Federal Judge Blocks President Trump’s Executive Order on Birthright Citizenship
On February 5, 2025, a federal judge in Maryland issued a nationwide preliminary injunction that halts President Donald Trump’s executive order aimed at terminating birthright citizenship for children born in the United States to undocumented and temporary immigrants.
Quick Hits
Nationwide preliminary injunction issued: U.S. District Judge Deborah Boardman blocked President Trump’s executive order restricting birthright citizenship, citing constitutional conflicts and long-standing legal precedent.
Temporary relief granted: The injunction, brought by five undocumented pregnant women and two immigrant rights groups, provides temporary relief while the lawsuit proceeds, with the administration expected to appeal the decision.
In a significant development, U.S. District Judge Deborah Boardman issued a nationwide preliminary injunction on February 5, 2025, blocking President Trump’s executive order, titled, “Protecting the Meaning and Value of American Citizenship.” The executive order sought to make children born on American soil on or after February 19, 2025, ineligible for U.S. citizenship if they were born to parents who were either unlawfully present in or temporary visitors to the United States. The president signed the executive order on January 20, 2025, the day he took office.
Judge Boardman’s ruling stated that President Trump’s executive order conflicted with the Fourteenth Amendment to the U.S. Constitution and contradicted more than one hundred years of binding Supreme Court precedent, as well as the United States’ 250-year history of birthright citizenship. Unlike the fourteen-day temporary restraining order issued on January 23, 2025, by Judge John Coughenour of the U.S. District Court for the Western District of Washington, today’s preliminary injunction will remain in effect until the lawsuit is resolved or the injunction is overturned by a higher court.
The lawsuit in Maryland was brought by five undocumented pregnant women and two nonprofit organizations that work with immigrants, who argued that the executive order would cause irreparable harm by denying citizenship rights to their children.
Judge Boardman emphasized that “citizenship is a most precious right” guaranteed by the Fourteenth Amendment, noting the instability, uncertainty, and “irreparable harm” the executive order would create for affected families across the country. The injunction will remain in place while the lawsuit proceeds, though the Trump administration is expected to appeal the decision.
Next Steps
As legal challenges to the executive order continue across the country—including challenges brought by twenty-two state attorneys general—it is likely that the matter will eventually reach the Supreme Court. For now, Judge Boardman’s ruling provides a reprieve for those affected by the executive order, reaffirming the constitutional right of citizenship by birth and through the Fourteenth Amendment.
DEI Dead at the EEOC: What’s Next for EEOC Enforcement Priorities After Trump Administration Actions
President Donald Trump has made several significant and sudden changes at the Equal Employment Opportunity Commission (“EEOC” or “the Commission”), the agency responsible for enforcing Title VII of the Civil Rights Act of 1964.
First, he appointed current Commissioner Republican Andrea Lucas as new Acting Chair and then removed Karla Gilbride (a nominee of former President Biden) from her role as EEOC General Counsel. Both of these decisions were routine and unsurprising for the start of a new presidential administration. President Trump then removed Commissioners Jocelyn Samuels and Charlotte Burrows, two of the three Democratic commissioners. This move was far from routine and is likely to be challenged in court.
These sweeping changes initiated by President Trump at the EEOC should be seen as a critical element of an ever-expanding goal of government-wide elimination, not just of DEI, but of all forms of affirmative action. This remaking of the EEOC should be viewed in parallel with Trump’s firing of two Democratic Members and the General Counsel at the National Labor Relations Board, revocation of Executive Order 11246, which contractually required covered federal government contractors and subcontractors to meet certain affirmative action obligations, and the possible elimination of the Office of Federal Contract Compliance Programs (“OFCCP”).
The shakeup at the EEOC – particularly, the removal of Samuels and Burrows – is intended to clear the road of challenges that might have inhibited Acting Chair Lucas’s pursuit of her (and President Trump’s) enforcement priorities, including what she described as “rooting out unlawful DEI-motivated race and sex discrimination,” a goal that aligns with Trump’s Executive Orders targeting Diversity, Equity, and Inclusion (DEI).
Prior to Samuel’s and Burrow’s removal, the EEOC had a Democratic majority, which would have limited Acting Chair Lucas’s authority to press her (and President Trump’s) priorities until at least mid-2026. The EEOC has a statutorily bipartisan structure, headed by five members appointed by the President and confirmed by the Senate. The President can appoint up to three members of his own party as staggered vacancies arise. The designated Chair is elevated over other Commissioners, each of whom is independent. With President Trump’s actions, there is currently no quorum and only an Acting General Counsel. This will halt issuance of new guidance and impact EEOC litigations on behalf of private sector employees. Even without a majority, Acting Chair Lucas can press her enforcement goals by bringing Commissioner Charges independent of her fellow Commissioners. Indeed, Acting Chair Lucas is quite familiar with this tool, having filed the most Commissioner Charges of any of her colleagues in the 2022 (12 charges), 2023 (15 charges), and 2024 (11 charges) fiscal years. She has already taken other actions as well, including removing the X gender marker during the intake process for filing a charge of discrimination, deleting gender ideology materials from the Commission’s internal and external websites and other platforms, and removing a feature that allows Commission employees to opt to identify pronouns next to their names within e-mails and internal messages.
Lucas’s Priorities and President Trump’s Related Executive Orders
Lucas has outlined several key priorities for her tenure, including, in her words:
“rooting out unlawful DEI motivated race and sex discrimination;
protecting American workers from anti-American national origin discrimination;
defending the biological and binary reality of sex and related rights, including women’s rights to single-sex spaces at work
protecting workers from religious bias and harassment, including antisemitism; and
remedying other areas of recent under-enforcement.”
Notably, Samuels, Burrows, and Kalpana Kotagal (remaining Democratic Commissioner) issued a joint statement on X defending DEI practices after Acting Chair Lucas’s appointment.
In particular, Lucas’s statements regarding DEI programs align with President Trump’s Executive Order “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “DEI EO”), that targets DEI programs by eliminating them in the federal government and encouraging the private sector to drop them, too. (Read our Insight for more about the DEI EO.)
Additionally, Lucas’s priority to defend “the biological and binary reality of sex and related rights, including women’s rights to single-sex spaces at work” is consistent with President Trump’s Executive Order entitled “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” (the “Biological Sex EO”). This EO states that “[i]t is the policy of the United States to recognize two sexes, male and female” and, among other directives, instructs federal agencies to adopt and apply these definitions and to “remove all statements, policies, regulations, forms, communications, or other internal and external messages that promote or otherwise inculcate gender ideology, and shall cease issuing such statements, policies, regulations, forms, communications or other messages.”
The Biological Sex EO instructs agency heads with enforcement power (including Lucas and the EEOC General Counsel) to prioritize investigations and litigation to enforce the “rights and freedoms” it identifies. Additionally, the EO also calls for the prompt rescission of the EEOC’s Enforcement Guidance on Harassment in the Workplace (the “Enforcement Guidance”). In what was perhaps a foreshadowing of the looming dispute over the extent of the President’s authority over the EEOC, on January 28, 2025, the EEOC added the following message to the Enforcement Guidance web page: “This document was approved by the Commission on April 29, 2024, by a 3-2 vote. Any modification must be approved by a majority vote of the Commission.”
Other language in the Biological Sex EO aimed at the Attorney General could further impact the EEOC’s guidance and enforcement actions against private employers. Specifically, the Biological Sex EO instructs the Attorney General to issue guidance to:
“…correct the misapplication of the Supreme Court’s decision in Bostock v. Clayton County (2020),” wherein the U.S. Supreme Court held that discrimination on the basis of a person’s gender or sexual orientation is a violation under Title VII of the Civil Rights Act (“Title VII”). The EO states that the Biden Administration interpreted Bostock as requiring “gender identity-based access to single-sex spaces under, for example, Title IX of the Educational Amendments Act” and that “this position is legally untenable and has harmed women.” The Biological Sex EO further instructs the Attorney General to “issue guidance and assist agencies in protecting sex-based distinctions, which are explicitly permitted under Constitutional and statutory precedent.”
“ensure the freedom to express the binary nature of sex and the right to single-sex spaces in workplaces and federally funded entities covered by the Civil Rights Act of 1964.”
While Acting Chair Lucas did not specifically mention the Pregnant Workers Fairness Act (PWFA) when announcing her enforcement priorities, she has in the past criticized the EEOC’s final regulations on the enforcement of the PWFA, which we discussed here. At the time, she took issue with the EEOC’s definition of “related medical conditions” covered by the law’s provisions that includes abortion, along with pregnancy and childbirth.
What’s Next for the EEOC?
President Trump is expected soon to nominate a new EEOC General Counsel, who is likely to be a staunch foe of DEI and affirmative action plans and who could litigate claims based on charges alleging harm from such policies, programs, or plans. Along with Acting Chair Lucas, there is one remaining Democrat – Kotagal, whose term expires in July 2027. There are now three open seats (those vacated by Samuels and Burrows, and one left open by Keith Sonderling, who President Trump recently named Deputy Labor Secretary). President Trump will likely seek to fill the empty seats with candidates who will press his and Acting Chair Lucas’s enforcement priorities.
In the meantime, however, Samuels and Burrows are expected to challenge their removal in court. Burrows has already retained counsel. There is no provision in Title VII giving the President authority to remove an EEOC Commissioner. Samuels and Burrows will undoubtedly rely upon Humphrey’s Executor v. Federal Trade Commission, a 1935 opinion in which the Supreme Court of the United States (SCOTUS) analyzed the propriety of President Hoover’s removal of a Commissioner from the Federal Trade Commission (FTC). SCOTUS held that the FTC Act only allowed the President to remove an FTC Commissioner prior to the end of their term on specific grounds, which did not apply, and that a President cannot remove, or oust, a confirmed appointee of an independent commission or board without specific authority. SCOTUS wrote:
We think it plain under the Constitution that illimitable power of removal is not possessed by the President in respect of officers of the character of those just named. The authority of Congress, in creating quasi-legislative or quasi-judicial agencies, to require them to act in discharge of their duties independently of executive control cannot well be doubted; and that authority includes, as an appropriate incident, power to fix the period during which they shall continue, and to forbid their removal except for cause in the meantime. For it is quite evident that one who holds his office only during the pleasure of another cannot be depended upon to maintain an attitude of independence against the latter’s will.
SCOTUS had a chance to revisit Humphrey’s Executor precedent last term in Consumers’ Research v. Consumer Product Safety Commission; however, it denied certiorari. SCOTUS will likely have another bite at this issue in the near future, given the anticipated legal challenge to Burrows’ and Samuel’s removal, as well as that of President Trump’s similar recent removal of Members of the National Labor Relations Board, as we wrote about here. Justices Thomas and Gorsuch have expressed the view that Humphrey’s Executor should be overruled. Further, Samuels and Burrows potential reliance on Humphrey’s Executor as it stands, may be vulnerable in light of President Trump’s view regarding the effect of Seila Law v. Consumer Financial Protection Bureau; in particular, that the case gave him the authority to remove Gwynne Wilcox and Jennifer Abruzzo from the NLRB.
For now, there have been no changes to the EEOC’s guidance, and existing litigations and investigations will continue and new charges can be processed. Employers should stay informed about potential shifts in EEOC policy and work with counsel to ensure they remain compliant with federal guidelines.
Epstein Becker Green Staff Attorney Elizabeth A. Ledkovsky contributed to the preparation of this article.
Patent Eligibility: The Call for Supreme Court Clarity and for an End to Summary Affirmances
The U.S. Supreme Court has once again been urged to revisit 35 U.S.C. § 101, the statute governing patent eligibility. Audio Evolution Diagnostics, Inc. (AED) filed a petition for writ of certiorari, challenging the Federal Circuit’s summary affirmance under Rule 36 of a ruling that invalidated its patents under the Alice/Mayo framework. Should the SCOTUS take up the case, this presents an opportunity for the Court to clarify the boundaries of patent eligibility and address concerns over the Federal Circuit’s handling of such cases.
AED’s Basis for its Petition
AED’s petition asserts that “the Federal Circuit remains at an impasse over the proper scope of § 101” and that the § 101 doctrine “is in chaos and requires this Court’s review.”
AED raises, inter alia, two key concerns: First, since Alice was decided more than a decade ago, “division among decisionmakers on how to correctly apply the two-step framework has dominated the jurisprudence.” And second, the Federal Circuit’s overuse of summary affirmances under Rule 36, and “whether the Federal Circuit can properly fulfill its § 101 interpretation role using just one word: ‘affirmed.’”
In support of the first key concern, AED asserts several issues: (i) the blending of subject matter eligibility under § 101 with other patentability requirements such as novelty and non-obviousness; (ii) the conflation of factual and legal questions, especially in step one of the analysis; and (iii) arbitrary outcomes caused by “the [Federal Circuit] judges’ differing opinions on § 101 and their decade-long reluctance to address the issue en banc.”
As to the second key concern, AED notes that the Federal Circuit’s use of Rule 36 to summarily affirm lower court decisions without issuing an opinion has been widely criticized. Particularly, AED asserts that the Federal Circuit’s one-word affirmance (“affirmed”) effectively shields the underlying decision from Supreme Court review. The lack of an opinion means there is no explanation of the legal reasoning, “leaving litigants to guess the reasoning behind the decisions.”
Why This Case Matters
Patent holders and accused infringers have asked for more certainty, and given the stakes, clarity is needed. AED’s petition is not the first time stakeholders have asked the Supreme Court to clarify the Alice/Mayo standard. The Solicitor General, courts, USPTO, and Congress have all requested clearer guidance from the SCOTUS on patent eligibility. Due to the lack of clear guidance from the courts, litigants regularly face the question of subject matter eligibility with limited ability to weigh likely outcomes. Even former members of he Federal Circuit itself have voiced concern. Retired Federal Circuit Chief Judge Michel wrote: “[N]ary a week passes without another decision that highlights the confusion and uncertainty in patent-eligibility law.”
Some observers have argued that uncertainty under § 101 stifles innovation, and that this uncertainty has far-reaching implications for innovators, investors, and businesses. Inconsistent rulings under Alice have led to unpredictability in outcomes, particularly in fields such as software, artificial intelligence, business methods, and medical diagnostics. The absence of clear, enforceable standards makes it difficult for companies to assess patentability, protect their innovations, and secure investments. In the words of retired Chief Judge Michel: “The result [of Section 101’s unpredictability], unavoidably, is less innovation. Why? Because all these commercial actors follow the simple caution: when in doubt, do not commit time and money in high-risk endeavors, which is what innovation always is.”
Rule 36 judgments provide no guidance to the parties, the lower courts or to the legal community in general. Worse, they provide no basis for Supreme Court review. These summary affirmances have increasingly come under scrutiny for their lack of transparency. Observers have argued that this practice undermines the Federal Circuit’s role in creating uniformity in patent law—a primary reason for its creation.
What Comes Next?
AED’s petition presents the Supreme Court with an opportunity to provide guidance and clarification on the Alice/Mayo framework and addressing the Federal Circuit’s use of Rule 36 in cases involving significant legal questions.
The Supreme Court’s response to this petition could have major implications for the future of patent eligibility in the U.S. If the Court declines to hear the case, the uncertainty surrounding § 101 jurisprudence will persist, at least for now, leaving some patent holders, accused infringers, legal practitioners and District Court’s to continue to ask for more predictability in securing, defending and weighing the eligibility of their patent rights.
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The Double-Edged Sword of AI Disclosures: Insurance & AI Risk Mitigation
Artificial intelligence (AI) is reshaping the corporate landscape, offering transformative potential and fostering innovation across industries. But as AI becomes more deeply integrated into business operations, it introduces complex challenges, particularly around transparency and the disclosure of AI-related risks. A recent lawsuit filed in the US District Court for the Southern District of New York—Sarria v. Telus International (Cda) Inc. et al., No. 1:25-cv-00889 (S.D.N.Y. Jan 30, 2025)—highlights the dual risks associated with AI-related disclosures: the dangers posed by action and inaction alike. The Telus lawsuit underscores not only the importance of legally compliant corporate disclosures, but also the dangers that can accompany corporate transparency. Maintaining a carefully tailored insurance program can help to mitigate those dangers.
Background
On January 30, 2025, a class action was brought against Telus International (CDA) Inc., a Canadian company, along with its former and current corporate leaders. Known for its digital solutions enhancing customer experience, including AI services, cloud solutions and user interface design, Telus faces allegations of failing to disclose crucial information about its AI initiatives.
The lawsuit claims that Telus failed to inform stakeholders that its AI offerings required the cannibalization of higher-margin products, that profitability declines could result from its AI development and that the shift toward AI could exert greater pressure on company margins than had been disclosed. When these risks became reality, Telus’ stock dropped precipitously and the lawsuit followed. According to the complaint, the omissions allegedly constitute violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.
Implications for Corporate Risk Profiles
As we have explained previously, businesses face AI-related disclosure risks for affirmative misstatements. Telus highlights another important part of this conversation in the form of potential liability for the failure to make AI-related risk disclosures. Put differently, companies can face securities claims for both understating and overstating AI-related risks (the latter often being referred to as “AI washing”).
These risks are growing. Indeed, according Cornerstone’s recent securities class action report, the pace of AI-related securities litigation has increased, with 15 filings in 2024 after only 7 such filings in 2023. Moreover, every cohort of AI-related securities filings were dismissed at a lower rate than other core federal filings.
Insurance as a Risk Management Tool
Considering the potential for AI-related disclosure lawsuits, businesses may wish to strategically consider insurance as a risk mitigation tool. Key considerations include:
Audit Business-Specific AI Risk: As we have explained before, AI risks are inherently unique to each business, heavily influenced by how AI is integrated and the jurisdictions in which a business operates. Companies may want to conduct thorough audits to identify these risks, especially as they navigate an increasingly complex regulatory landscape shaped by a patchwork of state and federal policies.
Involve Relevant Stakeholders: Effective risk assessments should involve relevant stakeholders, including various business units, third-party vendors and AI providers. This comprehensive approach ensures that all facets of a company’s AI risk profile are thoroughly evaluated and addressed
Consider AI Training and Educational Initiatives: Given the rapidly developing nature of AI and its corresponding risks, businesses may wish to consider education and training initiatives for employees, officers and board members alike. After all, developing effective strategies for mitigating AI risks can turn in the first instance on a familiarity with AI technologies themselves and the risks they pose.
Evaluate Insurance Needs Holistically: Following business-specific AI audits, companies may wish to meticulously review their insurance programs to identify potential coverage gaps that could lead to uninsured liabilities. Directors and officers (D&O) programs can be particularly important, as they can serve as a critical line of defense against lawsuits similar to the Telus class action. As we explained in a recent blog post, there are several key features of a successful D&O insurance review that can help increase the likelihood that insurance picks up the tab for potential settlements or judgments.
Consider AI-Specific Policy Language: As insurers adapt to the evolving AI landscape, companies should be vigilant about reviewing their policies for AI exclusions and limitations. In cases where traditional insurance products fall short, businesses might consider AI-specific policies or endorsements, such as Munich Re’s aiSure, to facilitate comprehensive coverage that aligns with their specific risk profiles.
Conclusion
The integration of AI into business operations presents both a promising opportunity and a multifaceted challenge. Companies may wish to navigate these complexities with care, ensuring transparency in their AI-related disclosures while leveraging insurance and stakeholder involvement to safeguard against potential liabilities.
Corporate Transparency Act Recent Update
As previously reported, in early December, the District Court for the Northern District of Texas issued a nationwide injunction against the enforcement of the CTA [1]. The government quickly appealed. Just a few weeks later, on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s emergency motion to stay the nationwide injunction — effectively lifting the injunction and allowing the enforcement of the CTA to proceed. Given there was a January 1, 2025, deadline for millions of small business owners to file, FinCEN graciously decided to extend the filing deadline to January 13, 2025.
Then, just three days later, on December 26, 2024, in a short, one-page order, a different panel of judges from the same Fifth Circuit Court of Appeals reinstated the injunction, again placing the CTA and its enforcement provisions on hold. The government again quickly responded, petitioning the U.S. Supreme Court to lift the injunction. On January 23, 2025, the Supreme Court did precisely that — granting the government’s motion. The Supreme Court’s order, however, only applied to the injunction issued by the federal judge in Texas. Since a separate nationwide order issued by a different federal judge in Texas [2] was still in place, FinCEN posted a new update to its website one day later, stating:
“Reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports. [3] “
Opinions vary regarding whether reporting companies should file voluntarily. At the very least, reporting companies should be prepared to file quickly if and when the “red light” turns green once again. In the meantime, we continue to watch for any additional rulings. To stay up to date, please check our website regularly or contact a member of our Corporate Transparency Team for advice.
[1] Texas Top Cop Shop, Inc. v. McHenry
[2] Smith v. U.S. Department of the Treasury
[3] https://www.fincen.gov/boi (last accessed February 3, 2025)
This Week in 340B: January 28 – February 3, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: HRSA Audit Process; Contract Pharmacy; Rebate Model; Other
In one Health Resources and Services Administration (HRSA) audit process case, the plaintiff filed a brief in opposition to the government’s motion to dismiss.
In a Freedom of Information Act (FOIA) case, the government filed a motion for summary judgment.
In a breach of contract claim filed by a 340B covered entity against several related party Medicare Advantage plans, defendants’ filed an amended answer and defenses to plaintiff’s second amended complaint, and plaintiff filed a response in opposition to defendants’ motion to compel plaintiff’s claims spreadsheet.
In several cases challenging HRSA’s policy prohibiting all manufacturer conditions on 340B transactions, the court granted the parties’ joint motion for a stipulated protective order.
In a case challenging a proposed state law governing contract pharmacy arrangements in West Virginia, the court granted plaintiff’s third motion for an extension of time to respond to defendants’ motion to consolidate.
In a case challenging HRSA’s policy prohibiting manufacturer rebate models, three intervenors filed a motion to intervene.
In a case against HRSA alleging that HRSA prevented a 340B covered entity from accessing the 340B Program, the court granted the covered entity’s unopposed motion to stay all deadlines.
A drug manufacturer filed suit against HRSA to challenge certain of HRSA’s eligibility determinations.
New Jersey Appellate Division Makes Clear Experts Must Demonstrate a Scientifically Recognized Methodology
Recently, the New Jersey Appellate Division, in Dorrell v. Woodruff Energy, Inc.,[1] vacated a 2018 judgment against Chevron U.S.A., Inc. (“Chevron”) that had found Chevron liable for gasoline contamination. More specifically, the Appellate Division found that plaintiff’s expert was not qualified to determine that the subject property was contaminated with gasoline because his methodology was flawed and wholly unsupported by any scientific resource.
Background
Plaintiff Sandra Dorrell filed a second amended complaint in 2016 in which she claimed that Chevron was liable for private contributions under the New Jersey Compensation and Control Act (the “Spill Act”),[2] for gasoline contamination in the soil and groundwater on property she purchased in 1984.
During trial, plaintiff called an expert witness, who the trial court qualified as an expert in subsurface investigations involving hydrocarbon contamination, but found he was not qualified to distinguish one type of petroleum product from another. The expert concluded that the soil and groundwater had been contaminated with petroleum products attributable to Chevron and judgment was entered against Chevron. Chevron appealed the judgment and the case was remanded to the trial court in order to conduct an N.J.R.E. 104 hearing to determine the admissibility of the expert’s testimony at trial. The Appellate Division specifically focused its remand order on the reliability of the methodology employed by the expert to support his opinion that gasoline was a contaminant found at the property.[3] The Appellate Division noted that the In re Accutane Litigation[4] case had adopted aspects of the Daubert v. Merrell Dow Pharmaceuticals, Inc.[5] test, requiring that the proponent apply a scientifically recognized methodology similar to how others in the expert’s field practice the methodology.[6] The trial court conducted a two-day hearing and found that the expert had been properly qualified and had used a reliable methodology as the basis for his opinion concerning causation. Chevron appealed again.
The Appellate Division’s 2024 Decision
On appeal, Chevron argued the lower court “misapprehended [the] remand order and erred by focusing on whether [the expert] was generally qualified to investigate spills, rather than on whether he was qualified to ‘distinguish between petroleum products based on the chemical constituents in dissolved phase samples.’”[7] Applying an abuse of discretion standard, the Appellate Division reversed. The Appellate Division focused on the reliability of the expert’s methodology. The plaintiff bore the burden of proving that there was gasoline contamination and the Appellate Division found that the record lacked evidence supporting the reliability of the methodology, including the fact that the expert failed to “cite to a single scientific resource, article, journal, publication, test, or study supporting the reliability of that methodology, and he acknowledged he was unaware if there is any known error rate for the methodology he employed.”[8] The Court went on to note that there were several reliable tests and investigative techniques the expert could have used, but he failed to employ any of them.[9] Consequently, the judgment against Chevron was vacated.
The Appellate Division’s decision reiterates the requirement that an expert must clearly identify the methodology utilized to come to an opinion, including the expert’s ability to identify the scientific sources he or she relied upon. For those litigating complex environmental cases, this serves as an important reminder that failing to establish the reliability of an expert’s methodology could be fatal to your case.
[1] Dorrell v. Woodruff Energy Inc., No. A-2636-21, 2024 WL 5251650 (N.J. Super. Ct. App. Div. Dec. 31, 2024). (“Dorrell”).
[2] N.J.S.A. 58:10-23.11 to -23.11z.
[3] Dorrell v. Woodruff Energy, Inc.,2021 WL 922446 (N.J. Sup. Ct., App. Div., Mar. 11, 2021). (“Dorrell II”).
[4] 234 N.J. 340 (2018).
[5] 509 U.S. 579 (1993).
[6] Dorrell II at *11, n.14.
[7] Dorrell, No. A-2636-21, 2024 WL 5251650, at *12.
[8] Id. at 16.
[9] Id. at 18.
VINTAGE: Court Throws Out TCPA Class Action Against Vintage Stock and This One Is Sure to Stand the Test of Time
Wow.
This one is a remarkable ruling folks.
Lady visits a retail store. She is asked for her phone number and told it is necessary for her to return goods. She tells the employee she does not want to receive any advertisements. But when she provides her number she is actually signing up for a recurring text program.
What result?
According to the court in Thompson v. Vintage Stock, 2025 WL 385681 (E.D. Mo Feb. 3, 2025) the consent provided by the consumer trumps and the resulting messages are legal.
Let’s dive in.
Plaintiff’s phone number is on the DNC list. She visited a store called Vintage Stock and made a purchase.
The sales lady apparently told her that she needed to enter her number on the POS system because it would be needed in case Plaintiff wanted to return an item.
Plaintiff tells sales lady “I don’t want to receive any advertisements” but goes ahead and enters her number in the POS anyway.
On the POS is a display reading: ““Enter your phone # to receive coupons and sales notices. Message and data rates may apply.”
As a result Plaintiff received at least four promotional text messages sent to her phone.
Plaintiff sued claiming Vintage Stock violated the DNC rules of the TCPA. Even though she entered her phone number Plaintiff claims she did not provide her prior express invitation of permission because she told the sales lady she did not want advertising and because the POS language was too vague– for instance it didn’t mention text messages and it didn’t specifically authorize Vintage Stock to send anything to her phone.
VS moved for summary judgment and the court sided with it.
In the Court’s view Plaintiff’s submission of her number on the POS was sufficient to constitute “prior express invitation” to receive further messages–a lower standard than prior express written consent.
Here’s the analysis:
When visiting Vintage Stock’s store, Sheila entered her number into the VeriFone system. Doc. 72 at ¶ 9. That system clearly stated that one should enter her phone number to receive coupons and sales notices, and it warned that “[m]essage and data rates may apply.” Doc. 68-2 at 2. If one entered her phone number into this system, she would undoubtedly expect a few things. One, she would receive coupons and sales notices from Vintage Stock. Two, Vintage Stock would send those coupons and sales notices to the phone number she entered. Three, the coupons and sales would arrive in, at least, message format. (Because this case does not involve a phone call, the Court need not address whether one would expect to receive phone calls regarding coupons or sales notices.)
Hmmm. Maybe.
The disclosure did not actually tell the consumer she would receive anything on a phone number but I see where the Court is coming from here. Still this is the most relaxed application of prior express invitation we have seen yet.
On the failure to mention text messages piece the Court mysteriously determined it didn’t need to address that issue because it related to “permission” rather than “invitation” but it is not clear why that is.
Now the really fun issue– Plaintiff claiming she was tricked by a sales lady.
The Court was unmoved by this argument and determined, in essence, that whatever happened between Plaintiff and the sales girl was irrelevant to the issue of whether invitation was given to the text program. Here the Court took a very limited view of the language used: “expressing a lack of desire to receive advertisements does not counter expressly requesting coupons and sales notices to be sent to you.”
Hmmm.
At bottom the case was dismissed and Vintage Stock walked away clean.
Very very interesting case here– and truthfully Vintage Stock could have lost this case easily. Indeed, 8 out of 10 times these folks lose this motion. There are a bunch of interesting issues here and it is, frankly, stunning to me that Vintage Stock is walking away unscathed. I suspect an appeal is likely here.
But notice this is the third POS text club case we have discussed in the last two weeks!:
Circle K is stuck in a case because it included advertising in its opt ins;
7-Eleven is sued because it sent text messages outside of call time hours; and now
Vintage Stock barely gets away with very thin language on a POS.
Again, if you are a retailer launching a consent/preference center or managing POS messaging GET ASSISTANCE FROM QUALIFIED COUNSEL. My goodness.
Some take away here:
This case applies to loosest application of “prior express invitation” we have seen yet. Remember this is the standard applicable to calls and texts to numbers on the DNC– it does NOT apply to calls made using regulated technology, that requires a HIGHER standard (Troutman 9);
Generally consent is only valid so long as the texter does not have reason to know it was limited. Here VS’ agent knew of an intent to limit consent. So this is a case it probably should have lost (on an individual basis– now way this is a class issue tho)
POS disclosures should definitely mention the word “text” or “SMS” when enrolling in a text club and should use language indicating permission is being given like “authorize” or “permit.” Yes, I know VS got away with one here but don’t let their mistake become your bad habit.
VS couldn’t leverage the 18 month EBR defense here because it continued texting long after the consumer stopped visiting VS. Retailers should consider stopping text programs 18 months after a consumer’s last visit. One, these folks may have changed phone numbers– very bad. Two, these folks seemingly aren’t interested and continued texting might draw a claim similar to the one VS faced. Just something to think about.
Federal Court Acknowledges Catch-22 Involving FERPA and the NRLA
While union organizing among students flourished under President Biden’s labor board, colleges and universities face unresolved issues, including compliance with other federal laws.[1] In Vanderbilt University v. National Labor Relations Board, Vanderbilt University (Vanderbilt) sought a preliminary injunction enjoining the application of certain National Labor Relations Board (NLRB or Board) regulations that Vanderbilt argued conflict with the Family Educational Rights and Privacy Act (FERPA). The District Court for the Middle District of Tennessee (District Court) granted the injunction, recognizing a conflict between the Board’s disclosure requirements and FERPA’s privacy protections.
FERPA and the NLRB Regulations
The friction between FERPA and NLRB regulations is not surprising. Our last update addressed the NLRB’s General Counsel (GC) memorandum from August 2024, which attempted to reconcile a higher education institution’s disclosure obligations under the National Labor Relations Act (NLRA) and FERPA. In its recent decision, the District Court noted an outright conflict between FERPA and NLRB regulations. Generally, FERPA forbids the disclosure of student information from educational records without written consent unless an exception applies, such as when a student is given timely notice of a subpoena and the opportunity to initiate protective action. Failing to comply with FERPA presents a significant risk—losing federal funding. However, failing to comply with NLRB regulations could result in NLRA violations or preclude an institution from using certain defenses or strategies in a union election proceeding. The District Court recognized that FERPA protects student privacy rights, namely unauthorized disclosures of certain educational records and personal identifying information contained therein, but NLRB regulations enable unions and the Board access to certain personal identifying information for collective bargaining purposes and union elections. The District Court summarized the issue as a “seemingly impossible Morton’s Fork: either comply with those [NLRB] regulations and lose federal funding for violating its students’ privacy; or not comply and face punishment during union election proceedings.”
Vanderbilt University v. National Labor Relations Board
Vanderbilt is a 501(c)(3) FERPA-covered private university that accepts federal funding. The Vanderbilt Graduate Workers Union United, International Union, UAW (Union) filed a representation petition with Region 10 of the NLRB to represent 2,200 graduate student employees. NLRB regulations allow employers, upon filing a petition, to submit a statement of position (SOP), but that SOP must include, among other things, “a list of the full names, work locations, shifts, and job classifications in the proposed unit.” If the SOP omits information, an employer is precluded from raising any issue, offering any evidence, cross-examining witnesses, or presenting any argument related to the omitted information at the hearing concerning the petition. Vanderbilt argued that it had competing obligations—provide student information per the Board regulations or protect against unapproved disclosure and use of student education records under FERPA. After the Regional Director issued a subpoena directing Vanderbilt to provide the NLRB-required information, the university provided affected students an opportunity to object under FERPA. FERPA allows institutions to release protected records with students’ consent or in response to a lawfully issued subpoena, so long as affected students are given timely notice and an opportunity to take protective action. Over 80 students objected to the subpoena. After another subpoena, Vanderbilt again notified affected students, but it received even more objections. Two graduate students filed a request to intervene directly with the Board proceeding and a motion to stay enforcement of the subpoena to provide time to present their objections. The Regional Director later denied Vanderbilt’s motion to postpone the hearing, the SOP, and its response to the subpoena and further denied the students’ request to intervene and the motion to stay. The two students filed an emergency appeal to the Board. At the same time, Vanderbilt sought emergency expedited relief from the Board to avoid disclosing students’ FERPA-protected information before their objections were adjudicated.
Ultimately, Vanderbilt complied with the subpoena, filing its SOP with redacted student information. At the hearing concerning the petition, the Union moved to preclude Vanderbilt from presenting evidence or arguments contesting the appropriateness of the proposed union or any individual’s eligibility because the SOP did not provide full names. Vanderbilt opposed the Union’s motion for preclusion, arguing the redacted information was FERPA-protected. Eventually, at the Regional Director’s instruction, the hearing officer precluded Vanderbilt from offering evidence or argument on the unit’s appropriateness because it did not provide the required information and precluded Vanderbilt from offering proof regarding the evidence it would have presented.
Vanderbilt requested the District Court issue a preliminary injunction enjoining the Board from enforcing three regulations that essentially present a catch-22 when considered alongside FERPA obligations. Namely, the regulations forced a FERPA violation by disclosing protected personally identifiable information, which would penalize Vanderbilt for FERPA compliance by precluding evidence or argument about the unit’s appropriateness.
The Court Finds A Preliminary Injunction Necessary
The Court ultimately found the regulations contrary to FERPA and thus “not in accordance with law” under the Administrative Procedures Act (APA).[2] The Court granted immediate injunctive relief based on the four factors considered for an injunction, detailed below.
1. Vanderbilt had a Strong Likelihood of Success on the Merits
The Court concluded Vanderbilt is likely to succeed on the merits of its claim that the Board is applying the regulations in a manner not in accordance with the law, particularly because the application directly conflicts with Vanderbilt’s FERPA obligations and penalizes it for compliance. The particular requirements of the NLRB regulations and FERPA illustrate Vanderbilt’s conflict.
The three NLRB regulations at issue provide that:
A statement of position must contain “a list of the full names, work locations, shifts, and job classifications of all individuals in the proposed unit[;]”
If a party fails to “timely furnish the lists of employees,” the employer is “precluded from contesting the appropriateness of the proposed unit” and “from contesting the eligibility or inclusion of any individuals at the pre-election hearing, including by presenting evidence or argument, or by cross-examination of witnesses[;]”
Absent extraordinary circumstances, an employer must provide the Regional Director, within two business days after issuance of direction, “a list of the full names, work locations, shifts, job classifications, and contact information (including home addresses, available personal email addresses, and available home and personal cellular “cell” telephone numbers) of all eligible voters.”
At the same time, FERPA provides (absent exception to disclosure under particular circumstances) that:
[n]o funds shall be made available under any applicable program to any educational agency or institution which has a policy or practice of permitting the release of education records (or personally identifiable information contained therein other than directory information . . . ) of students without the written consent of their parents to any individual, agency, or organization[.]
The Court found Vanderbilt likely to succeed in showing FERPA protections apply to student information NLRB regulations require for disclosure and that the university would be forced to enact a “policy or practice” of disclosure during election proceedings. According to the Court, the information required by the regulations to avoid preclusion, including the voter list related to students and maintained by Vanderbilt, constitutes education records or personally identifiable information. The Court concluded the information, such as work locations, shifts, job classifications, and personal email addresses, did not constitute “directory information,” which FERPA permits an institution to disclose.
The Court held that the Board’s application of the regulations to Vanderbilt clearly conflicted with FERPA obligations. The Court noted that even if the Board adequately contested Vanderbilt’s claim under FERPA’s subpoena exception, the argument would likely fail because of the Board’s strict application, i.e., the Board did not give Vanderbilt a significant opportunity to allow students to seek protective action in response to the subpoena before mandating disclosure. The Court also noted that the Board failed to make a meaningful effort to agree on an accommodation to honor Vanderbilt’s concerns, as the GC recommended, or follow any other related guidance to facilitate compliance and consent procedures. The Court noted that Vanderbilt could not comply with FERPA and the regulations as currently written during the election proceeding and that “a valid statute always prevails over a conflicting regulation.” Therefore, the Court concluded Vanderbilt will likely succeed in its APA claim that the regulations are not in accordance with FERPA.
2. Vanderbilt Would Suffer Irreparable Injury
The District Court also found that Vanderbilt would suffer irreparable injury without an injunction. The Court noted Vanderbilt suffered harm from a previous preclusion order and would continue to suffer if forced to participate in election proceedings governed by regulations that required the university to choose between rights in NLRB proceedings and federal obligations. The Court emphasized the threat of Vanderbilt losing federal funding if forced to continue to comply with the election. Accordingly, given the past harm Vanderbilt experienced—which would continue to pervade—and the potential loss of funding, the Court found irreparable injury.
3. The Third and Fourth Factors Proved Neutral
As for the remaining factors—whether issuance would cause substantial harm to the opposing party or others and the public interest—the Court noted its neutrality. On the one hand, the Court acknowledged that Congress gave the NLRB significant power to regulate election proceedings and that an injunction could delay administrative proceedings, cause confusion regarding the proper application of the regulations, and deprive students of the ability to unionize quickly. However, the Court also noted Vanderbilt’s significant likelihood of success on the merits, which strongly indicated that a preliminary injunction would serve the public interest as “there is generally no public interest in the perpetuation of unlawful agency action.” The Court noted that granting relief would likely benefit over 100 students who objected to disclosing FERPA-protected information. While Congress enacted the NLRA and created the NLRB with specific objectives to not be infringed upon, the Court gave great weight to the fact that Congress similarly intended to protect the privacy rights of students under FERPA—students objected under the rights delegated by Congress. Those rights should not need to be set aside for agency expediency.
After balancing those factors and considering the irreparable harm, the Court found the circumstances warranted a preliminary injunction and narrowly tailored the scope by enjoining the Board from applying and enforcing the regulations to Vanderbilt in a way that violates the APA or FERPA. Shortly after the Court’s decision, the Union withdrew its petition.
What’s to Come
As the Courts and the Board navigate these challenges, the very legal foundation for students being able to unionize could face challenges under a Trump labor board. During President Trump’s prior term, the NLRB proposed but later withdrew regulations that would have excluded students at private universities from the NLRA’s definition of an employee. Will a Trump labor board reintroduce those proposed regulations? With the Senate failing to confirm Lauren McFerran to another term, Republican appointees will have a Board majority in early 2025. With precedent established by President Biden, Trump has already removed the General Counsel that President Biden appointed. In light of existing complex issues involving higher education, labor law, and other developments likely to come, colleges and universities should consult with competent legal counsel to stay abreast of these issues and prepare for any potential compliance obligations.
ENDNOTES
1. Aside from the FERPA compliance issues addressed in this article, higher education institutions may face additional issues with students being recognized as employees, including potential conflicts with federal immigration law and the Fair Labor Standards Act. The Third Circuit Court of Appeals addressed possible minimum wage requirements in Johnson v. NCAA, 2024 WL 3367646 (3d Cir. July 11, 2024), and the NLRB’s regional directors have addressed arguments that under federal immigration law, the characterization of a student as an employee has the potential to violate that student’s immigration status. For instance, international students must comply with federal immigration requirements, which can limit pursuit of full-time work in the United States and hours worked for certain visas. Educational institutions often limit international students’ work hours to comply with such requirements. However, with more and more students recognized as workers, these limits may be exceeded unintentionally if an international student is classified as an employee of their higher education institution, placing certain international students’ visa status at risk. Some regional directors have recognized this potential conflict when presented with election petitions, while others have given less weight to this issue—the facts of the particular case and what students are actually doing appear significant to this determination. See Trustees of Dartmouth College v. Service Employees International Union, Local 560, Case 01-RC-325633 (Feb. 5, 2024); Massachusetts Institute of Technology, Case 01-RC-304042 (March 13, 2023).
2. The Court did not address Vanderbilt’s arguments that the regulations are arbitrary and capricious because it found the regulations as applied were not in accordance with the law (i.e., FERPA).
DOJ Effectively Pauses Its Civil Rights Division’s Litigation, Which May Impact IER’s Pursuit of New Claims
The U.S. Department of Justice (DOJ) issued a directive to its Civil Rights Division, freezing all ongoing or new litigation. The specifics of the freeze are not clear; however, it appears to freeze new claims presented to the DOJ’s Immigrant and Employee Rights Section (IER).
Quick Hits
New and ongoing litigation at the DOJ’s Civil Rights Division is essentially frozen indefinitely.
The freeze could have implications for the Immigration and Employee Rights Section, which handles claims of citizenship discrimination.
Hidden among a flurry of executive orders, within the first week of President Trump’s second term of office, the media reports the DOJ issued a freeze memorandum to its Civil Rights Division, which is the arm of the DOJ that enforces federal statutes prohibiting discrimination on the basis of race, color, sex, disability, religion, familial status, military status, or national origin. The memorandum reportedly freezes any ongoing litigation held over from the Biden administration, and it halts the division’s pursuit of any new cases or settlements. The Civil Rights Division is also tasked with enforcing voting and election laws. Although not confirmed, it is believed the action is aimed at freezing Biden administration’s focus on cases and claims involving discrimination and violence within police forces throughout the country, as well as cutting back on enforcement of existing voting rights laws.
What is unknown at this time is how this freeze will impact IER, whose role is to enforce the Immigration and Nationality Act’s (INA) prohibition on citizenship discrimination in the hiring, recruitment, and termination phases of employment. The INA also prohibits asking for more or different documents during I-9 processing during an employee’s onboarding. Any potential impact this purported memorandum has on IER is merely a consequence—and not a focus—of the freeze. What is also unknown is how this freeze may impact any ongoing litigation currently proceeding before the Office of the Chief Administrative Hearing Officer involving alleged violations of the INA.
President Trump’s pick for attorney general, Pam Bondi, has not yet been confirmed; however, the acting attorney general is James R. McHenry III, who directed the DOJ’s Executive Office for Immigration Review (EOIR) in President Trump’s first administration and served as EOIR’s chief administrative hearing officer in President Biden’s administration.
McHenry’s career has focused on immigration, which lends some insight into this latest freeze. Should Bondi assume the role of attorney general, the focus of the DOJ for the next four years will likely become clearer—particularly as to how it will handle allegations of citizenship discrimination in light of the administration’s heavy focus on immigration. This is an area employers should remain focused on in the next few months, with consideration given to reviewing internal policies and procedures to ensure compliance with the INA’s antidiscrimination provisions.
Next Steps
In the coming months, employers will want to remain focused and consider reviewing internal policies and procedures to ensure compliance with the INA’s antidiscrimination provisions.
Red Rover, Red Rover, Come on Over? Understanding Pet Policies in Community Associations
Many community associations have restrictions that limit and/or prohibit pets.
In general, as long as such restrictions are drafted clearly, the North Carolina Courts will uphold their enforcement; however, there are several factors community associations should consider when establishing and enforcing pet restrictions and policies.
What is a Pet?
The North Carolina Court of Appeals has defined a household pet as a domesticated animal kept for the pleasure of or relating to a family or social unit who live together in the same dwelling. Accordingly, unless your community association’s pet policy contains a specific definition of “pet,” the broad definition adopted by the Court of Appeals controls. Therefore, in order for a community association to successfully limit pets to those animals traditionally considered as pets, such as dogs and cats, it may need to consider amending its pet policy to clearly define the term “pets.”
Types of Pet Policies – Restrictive Covenants v. Rules and Regulations
Pet policies are typically found in the community association’s declaration of covenants, conditions, and restrictions (“CC&Rs”) or in duly adopted rules and regulations. These policies often limit and/or prohibit the number, size, and types of pets that can be kept within the community.
Community associations that choose to implement pet policies through rules and regulations need to carefully consider the scope of authority for rules and regulations granted by the CC&Rs. Typically, CC&Rs only grant the authority to promulgate rules and regulations over the common area, not an individual owner’s lot or unit. For example, a pet policy adopted by the Board of Directors can require pets to be leashed when in the common area and require pet owners to properly collect and dispose of pet waste from the common area. Unless the CC&Rs grant the Board of Directors rule-making authority over lots, regulations that limit and/or prohibit the number, size, breed, and types of pets must be specifically granted by the CC&Rs.
Be Cautions with the Fair Housing Act
The Fair Housing Act, codified at 42 U.S.C. §§ 3601-3619 (“FHA”), prohibits housing providers from discriminating based on race, color, religion, sex, national origin, familial status, and disability. While the FHA does not define “housing providers,” it is well settled by federal courts that the definition of “housing provider” includes community associations.
Under the FHA, an assistance animal is not a pet but an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability or that provides emotional support that alleviates one or more identified effects of a person’s disability. An assistance animal under the FHA may include any animal, such as a dog, cat, chicken, goat, bees, etc., and does not have to be specifically trained to provide any assistance. As a result, assistance animals include service animals and emotional support animals.
Consequently, a community association cannot enforce pet policies against assistance animals or emotional support animals. For a better understanding of the FHA’s impact on pet policies, please check out Home Owners Associations: Beware of the Fair Housing Act When Enforcing Pet Prohibitions and Restrictions.
Conclusion
Understanding how to properly adopt and implement pet policies is an important skill for all community associations; however, even more important is understanding those times when pet policies may or may not be enforced. Failing to understand these distinctions can lead to unintended consequences.
Delaware Supreme Court Holds That While Timing May Not Be Everything, It Is Really Important When Looking For The Exit
Nearly one year ago, Vice Chancellor J. Travis Laster decided to apply Delaware’s most onerous standard of review, entire fairness, to the decisions of TripAdvisor, Inc. and Liberty TripAdvisor Holdings, Inc. to reincorporate in Nevada. Palkon v. Maffei, 311 A.3d 255 (Del. Ch. 2024). See Vice Chancellor Laster Rules That It Is “Reasonably Conceivable” That Nevada Provides Greater Protection Against Fiduciary Liability Than Delaware. Nor surprisingly, that ruling was appealed to the Delaware Supreme Court, which today issued its opinion reversing the Vice Chancellor’s ruling.
Vice Chancellor Laster applied the entire fairness standard because the proposed reincorporation would involve a controlling stockholder and the receipt of a non-ratable benefit in the form of the enhanced liability protections under Nevada law. The Delaware Supreme Court disagreed with the Vice Chancellor on the role of timing in determining whether an alleged benefit was no-ratable. The Supreme Court believes that temporality is a key factor in determining materiality. The Court concluded that the plaintiffs’ allegations did not satisfy the requirement of pleading a material benefit because they failed to allege “anything more than speculation about what potential liabilities Defendants may face in the future”. Accordingly, the business judgment rule is the applicable standard of review.
This decision may be beneficial to both Delaware and Nevada in the long run. If the Delaware Supreme Court had decided the other way, businesses might avoid incorporating in Delaware due to a fear that Delaware has become a Hotel California. See TripAdvisor Suit Invites Delaware To Become The Hotel California.