Federal Court Enjoins DHS’s Revocation of Harvard’s Ability to Enroll International Students
On May 22, 2025, Secretary of Homeland Security Kristi Noem ordered the Department of Homeland Security (“DHS”) to terminate Harvard University’s Student and Exchange Visitor Program (“SEVP”) certification for alleged “pro-terrorist conduct.” SEVP certification enables universities to enroll international students.
The revocation of Harvard’s SEVP authorization has sent shockwaves through the academic community, as it means Harvard would not be able to enroll international students and enrolled students must transfer to another university, obtain some other legal visa status, or depart the U.S. The DHS decision is premised on allegations that Harvard’s leadership has failed to address pervasive antisemitism and pro-terrorist conduct on its campus, as well as accusations of collaboration with the Chinese Communist Party, and failed to cooperate with DHS’s demands for information regarding its students.
On May 23, 2025, Harvard filed suit in U.S. District Court for the District of Massachusetts seeking an injunction on revocation of Harvard’s SEVP certification, alleging that the revocation violates both the U.S. Constitution and Administrative Procedure Act. On the same day, the District Court issued a Temporary Restraining Order enjoining the U.S. government and its agents, including DHS, from implementing the SEVP termination until there is a hearing on the matter. The Court found that Harvard would face immediate and irreparable injury if the termination takes effect before such a hearing.
If the termination takes effect, the impact of the decision will be substantial. Harvard, which had 6,793 international students enrolled during the 2024-2025 academic year, would face the loss of one quarter of its student population. International students would either have to transfer to other institutions or lose their legal student status in the U.S. by remaining enrolled at Harvard. Termination would have serious financial and academic implications, as international students contribute substantially to Harvard’s revenue and academic scholarship. The university’s leadership has vowed to provide guidance and support to affected students during this tumultuous period.
Texas AG Announces $1.375 Billion Settlement with Google for Privacy Violations
On May 9, 2025, Texas Attorney General Ken Paxton announced a $1.375 billion agreement in principle to settle cases it filed against Google in 2022 alleging that Google unlawfully collected, stored and used certain personal data of Texans without consent, including location information, biometric identifiers and web browsing activity. More specifically, according to the AG’s allegations, Google (1) continued to collect and use precise location data even when users disabled location services, (2) misled users to think that activity would not be tracked when using the “Incognito” mode in Google’s Chrome browser, and (3) captured and used biometric identifiers, such as voiceprints and facial geometry, in violation of the Texas Capture or Use of Biometric Identifier Act through products such as Google Photos and Google Assistance.
A press release from the Texas AG’s Office stated that the settlement delivers “a historic win for Texans’ data privacy and security rights. . . . To date, no state has attained a settlement against Google for similar data-privacy violations greater than $93 million. Even a multistate coalition that included forty states secured just $391 million — almost a billion dollars less than Texas’s recovery.”
A Google spokesperson said in a statement that the agreement “settles a raft of old claims, many of which have already been resolved elsewhere, concerning product policies we have long since changed.” The spokesperson said that Google is pleased to put the claims behind them and will continue to build robust privacy controls into Google services.
Orange Book Listings: Republican Led FTC Picks Up Where Democrat Led FTC Left Off
Key Takeaways
The Federal Trade Commission (FTC), now under Republican leadership, has continued its scrutiny of Orange Book listings for device patents, signaling bipartisan concern over potential anti-competitive practices
Despite new Warning Letters, many of the questioned patents were already delisted or tied to discontinued products, suggesting limited immediate impact on generic competition
Both branded and generic drugmakers may need to reassess litigation strategies and patent listings as regulatory and enforcement dynamics evolve
During the past two years, we have reported on actions regarding the listing of certain patents in the U.S. Food and Drug Administration’s (FDA) Orange Book for drug/device products where the patents focus on the device aspect of the product.1 During the Biden Administration, the FTC, under Democratic-led leadership, started taking note of what it deemed to be “improper” Orange Book patent listings. With all of the changes being implemented by the Trump Administration and at FTC, an open question remained as to whether the FTC would remain active in this area. We now have at least a partial answer to this question – the propriety of certain Orange Book patent listings will remain a focus of FTC.
Under the Biden Administration, the FTC issued two sets of Warning Letters (on November 7, 2023, and April 30, 2024) to multiple drug manufacturers and FTC commenced so-called patent listing dispute proceedings before FDA. Historically, however, the FDA has treated the listing of patents as an administrative matter and does not challenge the information submitted by the NDA holder. As we noted on July 17, 2024, those proceedings initiated by FTC had a minimal impact, as many of the patents remained in the Orange Book.
However, on December 20, 2024, the United States Court of Appeals for the Federal Circuit held that certain patents that were listed in the Orange Book for an asthma inhaler should have been delisted as the claims in question did not recite the active ingredient. Teva Branded Pharmaceutical Products R&D, Inc. et al. v. Amneal Pharmaceuticals of New York, LLC et al., (Fed. Cir Case 2024-1936, Dec. 20, 2024). On March 3, 2025, the Federal Circuit denied Teva’s petition for an en banc hearing. We have observed that in recent updates to the Orange Book, many device type patents have been delisted, presumably at the NDA holder’s request.
For certain products, the Teva decision could lead to additional patent listing disputes and the potential for antitrust counterclaims where patents focusing on the device aspect of drug/device patents are listed. Determining when this would be a potential strategy for generic companies involves an analysis of the competitive landscape, the timeliness of the FDA’s review, the types of patents the brand holds and what the expiration date is for each patent. But, with the significant changes brought about by the Trump Administration, it was an open question how active the FTC would be going forward, even after the Teva decision.
Specifically, on January 20, 2025, President Trump designated Andrew Ferguson to become the new Chairman of the FTC. Then, on March 18, 2025, President Trump fired the two remaining FTC Democratic Commissioners. All these changes begged the question as to whether a Republican-led FTC would continue to take aim at Orange Book listings? The answer to that question appears to be ‘yes’! On May 21, 2025, the new FTC leadership issued Warning Letters that were similar to the ones sent in 2023 and 2024 to seven companies, questioning the legitimacy of the listings for multiple products. Like the previous Warning Letters, FTC’s action was to institute patent dispute procedures at FDA.
In the May 21, 2025, FTC Press Release, Commissioner Ferguson stated:
The American people voted for transparent, competitive, and fair healthcare markets and President Trump is taking action. The FTC is doing its part, . . . . When firms use improper methods to limit competition in the market, it’s everyday Americans who are harmed by higher prices and less access. The FTC will continue to vigorously pursue firms using practices that harm competition.
We have reviewed each of the seven Warning Letters published by FTC (that cover 16 products) and a deeper dive indicates that Commissioner Ferguson’s proclamation may not have a significant impact on competition. Of the 16 brand products identified, seven have been discontinued by the brand, one of the products already has multiple generic competitors, the patents for two of the products will expire in roughly three months, and, for five others, the products in question have Orange Book listed patents whose legitimacy for listing was not questioned by FTC expiring later than those whose legitimacy was questioned. It appears that only one of the sixteen products appears to only list patents questioned by FTC. Moreover, at the time the FTC’s letters were sent, several of the patents in question had already been delisted from the Orange Book.
We also note that FTC has deferred action to the FDA, which is in the midst of significant staffing reductions that have led to slower response times. And, as discussed above, the FDA has traditionally taken the position that its role in patent listings is only ministerial. That being said, it will be interesting to see whether the new FDA leadership will take a different view.
While the new FTC has continued in its predecessor’s wake by sending out a series of Warning Letters relating to Orange Book patents, whether this action will create a more competitive landscape remains to be seen. And, both branded and generic companies may need to rethink their strategies in dealing with patents whose Orange Book listing is questionable. For example, for those products where there are both FTC questioned and unquestioned patents listed in the Orange Book, both the brand and generic company may desire legal certainty and the inclusion of both types of patents in a single lawsuit may be preferred to separate suits. Even if device patents are ultimately removed from the Orange Book, the possibility of litigation over these patents at some point in time still exists. The industry should certainly pay close attention to future developments in this area.
1] See Chad A. Landmon, Andrew M. Solomon, Federal Circuit Refuses to Rehear Case Involving Orange Book Listing of Device Patents, Polsinelli (Mar. 05, 2024), https://natlawreview.com/article/federal-circuit-refuses-rehear-case-involving-orange-book-listing-device-patents ; Court Ruling Alters the Calculus for Orange Book Patent Listings, Polsinelli (Jan. 23, 2025), https://www.polsinelli.com/publications/court-ruling-alters-the-calculus-for-orange-book-patent-listings; Federal Circuit Decides Case Involving Orange Book Listing of Device Patents, Polsinelli (Dec. 23, 2024), https://natlawreview.com/article/federal-circuit-decides-case-involving-orange-book-listing-device-patents; The FTC’s Challenge to the Listing of Device Patents in the Orange Book: What Challenge?, Polsinelli (Jul. 17, 2024), https://natlawreview.com/article/ftcs-challenge-listing-device-patents-orange-book-what-challenge
Tenth Circuit Rules Forfeiture-for-Competition Not Subject to Non-Compete Reasonableness Test
In Lawson v. Spirit AeroSystems, Inc., the U.S. Court of Appeals for the Tenth Circuit upheld the forfeiture of certain stock awards for violating a covenant not to compete. Like the Seventh Circuit in LKQ Corp. v. Rutledge(which applied Delaware law), the Tenth Circuit concluded that, under Kansas law, the remedy of forfeiting future compensation is not subject to the same reasonableness standard as traditional enforcement of a non-compete obligation. The Tenth Circuit reached this conclusion even though the executive’s agreement included both a forfeiture-for-competition provision and traditional enforcement rights (i.e., the right for the company to pursue monetary damages and specific performance), because the agreement terms enabled the forfeiture provision to be severed from the traditional enforcement provisions.
Background and the Court’s Analysis
A retirement agreement allowed the former CEO of Spirit AeroSystems (“Spirit”) to receive cash payments and continue vesting in certain stock awards if he continued working for Spirit as a consultant and complied with a non-compete agreement. The CEO subsequently contracted with a hedge fund that was pursuing a proxy contest against one of Spirit’s suppliers. Spirit determined that this activity breached the non-compete and therefore stopped payments to the CEO and cut off continued vesting of the stock, resulting in forfeiture of the CEO’s then-unvested stock awards. Notably, Spirit did not seek to claw back cash that had already been paid or stock that had already vested: only future compensation and vesting were affected.
The court first found under Kansas case law a distinction between a traditional penalty for competition and forfeiture of future compensation for competition. Under Kansas case law, the former is valid and enforceable only if “reasonable under the circumstances and not adverse to the public welfare.” But the court concluded that Kansas law does not subject the latter to the same reasonableness standard because it does not restrain competition in the same way. Rather than imposing a penalty, a forfeiture for competition provision “merely provides a monetary incentive in the form of future benefits for not competing.” The court reasoned that a forfeiture for competition provision gives the worker “a choice between competing and thereby forgoing the future benefits or not competing and receiving those benefits.” And because the forfeiture applied only to future compensation, it did not amount to a penalty: the executive forfeited only “the opportunity for the shares to vest notwithstanding his retirement.”
Second, the court reasoned that the policy justifications for reasonableness review did not apply to forfeiture in this case. The court stated that reasonableness review addresses the risk that (1) the employer’s bargaining power can lead to a one-sided non-compete that leaves former employees unable to support themselves after their employment ends and (2) “overbroad” restrictions on competition can “decrease options available to consumers and generate market inefficiencies.” The court concluded that neither of those risks were present in this case, noting that the executive was sophisticated and had support of counsel and that the executive had an opportunity to receive substantial compensation if he had complied with the covenant.
Third, the court reasoned that “[f]reedom of contract is the fountainhead of Kansas contract law.” Accordingly, the court determined that the forfeiture-for-competition provision should be presumed enforceable, absent the policy concerns described above.
Unlike the Seventh Circuit in LKQ—which certified a question of Delaware law to the Delaware Supreme Court—the Tenth Circuit refused to certify the question of Kansas law to the Kansas Supreme Court. For the reasons described above, the court determined that it could predict the Kansas Supreme Court’s interpretation of Kansas law with sufficient confidence to make certification unnecessary.
Finally, the court rejected an argument that reasonableness review should be required because Spirit had both the right to invoke forfeiture and the right to seek traditional enforcement (monetary damages and specific performance). The court determined that, in this case, the right to seek traditional enforcement could be severed from the right to invoke forfeiture. Because Spirit relied exclusively on the forfeiture provision and expressly declined to pursue traditional enforcement, the fact that Spirit could have pursued traditional enforcement was not fatal.
Takeaways
Although Lawson is binding only on federal courts in the Tenth Circuit that are applying Kansas state law (and Kansas state courts could still reach a different conclusion), it provides meaningful authority for the proposition that a forfeiture for competition provision can be enforced even if applicable law otherwise limits the enforceability of non-compete provisions. (Notably, however, some states reject forfeiture for competition.) The decision offers a few important practical takeaways:
The particular facts matter. In this case, the court noted that the forfeiture provision had been negotiated by sophisticated parties represented by counsel and determined that policy concerns with non-compete provisions (interfering with the ability to make a living and potential to generate market inefficiencies) were not present.
Drafting matters. If an agreement has more than one enforcement mechanism (e.g., a right to seek damages and injunctive relief and a separate statement that breach will result in forfeiture of certain compensation or benefits), it is important to make each enforcement mechanism distinct and severable from the others. The result of this case could have been different if the agreement did not have a severability clause. It also helps to state clearly that amounts subject to forfeiture are not considered earned or fully vested (even if considered vested for tax purposes) unless and until the employee has satisfied all applicable conditions. Clarity on this point helps the court to distinguish between a permissible compensatory incentive to comply and a potentially impermissible penalty for breach.
Enforcement strategy matters. The court emphasized that Spirit did not pursue injunctive relief or damages and that the forfeiture applied only with respect to future payments and vesting. Had Spirit sought to claw back prior payments or stock that had already vested, the court might have treated the forfeiture as a penalty that required reasonableness review.
Recent D.C. Circuit Case Limits Opportunity to Assert Waiver of State Section 401 Water Quality Certification Authority
The requirement to obtain a State water quality certification pursuant to Section 401 water of the Clean Water Act (“CWA”) has become a significant source of delay and complication in the federal permitting of any project—including hydropower, natural gas pipelines, liquefied natural gas terminal projects—that involves a discharge to a navigable water.
The U.S. Court of Appeals for the D.C. Circuit’s decision in Village of Morrisville v. FERC decided May 16, 2025, is the most recent decision in a line of cases decided over the last several years that address whether a state has waived its certification authority through delay. This decision further narrows the circumstances under which the court will determine that the state has waived its authority, and thus increases the burden on project proponents to demonstrate that a waiver has occurred.
Background
Under Section 401, applicants for federal licenses or permits whose activities may result in discharges into U.S. waters must obtain water quality certification from the state where the discharge will occur. This provision allows states to impose conditions to ensure compliance with state water quality standards or to deny certification if the discharge will not comply with these standards, which effectively vetoes the federal license or permit. However, the CWA specifies that if a state “fails or refuses to act” on a certification request within a reasonable period, not exceeding one year, the state waives its certification authority.
Courts have clarified that this waiver provision prevents states from indefinitely delaying federally licensed projects through untimely certification decisions. For Federal Energy Regulatory Commission- (FERC) regulated projects, courts have directed that FERC holds the authority to determine whether a state has waived its Section 401 certification authority or not.
Despite this time limitation, states have developed procedural mechanisms to extend review beyond the one-year period. For many years, states avoided this one-year limitation by requesting that project applicants withdraw their 401 certification requests before the expiration of the one-year deadline. The state would then encourage applicants to re-file identical requests to initiate a new one-year period for review. FERC had been prevented from issuing new licenses in these cases for years, and in some cases decades, while the state orchestrated the annual ritual of withdraw-and-re-file.
The D.C. Circuit offered hope for FERC’s ability to reassert control of its licensing timelines from Section 401 delays when it decided Hoopa Valley Tribe v. FERC in 2019. In that case, the court determined that a written agreement between an applicant for water quality certification and the States of California and Oregon, by which the applicant annually withdrew and re-filed the same request while the parties pursued a dam removal settlement, constituted a “waiver of authority” by the states.
Spurred by Hoopa Valley Tribe, FERC found waiver in a number of cases in California. These cases were based on California’s entrenched practice, not limited to Hoopa Valley Tribe, of encouraging hydroelectric applicants to withdraw their certification requests just prior to expiration of the one-year deadline.
In more recent decisions, however, the D.C. Circuit has limited the circumstances in which it will uphold FERC waiver determinations and/or has upheld FERC’s determinations that no waiver occurred. In Turlock Irrigation District v. FERC, the D.C. Circuit addressed a variation on the “withdraw and resubmittal” scheme where the state instead repeatedly “denied without prejudice.” When Turlock and Modesto Irrigation Districts challenged the state’s repeated denials as effectively waiving certification authority, FERC determined that denial “without prejudice” still constituted an “act” under Section 401. On appeal, the D.C. Circuit upheld FERC’s interpretation, dismissing concerns that states could extend review indefinitely through successive denials without prejudice.
Village of Morrisville v. FERC
The Village of Morrisville, Vermont (“Morrisville”) operates a hydroelectric project, for which it needed to renew its FERC license. Under Section 401, Morrisville needed a water quality certification from the Vermont Agency of Natural Resources (“VANR”) before FERC could issue a new license. Through this process, VANR raised concerns about certain environmental aspects of the project. Facing these concerns and the potential conditions VANR sought to impose, Morrisville twice withdrew and resubmitted its certification application. Eventually, VANR issued a conditional certification with requirements that Morrisville found onerous.
After exhausting its challenges in Vermont state courts, Morrisville changed tactics and argued that VANR had waived its Section 401 authority by allowing the withdrawals and resubmissions to extend beyond the statutory one-year timeframe. FERC disagreed, finding that VANR had not waived its Section 401 authority because Morrisville had withdrawn and resubmitted its application “unilaterally and in its own interest,” rather than “at the behest of the state.”
Morrisville then appealed FERC’s decision to the D.C. Circuit, which upheld FERC’s decision. The D.C. Circuit took a narrow view of its decision in Hoopa Valley Tribe, and explained that unlike Hoopa Valley Tribe, where the state and an applicant had a written agreement to circumvent the one-year time limit, the Court found no evidence of any mutual agreement between VANR and Morrisville to delay the certification process. VANR’s awareness of or accession to Morrisville’s withdrawal requests did not make the state a participant in any scheme to evade statutory deadlines.
The court observed that Morrisville, not VANR, sought and benefited from the additional time. Both withdrawals came at Morrisville’s request to afford more time for review and negotiation of more favorable conditions under the water quality certification.
Finally, the D.C. Circuit concluded that the record indicated that VANR permitted these withdrawals as an alternative to either denying the certification outright or granting it with conditions Morrisville hoped to avoid.
Implications
After the D.C. Circuit’s decision in Turlock, going forward states are more likely to deny certification requests without prejudice rather than request applicants withdraw and resubmit applications to avoid a potential waiver. Thus, decisions, like Morrisville, that address withdrawal and resubmittal may only apply in limited circumstances. Nevertheless, the Morrisville decision remains important for applicants who have previously been subject to the withdrawal and resubmittal scheme and may be seeking a waiver determination based on past state practice. While the D.C. Circuit stopped short of finding that a waiver determination could only be found if there is a written agreement between the applicant and the state, it remains unclear what evidence of agreement between the parties will be sufficient to support a waiver of a state’s certification authority. However, it appears that an applicant seeking a waiver determination is going to have to provide affirmative evidence that the state coerced the applicant into withdrawing and refiling, and the state was acting in its own interest in requesting the withdrawal and resubmittal.
Pennsylvania State Court Dismisses Climate Tort Litigation Against Major Fossil Fuel Companies
A local state court in Pennsylvania recently dismissed an array of climate tort claims brought against major fossil fuel companies by a local government–in this case, Bucks County. Among the three dozen or so climate tort litigations filed in recent years, this ruling is one of several decisions by both state and federal courts that have dismissed climate tort litigation at an early stage of the proceedings. Nonetheless, it remains true that more climate tort litigations have proceeded than not, as a number of courts–particularly state courts–have enabled those claims to proceed, although there have not yet been any rulings on the merits of the underlying claims.
Here, the state court held that it lacked subject matter jurisdiction because of the doctrine of preemption–i.e., that federal law governed the claims at issue. Specifically, the court stated that because “the Clean Air Act and the EPA actions it authorizes preempt Pennsylvania State law in this case,” that these laws “displace” any Pennsylvania common law right to seek abatement of greenhouse gas emissions from fossil fuel production companies.” This is the same legal doctrine that federal courts in New York and California, and state courts in Delaware, New Jersey, and Maryland, have relied upon to likewise dismiss similar climate tort claims.
While this decision will certainly not be the final word on climate tort litigation–a number of cases are continuing to proceed through the courts, and more may yet be filed–it does add increasing weight to a legal analysis that rejects the premise of these lawsuits.
A state judge dismissed a county’s climate tort lawsuit against major oil and gas companies, joining other local benches who have rejected similar lawsuits across the US. Judge Stephen A. Corr of the Pennsylvania Court for Common Pleas ruled on May 16 that Bucks County, Pa., does have capacity to sue, but ultimately had to dismiss its climate tort lawsuit, ruling that the state court does not have power over interstate emissions.
news.bloomberglaw.com/…
PROFESSIONAL NEGLIGENCE?: Vonage Failed to Honor DNC Requests in a Manner Leading to TCPA Class Action New Lawsuit Claims
So I was reviewing a $90+MM telecommunications services contract for a major brand yesterday.
$90MM folks.
The money in this industry is insane. But so are the stakes.
Fail to set up your system right and face a TCPA class action with damages that may dwarf an 8 figure contract.
Here’s a cautionary tale.
A company called YF FC Operations, LLC, dba YouFit was sued in a TCPA class action down in Florida by Jeniel Petrovich and Mauricio Cardero.
The essence of the allegations, apparently, was that YouFit failed to honor a DNC request received by YouFit via text message.
Not good.
But YouFit didn’t take the issue lying down.
Instead it sued its telecommunications provider– Vonage– for indemnity and professional negligence claiming that it was Vonage’s fault the stop notifications at issue in the underlying TCPA class action.
Per YouFit’s complaint:
On or around July 22, 2023, YouFit engaged Vonage to perform an integration of its systems with YouFit’s CRM provider Hubspot so that YouFit could communicate with its customers and potential customers using a short code (the “Integration”) rather than its toll-free number. The Integration was intended to monitor for the receipt of opt-out text messages from YouFit customers and, upon receipt of an opt-out text message, the customer’s request would be noted in Hubspot and further communication via text would end.
Because of Vonage’s actions, the opt-out messages of Petrovich and Cardero, and potentially thousands of other putative class members, were not recorded in Hubspot as was intended by the Integration. Subsequently, Vonage sent text messages potentially in violation of the TCPA and/or the FTSA.
Now let me just say, I HATE the content of these paragraphs to the extent they essentially concede away critical issues in the TCPA suit.
Why would you admit that “potentially thousands” of individuals received illegal text messages? Literally no reason to do that. Allegations that if anybody received text messages–which should be denied– it was Vonage’s fault would have been sufficient.
But I digress.
The point is that YouFit went straight for the jugular here against Vonage. The Complaint goes on to allege that Vonage shirked its responsibilities to YouFit to defend the suit:
After the Class Action was served on YouFit, YouFit advised Vonage of the Class Action and requested that Vonage assist in the defense and resolution of the Class Action in light of Vonage’s actions. Vonage rejected the request.
Now I am going to guess that Vonage had a contract that disclaimed all liability here, so it will be very interesting to see how this plays out.
Complaint here: Vonage Removal
The bottom line is companies need to be working hand in glove with their telecom platforms to avoid this sort of thing and retaining knowledgeable counsel.
CRITICAL to keep in mind the following when setting up an outreach campaign and to EXPRESSLY set these items out in the MSA or IOs:
Which party is responsible for providing phone numbers to be called? Where will they be sourced from? What level of consent will be required? How will that consent be documented and stored?
Which party is responsible for supplying the DIDs (outpulse phone numbers)? How will they be provisioned? How long will they be kept? Is the use of local touch permitted in the jurisdiction to which calls are made? Who is responsible for assuring that?
Which party is responsible for ingesting, tracking and honoring revocation notifications? How broadly will those revocations be treated? How will multi-channel revocations be handeled?
Is the platform to be treated as an ATDS or regulated technology under the TCPA or state laws? If not, who has the risk associated with that assumption? If so, who has the responsibility to assure compliance with applicable consent rules?
Is AI to be used? If not, there should be a clear representation to that effect. If so, there should be a clear articulation of whose responsibility it is to assure training and accuracy of AI model, disclosure of AI usage, and properly documented consents and AI-specific opt outs.
Is telemarketing at issue here? If so, who has responsibility for TSR recordkeeping requirements?
Is outreach to be recorded or reviewed in real time either by the calling party or by any third-party vendor? If so a massive number of state level privacy laws may be triggered– particularly the anti-wiretapping statutes like the California Invasion of Privacy Act. CRITICAL to spot these issues and assign compliance responsibilities between the parties.
These are just a handful of the issues that need to be thought through in virtually any deal. If you’re not working with experienced counsel that knows how to work through these issues you could be in SERIOUS trouble.
Just ask YouFit.
And trust me, suing for indemnity after facing a potentially business-ending lawsuit is not where you want to be. Set expectations. Work with good partners. And, most importantly, work with good counsel. And you should be able to avoid these issues in the first place.
Recent Rulings Against Trump Administration Funding Freezes
Shortly after taking office, President Trump froze funding already allocated to various parties, citing the Administration’s disapproval of issues including climate change and social equity. Additionally, executive agencies removed content discussing climate change from websites.
Unsurprisingly, these actions have been challenged in court. Parties whose funding was frozen sued on the grounds that the freezes violated statutes including the Administrative Procedure Act (APA) or their constitutional right to free speech. While cases remain pending in courts across the country, initial decisions show a pattern of courts rejecting the initial funding freezes and agencies agreeing to restore website content.
Below, we break down three recent decisions in The Sustainability Institute v. Trump, Woonasquatucket River Watershed Council v. US Department of Agriculture (USDA), and Northeast Organic Farming Association of New York v. USDA.
Background
Shortly after his inauguration, President Trump signed several orders that froze or terminated congressionally appropriated funds under the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA). The orders are Unleashing American Energy, Ending Radical and Wasteful Government DEI Programs and Preferencing, andImplementing the President’s “Department of Government Efficiency” Cost Efficiency Initiative(previously discussed here, here, and here). In addition, agencies ordered their staff to take down climate-related webpages from their sites.
Below, we discuss three cases where courts ruled against agencies who terminated funding or took down websites on the grounds that the actions violated the APA and First Amendment.
The Sustainability Institute v. Trump
The Sustainability Institute v. Trump involves a challenge in South Carolina federal court by nonprofit groups and local governments to a freeze to federal climate funding by agencies including the US Environmental Protection Agency (EPA), USDA, and the US Departments of Energy (DOE) and Transportation (DOT). The funding was appropriated by US Congress and contractually awarded to municipalities and nonprofits before the Trump Administration sought to freeze it.
The challengers alleged:
That the freeze orders violate the APA by terminating funding with no process or notice.
That denying funding violates the separation of powers principle of the US Constitution and the executive’s duty under Article II, Section 2 of the Constitution to “faithfully execute[]” the laws of the United States by failing to distribute funds appropriated by Congress.
That EPA violated their First Amendment right to free speech by engaging in viewpoint discrimination by ordering nonprofits to remove disfavored language from grants and threatening to revoke federal funding for groups that draw attention to climate change or equity issues.
In response, the government argued, without evidence, that termination decisions were supported by reasoning made on an individualized grant by grant basis, rather than because they were funded by the IRA and IIJA, and therefore were justified.
In April, the court ordered the five agencies to produce all documents from January 20 to present, relating to the freeze, pause, and/or termination of any of the grants identified by the plaintiffs in their motion for expedited discovery. EPA and other agencies responded by releasing over 130,000 pages of documents containing internal EPA emails, spreadsheets, and other materials pertaining to the freezes. Even with these productions, the plaintiffs argued there was no evidence that EPA and other agencies made grant-specific determinations to terminate funding.
Following these productions, the government conceded that, at least for this case, it would “not contest[] the merits of a majority of plaintiffs’ APA claims” that grant decisions were not made on an individualized basis as required, but they maintain the admission is “for purposes of this case only.” On May 20, the court entered judgment in favor of the plaintiffs on the APA claims, granted the plaintiffs’ request for a preliminary injunction, and denied staying injunctive relief requiring the funding to be reissued.
Woonasquatucket River Watershed Council v. USDA
In Woonasquatucket River Watershed Council v. USDA, a court reached a similar holding. This case involves a challenge by several nonprofit organizations to the freezing of funding appropriated under the IRA and IIJA. Last month, the court issued a nationwide preliminary injunction, ordering five federal agencies — DOE, US Department of Housing and Urban Development, USDA, US Department of the Interior, and EPA — to “take immediate steps to resume the processing, disbursement, and payment of already-awarded funding appropriated under” the IRA and IIJA, and prohibited those agencies from “freezing, halting, or pausing on a non-individualized basis the processing and payment” of such funding.
When EPA argued that it should be allowed to continue its freeze on nearly 800 IRA grants that had been terminated or had terminations pending, the court ordered that the grants be unfrozen before sending termination notices, and urged EPA to expedite the termination process for the grants it believes it can legally revoke. The case is now on appeal to the US Court of Appeals for the First Circuit.
Northeast Organic Farming Association of New York et al. v. USDA
Northeast Organic Farming Association of New Yorkalso reached a similar outcome. In that case, several nonprofits sued the USDA seeking to enjoin the government from erasing webpages focused on climate change. The plaintiffs’ complaint alleges that USDA violated the APA when it took down government websites containing climate content, including statutorily required climate-related policies, guides, datasets, and other resources, without advance notice or reasoned decision-making.
The USDA originally argued that the environmental groups had failed to show that relief was warranted and that the removals should stand because it was in the public’s interest to have government websites that reflect the current presidential Administration’s priorities. However, USDA recently reversed course and committed to restore climate change-focused webpages that were taken offline. Going forward, USDA stated that it would restore required websites and that it was committed “to complying with any applicable statutory requirements in connection with any future publication or posting decisions regarding the removed content, including, as applicable, the adequate-notice and equitable-access provisions of the Paperwork Reduction Act and the reading room provisions of [the Freedom of Information Act].” The parties are expected to submit a joint status report in early June.
Supreme Court Decides Against Reinstating Wilcox to NLRB as They Rule on Her Termination – NLRB Remains Without a Quorum
On May 22, 2025, the U.S. Supreme Court ruled National Labor Relations Board (“NLRB”) Member Gwynne Wilcox cannot return to work while she challenges President Donald Trump’s decision to terminate her without cause. The latest decision comes in a long line of court decisions since Trump terminated Wilcox in January 2025. The central issue revolves around 90-year-old precedent Humphrey’s Executor v. U.S., 295 U.S. 602 (1935) limiting the President’s power to fire employees at independent agencies.
The latest Supreme Court order is not a decision on the merits, although it is likely a sign of things to come. The order was split 6-3 along ideological lines, which likely indicates a majority of justices believe Humphrey’s Executor is no longer good law or is distinguishable as it relates to the NLRB. The Supreme Court stated it will hold off on issuing a full decision on the merits until the parties fully brief and argue the central issue. In the meantime, Wilcox remains removed from her position and the NLRB is left without a three-member statutory quorum to hear cases. The Supreme Court stated the stay “reflects our judgment that the government faces greater risk of harm from an order allowing a removed officer to continue exercising the executive power than a wrongfully removed officer faces from being unable to perform her statutory duty.”
We will continue to monitor future developments as the case is heard on the merits. Employers with questions about how the decision affects them should consult experienced labor counsel.
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NLRB Pulls a U-Turn on Remedial Relief in Settlement Agreements: New GC Issues Guidance Encouraging Efforts at Settlement
On May 16, 2025, the National Labor Relations Board’s (“NLRB”) Acting General Counsel, William B. Cowen, issued Memorandum GC 25-06, titled “Seeking Remedial Relief in Settlement Agreements,” that significantly loosens the requirements before NLRB Regions to approve settlements of unfair labor practice charges.
The Memorandum comes on the heels of Cowen’s February 14, 2025, Memorandum GC 25-05 which rescinded dozens of memos issued by his predecessor, former General Counsel Jennifer Abruzzo, including four memos requiring Regions to seek “full remedies” in settlement agreements. Former General Counsel Abruzzo indicated that this “full remedy” could include back pay, front pay, consequential damages “attributable” to the unfair labor practice, limitations on non-admission clauses, and extensive notice postings. For more information on these former settlement priorities, please see our prior blog post.
Acting GC Cowen’s guidance is a sharp departure from prior mandate to seek “full remedies.” GC 25-06 cautions that “if [the Board] attempt[s] to accomplish everything, we risk accomplishing nothing,” and reiterates to Regions that “diligent settlement efforts should be exerted in all…cases.” This is particularly important because, as the memo highlights, since 2019 anywhere from 96% to 100% of unfair labor practice charges were resolved through settlement.
To this end, GC 25-06 provides the following guidance to Regions – and parties – interested in drafting and entering settlement agreements to resolve pending unfair labor practice charges:
Default Language: The Memo limits the need to include default language regarding a parties’ failure to comply with the agreement to only those cases where such language is appropriate, such as when dealing with a recidivist violator, installment arrangement, or liquidated damages.
Non-Admission Clauses: Except for recidivist violators, the Memo expands the ability for the parties to include non-admission of liability clauses in settlement agreements, particularly before a Region has engaged in substantial trial preparation.
Unilateral Settlements: Regions may again use their discretion to approve unilateral settlements – i.e., settlements where the charging party does not consent. Previously, Regions needed to solicit the NLRB Division of Advice’s recommendation prior to approving such settlements.
Make-Whole Relief: While the Memo recognizes that Regions should continue to attempt to secure a full remedy for individuals, Regional Directors now have the discretion to approve settlements that provide for less than 100 percent of the total amount that could be recovered if the Region fully prevailed in litigation. Settlements that provide for less than 80 percent of the “relief reasonably anticipated to be recoverable” after litigation – a standard that is not further defined in the Memo – must be authorized by the NLRB Division of Operations-Management.
Acting GC Cowen also used the Memo to explain his interpretation of the Board’s decision in Thryv, Inc., 372 NLRB No. 22 (2022) (previously discussed here), which expanded the scope of remedies for ULPs by concluding that in all cases where make-whole relief is included as a remedy, the Board will order that “respondent compensate affected employees for all direct and foreseeable pecuniary harms.”
The Memo notes that the Thryv majority opinion did not address what a “direct or foreseeable pecuniary harm” is, expressly disclaiming a comparison to remedies awarded in tort cases. Cowen expressed his reliance on the dissent’s standard that foreseeable harms are those “where the causal link between the loss and the unfair labor practice is sufficiently clear.” Though not binding on the Board in future cases, this narrower formulation helps Regions and parties understand the standard that Regions will likely use to assess if the settlement proposed can be approved under the Acting GC’s new guidance.
Takeaways
This Memo represents an expected about-face from former General Counsel’s Abruzzo prior focus on securing complete make-whole relief in settlement discussions for alleged employer violations of the Act. The Memo takes a far broader view of the importance of seeking settlements in order to permit the NLRB to utilize its limited resources, by loosening the prior requirements that made it more difficult for employers to settle ULP charges.
Although Acting GC Cowen may soon be replaced at the Board as President Trump has nominated Crystal Carey to serve as the next NLRB GC, we expect this policy shift will remain in effect to some degree during the next GC’s tenure.
Finally, it is always important to remember that, unlike NLRB precedent or rulemaking, GC Memoranda—like the one discussed here—do not have the effect of changing the law, and, therefore, the Acting GC’s interpretation of Thryv, Inc. is not binding on the Board or courts. However, the GC Memoranda still provide important insight into the GC’s policy agenda and guidance on the manner in which Regions will review, draft and approve settlements.
We will continue to monitor developments at the NLRB.
Cardiac Monitors Found Subject to Sales Tax in California
The First District of the California Court of Appeal upheld the denial of Medtronic USA, Inc.’s (“Medtronic”) refund claim for California sales tax that it collected on sales of cardiac monitors. Medtronic USA, Inc. v. California Dep’t of Tax & Fee Admin., A169290 (Cal. Ct. App. Apr. 16, 2025).
The Facts: Medtronic manufactures two types of cardiac monitors, known as “RICMS,” which are implanted into a patient’s chest to monitor and collect information about the patient’s heart rhythm. Doctors then use the information to make decisions about and diagnose heart diseases of the patient.
For the periods at issue, Medtronic collected California sales tax on sales of its RICMS monitors. Subsequently, Medtronic requested a refund, maintaining that the RICMS devices met the definition of “medicines” that were statutorily exempt from sales tax.
The Law: California’s Revenue and Taxation Code Section 6369 exempts “medicines” from sales tax. The statute, in part, defines “medicines” as those furnished or prescribed for treatment of a human body by a licensed physician and “any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment, or prevention of disease[.]”
The statute states that “medicines” specifically include “articles . . . permanently implanted in the human body to assist the functioning of any natural organ, artery, vein, or limb and which remain or dissolve in the body,” including bone screws, bone pins, and pacemakers. However, the statute specifically excludes from the definition of “medicines” “articles that are in the nature of splints, bandages, pads . . . instruments, apparatus, contrivances, appliances, devices, or other mechanical, electronic, optical, or physical equipment….”
The Decision: Medtronic offered multiple arguments to support that the RICMS devices are exempt from sales tax—all of which the Court rejected. First, Medtronic argued that the RICMS devices are specifically exempt because they are “articles [that are] permanently implanted in the human body to assist the functioning of” the heart. The Court agreed that the RICMS devices are permanently implanted but did not agree that they “assist the functioning” of the heart. The Court determined that unlike bone screws, bone pins, and pacemakers—which by themselves assist an organ to function—the RICMS devices “serve a purely informational function that requires subsequent human intervention to ‘assist the functioning’ of the heart.” Because the RICMS devices are diagnostic in nature, the Court held that they do not fall squarely within the relevant statutory provision that exempts permanently implanted articles that assist any natural organ in functioning.
The Court also rejected Medtronic’s argument that the RICMS devices are not specifically excluded from the definition of “medicines.” Medtronic argued that because the relevant statutory provision only excludes those articles—such as “splints, bandages, and pads”—that are applied externally to the patient, the RICMS devices (which are implanted in the patient’s body) are not in the same nature of those external applications and are not excluded from “medicines.” The Court rejected Medtronic’s external versus internal distinction, noting that the statute’s generic definition of “medicines” includes devices that are “intended for use by external or internal application to the human body[.]” The Court reasoned that if the generic definition of “medicines” includes devices that are applied both externally and internally, it could not read a different provision of the same statute to make such distinction and to apply only to external devices.
In rendering its decision, the Court strictly construed the plain language of the statute to ultimately affirm the trial court’s decision that the RICMS devices do not meet the definition of “medicines” exempting them from California sales tax. The Court recognized that while the function of the RICMS devices touches several concerns of the statute exempting “medicines” from tax, “those touches are too tenuous to establish the firm basis needed for an exemption.”
A takeaway here is just because the spirit of a statute seems to apply to a taxpayer, it does not necessarily mean the statute actually applies. And we can ask whether the spirit of a statute creates an ambiguity, as to its words, that requires further consideration. However, the plain language of a statute generally will prevail. Whether the Court came to the correct conclusion in analyzing the plain language here seems questionable.
New York State Court Chops Retroactivity of Recent P.L. 86-272 Regulation
The New York State Supreme Court, which is a trial court, ruled that New York’s regulation that attempts to limit Public Law (“P.L.”) 86-272 in New York cannot operate retroactively. The court held that the regulation is not pre-empted by P.L. 86-272. American Catalog Mailers Association v. Department of Taxation & Finance, Index No. 903320-24 (NY Sup. Ct. Apr. 28, 2025).
P.L. 86-272 is a U.S. federal law that shields a seller of tangible personal property from imposition of a state’s net-income based tax when the company solicits orders in the state, conducts activities in the state that are ancillary to solicitation, or conducts de minimis (very small) amounts of activities in the state. Wisconsin Dep’t of Revenue v. Wm. Wrigley Jr. Co., 505 U.S. 214 (1992) (analyzing 15 U.S.C. 381 to 384 also known as P.L. 86-272). The law dates back to 1959 and, since its enactment by the U.S. Congress, it has been attacked by states—initially (and unsuccessfully) challenging Congress’ authority to enact the shield law and later (with mixed success) challenging the operation of the shield. The shield protects a minimum level of company activity (having in-state company representatives who solicit orders) and third-party selling activity (third parties are allowed to conduct selling activities on a company’s behalf). 15 U.S.C. 381(a) and (c). Congress enacted P.L. 86-272 because solicitation activity had been found by the Louisiana Supreme Court in 1958 to create a taxable state-nexus and, in 1959, the U.S. Supreme Court declined to hear appeals from the decisions, which together upset settled expectations in the business community.
In the latest round of state attacks on P.L. 86-272, New York State promulgated regulations in December 2023 that attempt to reduce the federal shield for New York State purposes back to January 1, 2015 (the date of New York’s statutory corporation tax reform) when companies use modern technology to interact with customers such as by: assisting customers via “chat” features on a corporation’s website; accepting a customer’s application for a credit card via its website; allowing New York residents to apply for non-sales jobs via its website; using Internet “cookies” to gather customer information via its website; remotely fixing or upgrading via the Internet previously purchased products; selling extended warranty plans via its website; contracting with a marketplace provider that facilitates sales via the provider’s online marketplace; or selling tangible personal property via the Internet and contracting with customers to stream videos or music to electronic devices for a fee. 20 NYCRR 1-2.10[i].
The American Catalog Mailers Association (“ACMA”) challenged the regulations by seeking a flat-out declaration that the 2023 regulations are preempted by federal law and improperly retroactive to 2015. The New York court found that P.L. 86-272 does not prohibit the State from identifying and regulating which Internet activities are construed by New York to constitute more than protected activity and ruled that there is no conflict between the regulations and P.L. 86-272. However, the court struck down the retroactive period. It noted that “‘for centuries our law has harbored a singular distrust of retroactive statutes’” and found that the ACMA’s members were “not forewarned of this retroactive application,” “had no opportunity to ‘alter their behavior in anticipation of the impact of [retroactive application of the challenged regulations]’[,]” and the nearly nine-year period of retroactivity “is excessive[.]” The ACMA New York case and the issues presented by the regulations are in their early stages. [1]
Possibly riding to somewhat of a rescue, federal legislators introduced bills in the House and Senate to amend P.L. 86-272 with respect to activities that are ancillary to solicitation. Such proposed changes may become part of the federal tax package that is currently in the reconciliation process. Stay tuned for more developments regarding P.L. 86-272!
[1] On May 13, 2025, the ACMA appealed the Decision and Order of the court to the Appellate Division, Third Department.