Federal Circuit Affirms District Court’s Obviousness Judgment on ImmunoGen Patent Application
1. Background: ImmunoGen’s Patent Application & Dispute
In 2014, ImmunoGen, Inc. (Immunogen) filed U.S. Patent Application No. 14/509,809 (the ’809 application).1 The ’809 application has three independent claims, all of which are directed to methods of treating ovarian and peritoneal cancers by administering an antibody drug conjugate (ADC) known as IMGN853 (i.e., mirvetuximab soravtansine) according to certain dosing regimens. Specifically, the ’809 application claims administering the ADC “at a dose of 6 milligrams (mg) per kilogram (kg) of adjusted ideal body weight (AIBW) of the patient.”2
According to the specification, IMGN853 was found to cause ocular toxicity (i.e., blurred vision, keratitis, etc.) at certain doses.3 The inventors of the ’809 application discovered that “the high Cmax and initial AUC values are not required for efficacy” and developed “a therapeutically effective dosing regimen that results in minimal adverse effects.”4
The patent examiner, however, rejected the claims of the ’809 application on various grounds, including obviousness and obviousness-type double patenting. The Patent Trial and Appeal Board affirmed the examiner’s rejections and ImmunoGen filed suit in the Eastern District of Virginia seeking a judgment that it was entitled to a patent under 35 U.S.C. § 145.
After a three-day bench trial,5 the district court agreed with the Patent Office and determined that the claims of the ’809 application were obvious and were not patentably distinct from subject matter claimed in other patents owned by ImmunoGen (and thus were not patentable under the doctrine of obviousness-type double patenting).6, 7 ImmunoGen appealed, and on March 6, 2025, the Federal Circuit affirmed the district court’s judgment on obviousness in a precedential opinion.
2. The Federal Circuit’s Decision
The Federal Circuit began its obviousness analysis by explaining that “Immunogen first argues that the district court erred in its motivation-to-combine analysis because it was undisputed that at the time of the invention, a person of ordinary skill in the art would not have known that IMGN853 caused ocular toxicity in humans.”8 According to ImmunoGen, because the problem that the inventors aimed to solve was not known (i.e., that IMGN853 can cause ocular toxicity), the dosing regimen recited in the claims of the ’809 application could not have been obvious.
The Federal Circuit disagreed, explaining that “it does not follow that a claimed solution to an unknown problem is necessarily non-obvious.”9 And the Federal Circuit explained “that the specific problem the inventors of the ’809 application purported to solve via the claimed dosing regimen was unknown does not necessarily mean that the dosing regimen itself was not obvious.”10 In other words, the motivation provided by the prior art does not need to match the alleged motivation of the inventors—what matters is that a POSA would have been motivated by the prior art to arrive at the claimed dose, regardless of the reason, and would have had a reasonable expectation of success.
Regardless, the district court found that ocular toxicity was a known problem in the context of immunoconjugates like IMGN853 and thus a POSA would have known to monitor patients for those side effects when administering IMGN853. The district court also explained that pre-clinical studies were conducted in rabbits in which they were given IMGN853, but that ocular toxicity was not found to be a side effect in those studies. But experts on both sides agreed that pre-clinical animal studies do not always translate to humans, thus those rabbit studies would not have deterred a POSA from monitoring for those side effects in humans. The Federal Circuit found no clear error in the district court’s reasoning on these points.11
The district court also found that a POSA would have been motivated to reduce the toxicity of IMGN853 by experimenting with the dosing regimen and that AIBW was a known dosing methodology for that purpose.12 ImmunoGen took issue with the fact that the district court did not explain why a POSA would have been motivated to use AIBW specifically, as opposed to other known dosing methodologies.
The Federal Circuit again disagreed with ImmunoGen and found no clear error in the district court’s reasoning. Specifically, the Federal Circuit agreed with the district court that a POSA would have been motivated to select a 6 mg/kg AIBW dose with a reasonable expectation of success in view of a prior art reference that taught a dose of IMGN853 based on total body weight (TBW) dosing.13 The Federal Circuit acknowledged that TBW and AIBW are different types of weight-based dosing methodologies, but explained that the prior art reference’s 6 mg/kg TBW dose of IMGN853 would have also led to a 6 mg/kg AIBW dose of IMGN853 in certain situations. And the Federal Circuit explained that “[a] doctor dosing a patient at his or her IBW with IMGN853 at a dose of 6 mg/kg TBW would necessarily be dosing that patient at 6 mg/kg AIBW, as claimed. This would be true regardless of whether a doctor knew of AIBW dosing”14
Finally, ImmunoGen argued that the district court erred because a POSA would not have had a reasonable expectation of success with respect to using a 6 mg/kg AIBW dose to ameliorate ocular toxicity. The problem with ImmunoGen’s argument was that “the claims are silent as to any ocular toxicity problem,” and thus “ImmunoGen’s framing of the reasonable-expectation-of-success analysis is inapt.”15 Here, “[t]he inquiry merely required the district court to determine whether the evidence established that a person of ordinary skill in the art would have had a reasonable expectation that dosing a human at 6 mg/kg AIBW would have been effective in treating ovarian and peritoneal cancers, as claimed.”16 Because the prior art taught that dosing regimen, as claimed, the claims of the ’809 application were found to be unpatentable as obvious.17
Conclusions and Takeaways
The Federal Circuit’s opinion offers important guidance on obviousness issues in the context of “method of treatment” and dose-regimen patents. Namely, the fact that a dosing-related “problem” is not expressly known in the prior art may not save an otherwise obvious patent, particularly when the claims are “silent” on the dosing issues. In that case, a POSA can be motivated (and have a reasonable expectation of success) by the prior art for reasons distinct from what motivated the inventors to develop the claimed dosing-regimen.
Indeed, the Federal Circuit made clear that “the obviousness inquiry is generally agnostic to the particular motivation of the inventors,”18 and that “any need or problem known in the field of endeavor at the time of invention and addressed by the patent can provide a reason for combining the elements in the manner claimed.”19 Also, a dosing patent may be obvious even if the prior art does not expressly teach the specific nuances of how to arrive at the claimed dose or dosing methodology (e.g., where the TBW dose necessarily meant the same thing as the AIBW dose in at least some patients). Ultimately, the Federal Circuit’s opinion underscores the fact intensive nature of the motivation and reasonable expectation of success elements in the context of obviousness.
Footnotes
[1] The ’809 application claims priority to a provisional application filed on October 8, 2013.
[2] See, e.g., ’809 application, claim 1.
[3] See, e.g., id. at ¶ [0009].
[4] Id. at Abstract, ¶ [0009].
[5] Before this bench trial, the district court previously ruled in the patent office’s favor after a motion for summary judgment was filed. But the Federal Circuit vacated and remanded the district court’s summary judgment decision because “the district court resolved numerous factual disputes against” ImmunoGen.
[6] ImmunoGen, Inc. v. Vidal, 653 F. Supp. 3d 258, 307 (E.D. Va. 2023).
[7] The district court also found the claim term “adjusted ideal body weight (AIBW)” indefinite after trial, but the Federal Circuit did not address indefiniteness issues on appeal.
[8] ImmunoGen, Inc. v. Stewart, No. 2023-1762, 2025 WL 715996, at *3 (Fed. Cir. Mar. 6, 2025).
[9] Id.
[10] Id.
[11] Id.
[12] Id. at *4.
[13] Id. at *5.
[14] Id.
[15] Id.
[16] Id.
[17] The Federal Circuit also noted that “the government further challenged the patentability of the claims under the doctrine of obviousness-type double patenting,” but “[o]n appeal, the parties agree[d] that that issue rises and falls with the issue of obviousness,” and therefore double patenting was not addressed further by the Federal Circuit. Id., n. 3.
[18] Id. at *12, citing KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 419 (2007)
[19] Id. at *7, citing KSR Int’l, 550 U.S. 420.
CAPITAL ONE SUED: Plaintiffs Allege 17 Separate Causes of Action in New Website Tracking Case
Shah v. Cap. One Fin. Corp., No. 24-CV-05985-TLT, 2025 WL 714252 (N.D. Cal. Mar. 3, 2025) has raised some serious allegations against Capital One (“Defendant”), accusing the financial giant of secretly intercepting and sharing sensitive personal information through third-party tracking technologies on its website.
According to a group of plaintiffs, led by the somewhat seasoned Vishal Shah (see INVISIBLE DATA, REAL CONSEQUENCES: Navigating the IP Consent Dilemma – CIPAWorld), these trackers “instantaneously and surreptitiously” captured communications between users and the site, sending personal details to companies like Google, Microsoft, Adobe, Facebook, and others. The information allegedly shared included everything from employment and bank account details to credit card application status and browsing activities.
The Plaintiffs claim they never authorized sharing of their personal and financial data with these third or fourth parties for marketing and sales purposes. In the complaint, the Plaintiffs highlight specific privacy concerns, particularly with the targeted advertising section of Capital One’s Privacy Policy. The Policy states:
“We and our third-party providers may collect information about your activities on our Online Services and across different websites, mobile apps, and devices over time for targeted advertising purposes. These providers may then show you ads, including across the internet and mobile apps, and other devices, based in part on the information they have collected or that we have shared with them.”
The Plaintiffs argue that Capital One’s practices go well beyond what they ever agreed to in the company’s Privacy Policy. While the Privacy Policy does include an option to opt out of targeted advertising, this opt-out only applies to the “specific browser or device” used, meaning users may allegedly still be tracked across other platforms.
In total, the Complaint outlines a staggering 17 different causes of action, ranging from constitutional privacy violations to property claims. In response to these allegations, Capital One has filed a motion to dismiss the complaint in its entirety, along with all 17 claims brought forth by the Plaintiffs.
So, buckle in, and let’s go through them.
Threshold Issues
Defendant sought to dismiss the entire Complaint for two overarching reasons: (1) the Complaint’s exhibits conflict with Plaintiffs’ key allegations and (2) Plaintiffs fail to allege that Defendant disclosed Plaintiffs’ personal information and financial information.
Conflict between allegations of unauthorized disclosure and Privacy Policy attached to the Complaint.
Defendant contended that Plaintiffs’ allegations directly conflict with Defendant’s Privacy Policy because Defendant discloses that it releases customer information for third party marketing. However, the Court noted that while the Privacy Policy states that it collects information about a customer’s internet activities, it does not state that it releases that customer’s personal information such as employment information and credit card preapproval or approval status, which Plaintiffs allege is collected and shared. Therefore, the Court found that the Privacy Policy did not directly conflict with Plaintiffs’ allegations.
Defendant also argued that Plaintiffs consented to the disclosure of their personal information, that Defendant provided sufficient opt out instruction, and that the disclosures did not involve fourth parties. The Court found that the issue of consent was a factual question and declined to decide it at the pleadings stage.
Sufficiency of allegations as to disclosure of personal and financial information.
For the second threshold issue, Defendant argued that Plaintiffs failed to allege specific disclosures of their personal and financial information. The Court found that they did. For instance, Plaintiffs alleged that they interacted with Defendant’s website, which they alleged contained third party trackers. They alleged that they put their personal and financial information, including employment information, bank account information, citizenship status, and credit card preapproval or eligibility, into Defendant’s website and then received targeted third- and fourth-party marketing ads. They also alleged that, as a result of using Defendant’s website, their information was transmitted to third party trackers such as Google, Microsoft, and Meta, without their consent. The Court found these factual allegations sufficient to allege the disclosure of Plaintiff’s personal information and denied Defendant’s motion to dismiss as to the second threshold issue.
Plaintiffs’ Negligence Claims.
Defendant first argued that Plaintiffs have not identified a duty owed by Defendant arising under the Gramm-Leach-Bliley Act (“GLBA”) or the Federal Trade Commission (“FTC”) Act, because neither statute provides a private right of action. The Court dismissed this argument as the Defendant conflated negligence and negligence per se, with only the latter being concerned with a statutorily identified duty.
Further, the Court evaluated the California factors for determining whether a valid duty of care exists and found that Plaintiffs did allege such a duty by alleging that they placed trust in Defendant to protect their personal information, which Defendant then disclosed.
Next, the Court turned to the economic loss doctrine, which prohibits recovery of purely pecuniary or commercial losses in tort actions. While Defendant argued that the economic loss rule bars Plaintiffs’ negligence claims, the Court found that Plaintiffs also plead non-economic harms such as lost time and money incurred to mitigate the effect of the use of their information. Accordingly, the Court denied Defendant’s motion to dismiss as to negligence.
Plaintiffs’ Negligence Per Se Claims.
The doctrine of negligence per se creates an evidentiary presumption that affects the standard of care in a cause of action for negligence. Defendant next argued that negligence per se is not a standalone cause of action. The Court agreed and held that because Plaintiffs brought a negligence per se cause of action in addition to a negligence claim, the negligence per se claim was not proper. Accordingly, the Court granted Defendant’s motion to dismiss the negligence per se claim without leave to amend.
Plaintiffs’ Invasion of Privacy Claim under the California Constitution.
To state a claim for invasion of privacy under the California Constitution, plaintiffs must show that they possess a legally protected privacy interest, they maintain a reasonable expectation of privacy, and the intrusion is so serious as to contribute an egregious breach of social norms.
The Court determined that regardless of whether Plaintiffs possessed a legally protected privacy interest or maintained a reasonable expectation of privacy in this case, the alleged disclosure of employment information, bank account information, and preapproval or approval for a credit card does not rise to the level of an “egregious breach of social norms.” The Court granted Defendant’s motion to dismiss as the California constitutional privacy claim without prejudice.
Plaintiffs’ Comprehensive Computer Data Access and Fraud Act (“CDAFA”) and the Unfair Competition Law (“UCL”) Claim.
The CDAFA prohibits certain computer-based conduct such as knowingly and without permission accessing or causing to be accessed any computer, computer system, or computer network. The CDAFA provides that only an individual who has suffered damage or loss due to a violation of the statute may bring a civil action. Similarly, the UCL prohibits “unlawful, unfair or fraudulent business act or practice.” To have standing under the UCL, a plaintiff must establish that they suffered an injury in fact and lost money or property as a result of the wrongful conduct.
Here, Plaintiffs stated that they had a property interest in their personal information and that they lost money and property when Defendant disclosed their personal information to third parties. However, the Court determined that Plaintiffs’ personal information does not constitute property. Additionally, Plaintiffs did not plead that they “ever attempted or intended to participate in the market for the information” Defendant allegedly disclosed, or that they derived economic value from that information. Further, the Court held that even an argument that Plaintiffs experienced a diminution of the value of their private and personal information would not confer standing. Accordingly, the Court granted Defendant’s motion to dismiss for lack of standing as to the CDAFA and the UCL without prejudice.
Plaintiffs’ California Consumer Privacy Act (“CCPA”) Claims.
The CCPA imposes a duty on businesses to implement and maintain reasonable security practices to protect consumers’ personal information. While it is generally enforced by the California Attorney General, it also provides a limited private cause of action for any consumer whose personal information is subject to unauthorized access or disclosure as a result of a security breach. Courts, however, have also permitted CCPA claims to survive a motion to dismiss in cases where the plaintiff does not allege a data breach, but instead alleges that the defendants disclosed plaintiff’s personal information without consent by failing to maintain reasonable security practices.
In this case, because Plaintiffs allege that Defendant allowed third parties such as Google and Microsoft to embed trackers on its website and that these trackers transmitted Plaintiffs’ personal information, the Court held that Plaintiffs need not allege a data breach. Accordingly, the Court denied Defendant’s motion to dismiss as to the CCPA claim.
Plaintiffs’ California Customer Records Act (“CRA”) Claims under §§ 1789.81.5 and 1798.82 of the California Civil Code.
The CRA regulates businesses with regard to treatment and notification procedures relating to their customers’ personal information. It requires businesses to “maintain reasonable security procedures and practices appropriate to the nature of the information” and to protect “personal information from unauthorized access, destruction, use, modification, or disclosure.”
The Court first addressed Plaintiffs’ CRA claim under § 1789.81.5. Defendant argued that because it is a financial institution, it is exempt from liability for any violations under this provision. See Cal. Civ. Code § 1798.81(e)(2) (exempting financial institutions from liability under section 1798.81.5). Plaintiffs, however, alleged that Defendant is a business within the meaning of § 1798.81.5(b). The Court sided with Defendant and granted its motion to dismiss without leave to amend as to Plaintiffs’ § 1789.81.5 claims.
The Court next addressed Plaintiffs’ CRA claim under Section 1798.82, which requires a business to disclose a breach of security systems to customers. Plaintiffs allege that the CRA applies because Defendant knew that Plaintiffs’ information was acquired by unauthorized persons and failed to disclose it to Plaintiffs. However, there must be a breach of security to show a CRA claim. See Cal. Civ. Code § 1798.82(a) (stating that a person or business shall “disclose a breach of security of the system following discovery or notification of the breach”). Further, a claim under section 1798.82 is not actionable for the breach itself but instead for the “unreasonably delayed notification,” so Plaintiffs must allege when the breach occurred. Here, the Court held that Plaintiffs not to only failed to allege that there was a breach of security but also failed to allege when Defendant became aware of the alleged breach.
Accordingly, the Court granted Defendant’s motion to dismiss as to the CRA section 1798.82 claim without prejudice.
Plaintiffs’ Breach of Express Contract Claim.
The Court found that Plaintiffs did not state a claim as to the breach of express contract because, while they alleged that they entered a contract with Defendant, they failed to cite to any specific section of the contract that Defendant allegedly violated. Instead, Plaintiffs stated generally that Defendant breached its express contract with Plaintiffs “to protect their nonpublic personal information.” Questioning where in the contract Defendant agreed to protect their nonpublic personal information or when Defendant explicitly promised not to disclose their data, the Court granted Defendant’s Motion to Dismiss as to the breach of express contract without prejudice.
Plaintiffs’ Breach of Implied Contract Claim.
Plaintiffs alleged that they had an implied contract with Defendant that it would keep their personal information confidential. However, once again, Plaintiffs did not state a claim because they failed to expand on the nature of the implied contract. Plaintiffs also fail to differentiate the express contract claim from the implied contract claim – the Court noted that Plaintiffs must elaborate on whether the implied contract involves separate promises from the express contract because Plaintiffs cannot allege both an express contract and an implied contract on the same matter. Accordingly, the Court granted Defendant’s motion to dismiss as to breach of implied contract without prejudice.
Plaintiffs’ Breach of Confidence Claim.
For the same reason as above, the Court held that Plaintiffs do not state a claim as to breach of confidence because they allege the existence of both an express and implied contracts, and the express contract precludes the breach of confidence claim. The Court dismissed the Plaintiffs’ claim without prejudice.
Plaintiffs’ Unjust Enrichment Claim.
The Court acknowledged the “somewhat unclear” nature of unjust enrichment claims in California, but, noting that both the Ninth Circuit and the California Supreme Court have allowed independent claims for unjust enrichment to proceed, allowed Plaintiffs claim to proceed basis the allegations that Defendant benefited from using Plaintiffs’ information and that Plaintiffs’ remedies at law are inadequate.
Plaintiffs’ Bailment Claim.
Bailment is generally defined as the deposit of personal property with another, usually for a particular purpose. The Court held that Plaintiffs have not alleged a deposit of personal property that falls within the scope of bailment because they only allege that they deposited their personal information. The Court cited Worldwide Media, Inc. v. Twitter, Inc., 17-cv-07335-VKD, 2018 WL 5304852 (N.D. Cal. Oct. 24, 2018) and In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 903 F. Supp. 2d 942 (S.D. Cal. 2012), both finding that personal information is not something that can be delivered or taken custody of and later returned. Accordingly, the Court granted Defendant’s motion to dismiss as to bailment with prejudice.
Plaintiffs’ Claim for Declaratory Judgment.
The Court acknowledged Defendant’s contention that the declaratory judgment claim is duplicative of other claims but held that Plaintiffs may still bring it as it is predicated on their negligence claim. Therefore, the Court denied Defendant’s motion to dismiss as to declaratory judgment.
Plaintiffs’ Electronic Communications Privacy Act (“ECPA”) Claim.
The ECPA prohibits unauthorized interception of an electronic communication. To state a claim, a plaintiff must allege that the defendant intentionally intercepted the contents of plaintiff’s electronic communications using a device. The one-party consent exemption provides that it is not unlawful for a person to intercept a wire, oral, or electronic communication when that person is a party to the communication or when a party to the communication has consented to interception, unless the interception is to commit a crime or a tort.
Defendant argued that the “one-party consent exemption” applies because Defendant was a party to the communications. However, because Plaintiffs alleged that Defendant intercepted the contents of the communications for an unauthorized purpose, which resulted in tortious acts, the Court held that the one-party exemption does not apply.
Another reason that the one-party exemption does not apply is because the issue of whether Plaintiffs consented to Defendant’s conduct is at the center of the dispute – and this is a factual determination. Accordingly, the Court denied Defendant’s motion to dismiss as to the ECPA.
Plaintiffs’ CIPA Claims
Plaintiffs allege that Defendant violated both §§ 631 and 632 of CIPA.
Plaintiffs’ § 631 claims.
§ 631(a)(2) applies to anyone who reads, attempts to read, or to learn the contents of a communication while it is in transit and without the consent of all parties to the communication. Defendant argues that Plaintiffs’ claims under § 631 fail because Plaintiffs consented to the data sharing practices in the Privacy Policy, do not allege that any third party read a communication “in transit,” and do not allege that Defendant disclosed “contents” of a communication.
As for the first issue, because this once again involves factual determination of consent, the Court held that Plaintiffs’ allegations were sufficient for the pleadings stage. The Court also held that Plaintiffs plausibly alleged that Defendant intercepted communications while they were in transit by describing how Defendant allegedly installed third-party trackers on its website. Finally, Plaintiffs stated that the communication included personal information, which is a “content” under CIPA. As a result, the Court found that Plaintiffs sufficiently stated a claim as to § 631.
Plaintiffs’ § 632 claims.
§ 632 prohibits intentionally and without consent using an “electronic amplifying or recording device” to eavesdrop upon or record confidential communication. Again, because this issue hinges on whether Plaintiffs consented to Defendant’s disclosure, the Court found that Plaintiffs allegations are sufficient for purposes of a motion to dismiss.
Accordingly, the Court denied Defendant’s motion to dismiss as to the CIPA.
Plaintiffs’ Stored Communications Act Claim.
The Stored Communications Act created a private right of action against anyone who intentionally and without authorization (or in excess of their authorization) accesses a facility through which an electronic communications service is provided. The Stored Communications Act, however, only provides liability for a provider that is a “remote computing services” or “electronic communication services.” Plaintiffs alleged in the complaint that Defendant is an electronic communication service because it “intentionally procures and embeds” Plaintiffs’ personal information through the tracking technology on Defendant’s website. However, the Court held that Defendant is not an electronic communication service because its website does not allow customers to send and receive messages to third parties. The Court compared the situation here to that in In re Betterhelp, Inc., No. 23-cv-01033-RS, 2024 WL 4504527, at *2 (N.D. Cal. Oct. 15, 2024), where the defendant was found to be an electronic communication service because defendant’s customers communicated with third parties through the “conduit” of defendant’s websites. Instead, Plaintiffs here themselves stated that they were unaware of the presence of the trackers, and did not allege that they communicated with the third parties. Therefore, because Defendant’s website does not allow customers to send and receive messages to third parties, the Court held Defendant is not an electronic communication service.
Accordingly, the Court granted Defendant’s motion to dismiss as to the Stored Communications Act with prejudice.
Plaintiffs’ Computer Fraud and Abuse Act (“CFAA”) Claim.
The CFAA makes intentionally accessing a computer without authorization a federal crime. It imposes a civil liability when someone “knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access” unless the “object of the fraud” is less than $5,000 in any 1-year period. Plaintiffs here did not state a claim as to CFAA because they did not allege with specificity a loss of $5,000. The complaint only states that “secret transmission” of Plaintiffs’ personal information caused them loss, but it does not go into further detail. The alleged loss is therefore speculative, and insufficient for purposes of the CFAA. Accordingly, the Court granted Defendant’s motion to dismiss as to the CFAA claim without prejudice.
Takeaways
My first takeaway – if you got through all that, congratulations on your attention span. Secondly, a recurring theme in the Court’s extensive analysis is its refusal to determine issues of consent at the pleadings stage. This is nothing new or groundbreaking, the issue of consent unquestionably requires a factual investigation and is rarely, if ever, conclusive as grounds for a motion to dismiss.
On the brighter side for Capital One, the Court did agree to dismiss three of the Plaintiffs’ claims with prejudice, meaning the Plaintiffs cannot amend these claims and bring them again. These were Plaintiffs’ claims under negligence per se, bailment, and the Stored Communications Act.
The Court also granted the motion to dismiss as to Plaintiffs’ claims for invasion of privacy under the California Constitution, CDAFA, UCL, breach of express contract, breach of implied contract, breach of confidence, and CFAA, albeit with leave to amend. The California Constitution and CDAFA claims are notable for the Courts findings that the alleged disclosures do not amount to an “egregious breach of social norms”, and that Plaintiffs’ personal information does not constitute property. This fits into a trend of Courts being somewhat hesitant to expand the scope of privacy standing where there is no “tangible” harm. Blake digs into this here: READ ALL ABOUT IT: Reuters Faces Privacy Lawsuit But The Court Finds No Story To Tell – CIPAWorld.
You can read the order here: Shah v. Cap. One Fin. Corp., No. 24-CV-05985-TLT, 2025 WL 714252 (N.D. Cal. Mar. 3, 2025)
Under New York Law a Recourse Provision Bars Most Claims Except for Fraud
In Iberdrola Energy Projects v. Oaktree Capital Management L.P., 231 A.D.3d 33, 216 N.Y.S.3d 124, the Appellate Division for the First Department ruled that a nonrecourse provision in a contract barred a plaintiff’s causes of action for tortious interference with contract, unjust enrichment, and statutory violations of a trade practices statute, but not for fraud.
This case arose from a contract related to the construction of a power plant in Salem, Massachusetts. A choice-of-law provision dictated that the contract was governed by and construed in accordance with New York law. Defendants created a special-purpose entity (SPE) to serve as the company charged with constructing the new plant. Defendants owned, controlled, and managed the SPE and were the SPE’s majority and controlling equity holders. The majority of the SPE’s board of directors and officers were also defendants’ employees. The SPE retained plaintiff to be the project’s engineering, procurement, and construction contractor.
The contract permitted the SPE to terminate the contract for convenience or for a material breach by the contractor. In the event of termination for cause, the owner would incur substantial payment obligations; a termination for convenience would not. The contract required the contractor to post a standby letter of credit in the amount of approximately $140 million as security for the contractor’s performance. The owner was permitted to draw on the letter of credit only “upon any Contractor’s breach or failure to perform, when and as required, any of its material obligations under the Contract.” The contract contained a nonrecourse provision that provided that,
[Owner’s] obligations hereunder are intended to be the obligations of Owner and of the corporation which is the sole general partner of Owner only and no recourse for any obligation of Owner hereunder, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director or Affiliate, as such, past, present or future of such corporate general partner or any other subsidiary or Affiliate of any such direct or indirect parent corporation or any incorporator, shareholder, officer or director, as such, past, present or future, of any such parent or other subsidiary or Affiliate.
The project was plagued with delays and cost overruns. When the project was 98% complete, the SPE terminated for cause. The SPE drew the $140 million afforded by the letter of credit, retained a replacement contractor, and completed the remaining work. The original contractor filed for arbitration against the SPE, claiming that the SPE breached the contract, engaged in tortious conduct, violated the Massachusetts Unfair Trade Practice Act, and sought $700 million in damages. The SPE appeared in the arbitration proceeding and asserted counterclaims.
The arbitration panel determined, among other things, that the SPE lacked cause to terminate the contract and that it terminated the contract as a pretense to draw on the letter of credit and issued a final award in the contractor’s favor for $236,404,377. That award was confirmed in New York, and the SPE filed for bankruptcy. The original contractor filed a civil action in New York, bringing the same claims against the defendants, but all counts except for fraud were dismissed based on the nonrecourse provision.
The New York lower court enforced the plain meaning of the nonrecourse provision, which sophisticated commercial parties negotiated. The nonrecourse provision is a contractual limitation on liability, which, like other exculpatory clauses, is generally enforceable provided it does not violate a statute or run afoul of public policy. The court determined the provision to be “as broad as it is clear: no liability could be imposed upon various individuals and entities for “any claim based on the contract or otherwise in respect thereof.” Plaintiff’s causes of action for tortious interference with contract, unjust enrichment, and violations of Massachusetts’s deceptive trade practices statute were all hinged or predicated on conduct taken under or in contravention of the contract. Since these causes of action were all related to or connected with the contract, they were all barred by the nonrecourse provision. The court showed no sympathy for the plaintiff contractor and its likely inability to recover any part of the judgment it was holding. The plaintiff knew it was entering a very large contract with an SPE and should have known of the breadth of the nonrecourse provision. The takeaway appears to be: Beware of nonrecourse provisions with SPEs.
Texas Federal Court Holds that Dodd-Frank Act Whistleblower Protection Law Does Not Authorize Jury Trials [Video]
On February 20, 2025, Judge Horan held in Edwards v. First Trust Portfolios LP that a Dodd-Frank whistleblower retaliation plaintiff is not entitled to a jury trial. This opinion underscores the importance of bringing additional claims that can be heard by a jury, including a Sarbanes-Oxley (SOX) whistleblower retaliation claim.
Aaron Edwards filed suit against his former employer, First Trust, alleging that he was terminated in retaliation for raising concerns about a gift program. Edwards claimed that First Trust’s practice of only awarding gifts to financial advisors at the end of the year who sold the most First Trust products during that year constituted an illegal sales contest under SEC regulations. He brought claims under the whistleblower protection provisions of SOX, the Dodd-Frank Act, and the Consumer Financial Protection Act (CFPA). After Judge Horan denied First Trust’s motion for summary judgment, First Trust moved to strike Edwards’ jury demand for his Dodd-Frank retaliation claim.
In contrast to an express provision in SOX clarifying that a SOX plaintiff “shall be entitled to trial by jury,” the whistleblower protection provision of the Dodd-Frank Act does not expressly provide for a right to a jury trial, so this dispute hinges on whether Dodd-Frank Act retaliation remedies are legal or equitable in nature (if the remedies are legal, then there is a right to a jury trial under the Seventh Amendment). Per the Supreme Court’s decision in SEC v. Jarkesy, the key factor determining “whether a monetary remedy is legal is if it is designed to punish or deter the wrongdoer, or, on the other hand, solely to restore the status quo.” 603 U.S. 109, 123 (2024).
A prevailing whistleblower in a Dodd-Frank whistleblower retaliation action is entitled to reinstatement, double back pay with interest, and litigation costs, including attorneys’ fees. Edwards argued that double back pay damages are legal in nature because they “go beyond restoring the status quo to deter and punish Dodd-Frank violators” and that Dodd-Frank’s doubling of back pay transmutes it from an equitable to legal remedy because it “serves to deter future misconduct by litigants.”
First Trust, however, asserted that under Fifth Circuit precedent, Dodd-Frank retaliation remedies, including reinstatement and back pay, are equitable in nature. Relying on a Georgia district judge decision, Judge Horan held that reinstatement and back pay are generally recognized as equitable remedies and that the automatic doubling of back pay does not change it from an equitable remedy to a legal one. See Pruett v. BlueLinx Holdings, Inc., No. 1:13-cv-02607-JOF, 2013 WL 6335887 (N.D. Ga. Nov. 12, 2013).
Since Edwards is already trying his SOX claim before a jury, and the motion to strike was filed close to trial, Judge Horan held that a binding jury will be empaneled for Edwards’s SOX claim and the same jury will serve as an advisory jury for Edwards’s Dodd-Frank claim.
Strategic Considerations: Why a Whistleblower Should Bring Both SOX and Dodd-Frank Whistleblower Retaliation Claims
Where a whistleblower that suffered retaliation qualifies for protection both under SOX and the Dodd-Frank Act, we recommend bringing both claims uto maximize the potential recovery. There are four advantages to bringing a SOX claim in addition to a Dodd-Frank claim:
Uncapped special damages: The Dodd-Frank Act authorizes economic damages and equitable relief but does not authorize non-economic damages. In contrast, SOX authorizes uncapped “special damages” for emotional distress and reputational harm.
Exemption from mandatory arbitration: SOX provides an unequivocal exemption from mandatory arbitration, but Dodd-Frank claims are subject to arbitration.
Preliminary reinstatement: If an OSHA investigation concludes that an employer violated the whistleblower protection provision of SOX, OSHA can order the employer to reinstate the whistleblower. However, there is some dispute as to whether an OSHA order of reinstatement is enforceable. See, e.g., Gulden v. Exxon Mobil Corp., 119 F.4th 299 (3d Cir. 2024).
Favorable causation standard: A far more generous burden of proof (“contributing factor” causation under SOX, rather than “but for” causation under Dodd-Frank).
There are four advantages to bringing a Dodd-Frank claim in addition to a SOX claim:
Double back pay: Dodd-Frank authorizes an award of double back pay (double lost wages) plus interest, whereas SOX authorizes ordinary back pay with interest along with other damages. Both statutes authorize reinstatement and attorney fees.
Longer statute of limitations: Whereas the statute of limitations for a SOX retaliation claim is just 180 days, the statute of limitations for a Dodd-Frank retaliation claim is a minimum of 3 years after the date when facts material to the right of action are known or reasonably should have been known by the whistleblower.
Broader scope of coverage: SOX whistleblower protection applies primarily to employees of public companies and contractors of public companies. The Dodd-Frank prohibition against whistleblower retaliation applies to “any employer,” not just public companies.
No administrative exhaustion: In contrast to SOX, Dodd-Frank permits a whistleblower to sue a current or former employer directly in federal district court without first exhausting administrative remedies at DOL.
Whistleblower Protections for SEC Whistleblowers
Read More Here
No Harm, No Foul: Greenwashing Lawsuit Dismissed for Lack of Article III Standing
It is well-settled that under Article III of the Constitution, United States federal courts are limited to trying “cases and controversies.” Moreover, a case or controversy exists only if a plaintiff has standing to file the suit, requiring the plaintiff to demonstrate injury in fact, causation, and redressability. On February 19, 2025, the United States District Court for the Southern District of Florida issued a noteworthy decision and dismissed a putative class action lawsuit filed against lululemon athletica inc., and lululemon usa inc. (“Lululemon”) without leave to amend for lack of Article III standing.
A group of consumers filed the lawsuit alleging that Lululemon made “false, deceptive, and misleading representations” regarding the company’s products and actions as they relate to environmental initiatives in accordance with the company’s “Be Planet” campaign. Gyani v. Lululemon USA Inc., et al., 2025 WL 548405, *1 (S.D. Fla.). For example, the plaintiffs alleged that Lululemon’s website stated that it is “committed to making products that are better in every way-for…the planet.” Id. at *2. In fact, according to the plaintiffs, “Lululemon is responsible for significant GHG gas emissions, landfill waste, and release of microplastics into the environment.” Id. The plaintiffs claimed that they relied on various misrepresentations from the “Be Planet” campaign in deciding to purchase Lululemon products. Id.
The court dismissed plaintiffs’ claims, which were premised on alleged violations of various states’ consumer protection statutes. First, the court found the plaintiffs failed to adequately plead an injury in fact to support claims for monetary damages. The court highlighted that “mere allegations of having paid a price premium are insufficient — a plaintiff must tie the value of the product to any purported misrepresentations.” Id. at 4. On this point, the court found Valiente v. Publix Super Mkts., Inc., 2023 WL 3620538 (S.D. Fla. May 24, 2023) instructive. In Valiente, a plaintiff allegedly purchased cough drops due to the “phrase ‘honey lemon,’ the ‘pictures of these ingredients,’ and the statement that the product ‘soothes sore throats.’” The court dismissed the plaintiff’s claim for lack of injury because the plaintiff failed to allege that the cough drops were in any way “defective” or “worthless.” Id. at *5. The court in Gyani found the facts before it similar in that the plaintiffs’ complaint failed to allege Lululemon’s products were defective or worthless. 2025 WL 548405, *4. Moreover, the plaintiffs failed to allege deceptive or unfair acts as to the products themselves, failing to connect the allegedly problematic “Be Planet” statements to the price premium the plaintiffs alleged that they paid for Lululemon’s products. Id. at *5.
Next, the court held that the plaintiffs failed to plead an injury in fact to support a claim for injunctive relief. The court relied on Williams v. Reckitt Benckiser LLC, 65 F.4th 1243 (11th Cir. 2023) and Piescik v. CVS Pharmacy, Inc., 576 F. Supp. 3d 1125 (S.D. Fla. 2021), where the plaintiffs alleged that they “would like” to purchase the company’s products in the future “if” the defendant improved the products at issue. In Gyani, the complaint similarly alleged that the plaintiffs “would like” to purchase Lululemon’s products, however, “only if” the plaintiffs “can rely on Lululemon ‘to be truthful in their marketing statements regarding the sustainability and environmental impact of Lululemon’s products and actions.’” 2025 WL 548405, *5. The court held that such allegations failed to demonstrate harm that was actual or imminent.
Finally, the court refused to grant leave to amend. Id. at *6. The court held that the plaintiffs’ request was procedurally improper in that the plaintiffs embedded the request in their opposition brief rather than making the request via motion. Id.
Retailers and manufacturers concerned with risk associated with a growing number of environmental or “green” marketing claims will certainly welcome the Gyani decision. The ruling emphasizes that plaintiffs must demonstrate concrete economic injury linked to the at-issue marketing claims to pursue monetary relief as well as a real and immediate threat of future harm to seek injunctive relief; general allegations relating to a price premium and an equivocal desire to make future purchases are not enough. However, the decision certainly will not put an end to putative class actions asserting greenwashing claims. If faced with a similar lawsuit, retailers and manufacturers should consider whether to seek dismissal at the pleading stage when the complaint does not tie the alleged misrepresentations to the value of the product and/or does not adequately allege any real threat of future harm.
SuperValu Wins False Claims Act Case with a “No Harm, No Foul” Jury Verdict
On March 5, 2025, SuperValu, Inc. (SuperValu), a grocery store chain that operates in-store pharmacies, was cleared of liability by a Central District of Illinois federal jury—finally quashing whistleblower claims that the company improperly over-billed the government and violated the False Claims Act (FCA). This jury verdict came after a long 14-year battle, which included a Supreme Court reversal of lower court decisions on the FCA’s scienter standard.
In 2006, SuperValu’s pharmacies began discounting generic drugs through a price-matching system (if a customer provided evidence of a cheaper price for certain drugs available at another pharmacy, SuperValu would match that price) and other loyalty programs. Many of SuperValu’s customers took advantage of these programs. However, when the company reported its “usual and customary” price to federal and state governments for reimbursement, SuperValu reported the much higher retail price of the drugs. After these programs ended, whistleblowers brought suit against SuperValu under the FCA’s qui tam provision. In the qui tam actions, plaintiffs alleged that SuperValu offered discounted pricing through these programs to so many customers that the discounted price was effectively their “usual and customary” price. As SuperValu did not offer the discounted pricing to Medicare and Medicaid, which were required by law to be charged the “usual and customary price,” the whistleblowers alleged SuperValu overcharged the government for years when seeking reimbursements for prescription drugs.
In 2020, the District Court granted SuperValu’s motion for summary judgment, holding that SuperValu had submitted false claims as defined under the FCA, but concluding that SuperValu did not possess the required scienter necessary to establish FCA liability. The government appealed to the Seventh Circuit, which affirmed the lower court’s decision. The Seventh Circuit applied a two-part test to determine if SuperValu knowingly or recklessly submitted false claims:
Was the defendant’s interpretation of law objectively reasonable (including not being ruled out by prior precedent); and
If the defendant’s interpretation was not objectively reasonable, did the defendant have a subjective belief the claims they were submitting were false?
If the defendant’s interpretation was not objectively reasonable, and the defendant had a subjective belief it was submitting false claims, the defendant knowingly or recklessly submitted false claims. The Seventh Circuit held that SuperValu’s interpretation of the law was objectively reasonable and, therefore, SuperValu did not possess the required scienter under the FCA.
In 2023, the Supreme Court reversed the Seventh Circuit, holding that, whether a defendant possessed scienter sufficient to satisfy the FCA requirements depended solely on that defendant’s subjective knowledge—doing away with the Seventh Circuit’s “objectiveness” test. Focusing on the plain language of the FCA, the Supreme Court held that, to prove a false claim, two elements must be satisfied: (1) the claim that was submitted was, in fact, false and (2) the defendant subjectively believed the claim was false.
Nearly fourteen years after its initial filing, the case returned to the District Court on remand from the Supreme Court for a jury trial. While the jury ultimately found that SuperValu did knowingly submit false claims under the Supreme Court’s scienter standard, the question of whether the jury would impose liability came down to whether the federal or state governments suffered damages due to SuperValu’s false claims. In a pre-trial motion, SuperValu argued that any evidence the plaintiffs offered of the alleged overpayments was evidence only of a gain to SuperValu—not a loss to the government. Because the government determines reimbursement rates under Medicare Part D plans, SuperValu argued that plaintiffs would have to prove that the alleged false claims changed the amount government actually paid and, thus, caused damages. It appears the jury accepted this argument. The jury unanimously decided the plaintiffs had not proved that either the federal or state governments suffered damages and, as a result, SuperValu was found “not liable.” After a long and tortured history, the whistleblowers’ claims were finally put to rest. The case ultimately ended with a “no harm, no foul” verdict, and SuperValu avoided liability under the FCA. The case suggests a potent line of defense for companies defending against FCA allegations.
No Infringement of Nonfiction Work by Makers of Tetris Film – Court Uses Wrong Analysis to Reach the Right Result
Ackerman v. Pink asks how much of a written history can be claimed as proprietary by the author of that history. The answer: Not much. It is black letter that the author of a non-fiction work cannot prevent others from using historical facts in some other work – even if those historical facts are known only because of the author’s independent research. Copyright covers only the author’s expression of the research, not the research itself.
Ackerman is interesting because the analysis the court uses to separate the historical fact from the author’s expression is misplaced – even though the Court appears to have reached the right conclusion.
Daniel Ackerman, the author, sued several entities claiming that the film Tetris (the “Film”) infringed his copyright in a book he wrote about the video game Tetris – The Tetris Effect: The Game that Hypnotized the World (the “Book”). The Book purports to be a non-fiction history of the development of the video game Tetris. The Film also purports to tell the same story – albeit with some dramatic embellishments.
The opinion by district judge Katherine Polk Failla recites the relatively vanilla proposition that historical facts cannot be claimed by an author of a non-fiction work of authorship. So far, so good. The problem, however, is where the court compares certain purportedly historic scenes in the Book with how they are portrayed fictionally in the Film in an effort to separate the facts from the expression.
The court recounts several factual differences between the portrayal of historical scenes in the Book and the dramatization in the Film to hold that the expression of the former is not copied by the latter. For example, the Book describes one of the characters pitching Tetris to Sega in Japan. In the Movie, however, there are several differences including the fact the scene takes place in Seattle. Given that that historical facts described in the Book are not protected by copyright, whether the Film changed some of the facts should be immaterial to the court’s analysis. To the extent the author of the Book described certain scenes exactly as they happened, the Film was within its rights to portray those same facts as they happened. Nonetheless, the court’s analysis, to some degree, depends on these factual differences to hold that the Film does not copy the Book author’s expression.
The Court went on to compare the “total concept and overall feel of the two works” by focusing on the organization and focus of the Book and Film. This framework does seem to separate Book author’s expression from the unprotected historical facts. For example, the court noted that “the Book jumps through time to provide as much background and context as possible for the people and events it portrays, the Film proceeds largely chronologically.” The court, however, could find no evidence that the Film somehow misappropriated the way the author “selected, coordinated, and arranged the facts in his Book.”
While Judge Polk Failla reached the right result (in our view), her focus on the difference in the facts unnecessarily muddies the water on separating protected expression from something underlying that expression that is in the public domain. A subsequent author who wishes to write a book or make a movie about an historical event should not be required to change the historical facts to avoid a finding that they copied the original author’s expression – even though the makers of the Film chose to do so here.
Federal Appeals Court Rules Against Doctor Seeking to Use Mushrooms to Aide Terminal Patients: How We Learned to Question the Rationale of the Controlled Substances Act
It’s funny how things work out – sometimes you find yourself living in a sort of butterfly effect where the tail seems to wag the dog. In 2023, when we first started writing about the traction psychedelics were gaining as medicine, our goal was not to end up spending years covering the winding legal battle of a Washington physician to legally obtain psilocybin for terminally ill cancer patients to manage their pain.
But here we are. To be clear, while we’re certainly interested in the fate of Dr. Sunil Aggarwal’s efforts, we’ve been following the case closely because it’s one of a few legal cases to shed light onto what courts and federal agencies may do when faced with a medicinal demand for psychedelics outside of the research context.
In his efforts to be able to administer psilocybin to his patients, Aggarwal employed a two-fold approach: (1) he attacked the status of psilocybin as a Schedule I drug, and (2) he tried to get around statutory requirements governing a physician’s right to distribute Schedule I drugs outside of the research context. Neither has been successful (yet).
DEA Says No to Rescheduling, but the Court Keeps the Door Cracked
As a reminder, here’s what happened when Aggarwal petitioned the DEA to reschedule psilocybin:
Since at least 2021, Dr. Sunil Aggarwal has been working to legally obtain psilocybin for terminally ill cancer patients undergoing end-of-life care. Because psilocybin is a Schedule I drug under the Controlled Substance Act (CSA), obtaining the drug to treat his patients was “practically and legally difficult” according to his lawyers. Aggarwal turned to the DEA, petitioning the agency to transfer psilocybin from Schedule I to Schedule II. The DEA denied the petition in a four-sentence letter. Aggarwal then looked to the Ninth Circuit.
The Ninth Circuit Court of Appeals in Aggarwal v. U.S. DEA directed the U.S. Drug Enforcement Agency (DEA) to reconsider its decision not to transfer psilocybin from Schedule I to Schedule II.
The Ninth Circuit sided with Aggarwal. The court held that the “DEA failed to provide sufficient analysis to allow its path to be reasonably discerned” and “failed to clearly indicate that it ha[d] considered the potential problem identified in the petition.” More specifically, the Ninth Circuit noted that the DEA failed to define “currently accepted medical use with severe restrictions,” which was the applicable standard for rescheduling on which Aggarwal relied. The court directed the DEA to clarify or reevaluate its position.
And, while the footsteps may not have been as swift as some would hope, we still stand by the predictions we made in 2023:
The Ninth Circuit’s refusal to accept the DEA’s out-of-hand dismissal of a petition to reschedule psilocybin is yet another step in what appears to be faster and faster footsteps towards the future. What that future holds is yet to be determined – though we will monitor closely – but whatever the future is it promises to be quite a ride.
Will the Right to Try Act Save Practitioners Who Don’t Conduct Research but Want to Administer Schedule I Drugs?
Perhaps realizing that convincing the DEA to reschedule psilocybin may be a tall task, Aggarwal tried his hand before the DEA and then the Ninth Circuit with another approach — trying to get around the Controlled Substance Act (CSA) by way of the Right to Try Act (RTT Act). Aggarwal challenged the DEA’s decision not to exempt him from registration under the CSA, but the FDA’s RTT Act didn’t turn out to be the rescuer he had hoped for.
Because it’s a Schedule I substance, the CSA dictates that psilocybin may only be produced, dispensed, or possessed in the context of a research protocol registered with the DEA and approved by the Secretary of Health and Human Services. In other words, psilocybin may only be dispensed by medical practitioners in the context of “bona fide research,” which requires the approval of the FDA (see21 U.S.C. § 823(g)(2)(A)). The DEA handles registration and “may, by regulation, waive the requirement for registration of certain…distributors, or dispensers if DEA finds it consistent with the public health and safety” (21 U.S.C. § 8222(d)).
The Food, Drug, and Cosmetic Act (FDCA) is even broader and “imposes restrictions on the…distribution of all drugs including but not limited to controlled substances” (21 U.S.C. § 331). Generally, before a new drug can be introduced to the market, it must go through the clinical trial process, but there are other ways. A patient, for instance, may attempt to access a new drug through the FDA’s expanded access program.
Where a prescription drug is a controlled substance, “the FDCA and CSA operate in tandem” and the person distributing the drug must comply with both statutes.
The FDA has also adopted the RTT Act, which is intended to expand access for eligible investigational drugs outside the clinical trail process. “The RTT Act exempts the drugs provided to eligible patients from specified statutory and regulatory requirements concerning drug labeling, marketing, clinical, testing and approval.” “To access an eligible investigational drug under the RTT Act,” an eligible patient’s physician applies directly to the drug’s sponsor, and the FDA is not involved in approving access.
Seeking psilocybin for his terminally ill patients, Aggarwal’s attorneys submitted a letter to the DEA asking the DEA “for authorization to access psilocybin for therapeutic use under state and federal RTT Acts and immunity from prosecution under the CSA.” His lawyers also asked that if it deemed registration was required under the CSA, that the registration requirement be waived.
The DEA said no dice and clung tight to the CSA. In so doing, the DEA made a few things clear:
“Practitioners who seek to dispense or possess [S]chedule I controlled substances must be properly registered as an approved researcher in accordance with the CSA and its implementing regulations.”
The RTT Act does “not provide any exemptions from the CSA or its implementing regulations.”
The RTT Act does “not give the DEA authority to waive CSA requirements.”
Doubling down, the DEA also declined Aggarwal’s request to initiate rulemaking to exempt him from the CSA’s registration requirement. The DEA provided the following as its reasoning:
The DEA could not fully assess Aggarwal’s proposal because it was lacking in detail.
Aggarwal’s desire to administer psilocybin to patients was not consistent with public health and safety. In making this particular finding, the DEA relied heavily on Congress’ determinations in designating psilocybin as a Schedule I drug that it has a high potential for abuse, no currently accepted medicinal use in treatment in the United States, and a lack of accepted safety for use under medical supervision.
Aggarwal’s cited historical scenarios involving Schedule I controlled substances — including marijuana — were not persuasive.
The Ninth Circuit found in favor of the DEA, ruling that the DEA’s reasoning in blocking Aggarwal’s access to the DEA was not arbitrary and capricious. While the Ninth Circuit didn’t declare the following reasoning the rule of land even within the Ninth Circuit, it did make clear that the DEA’s reliance on this reasoning is not arbitrary and capricious:
“The CSA and FDCA together govern access to controlled substances for medicinal purpose.”
“Although the RTT Act itself does not require FDA approval for eligible patients to access eligible investigational drugs, it does not exempt such drugs from the FDA’s Attorney-General-delegated oversight pursuant to the CSA.” “So DEA’s continued enforcement of the CSA’s registration requirement does not affect, modify, repeal, or supersede the FDCA as amended by the RTT Act.”
The Ninth Circuit did not reject the DEA’s reliance on Congress’ determination, as codified in the CSA, that psilocybin has a high potential for abuse, no currently accepted medicinal use in treatment in the United States, and a lack of accepted safety for use under medical supervision.
So, What Does an Opinion Brushing Back One Physician on the West Coast Mean to the Psychedelics Industry More Broadly?
Proponents and physicians who are looking for easier access to psilocybin outside of the research context will see this as a significant step back. The DEA dealt a significant setback to the ability to rely on the RTT Act or to seek a waiver of registration. The Ninth Circuit didn’t really pull back the reigns. The DEA’s position that, even if a physician is able to obtain approval under the RTT, he or she still must obtain registration or a waiver under the CSA has now been approved (or at least not disapproved). And that position was pretty clear: The DEA is still in charge.
So, what does the opinion not mean? This opinion does not foreclose the efforts of physicians interested in conducting research blessed by the CSA and FDA. As we’ve previously reported, interest in researching psychedelics remains high and it appears capital does, too. Indeed, there are strong pushes for research in the federal, state, and private sectors with corresponding funding. There is no indication — and we have no expectation — that it will slow down any time soon, and the Ninth Circuit’s decision does nothing to change our thoughts on that point. Indeed, it appears to be, at least according to the DEA as approved by the Ninth Circuit, the clearest path forward.
What Does the Phrase “Resulting From” Mean? Circuit Courts Split on Standard for Determining When an AKS Violation Is a False Claim
Dating back to the 19th century, the U.S. Supreme Court has held that when construing a statute, the courts are to “give effect, if possible, to every clause and word of a statute, avoiding, if it may be, any construction which implies that the legislature was ignorant of the meaning of the language it employed.”[1]
However, there’s currently a split among the federal courts regarding how to interpret a phrase in a 15-year-old amendment to the Anti-Kickback Statute (AKS).[2] In 2010, Congress amended the AKS to provide that where the statute is violated, in addition to criminal penalties, any “claim that includes items or services resulting from [that] violation of [the AKS] constitutes a false or fraudulent claim for purposes of the [False Claims Act (FCA)].”[3] The circuit courts disagree over what it means for a claim to “result from” a violation of the AKS.
On February 18, 2025, the U.S. Court of Appeals for the First Circuit, in United States v. Regeneron Pharmaceuticals, held that to show a claim “results from” a violation of the AKS, the government must prove that a claim would not have been submitted “but for” the illegal kickback. [4] While this ruling aligns with recent decisions by the Sixth[5] and Eighth[6] Circuits, it conflicts with a Third Circuit decision[7] holding that the government must merely prove a “causal connection” between an illegal kickback and a claim being submitted for reimbursement. This Insight explores the courts’ approaches to evaluating what the words “resulting from” mean in the context of the AKS.
History of the Relationship Between the AKS and the FCA
The AKS makes it a crime to knowingly and willingly offer, pay, solicit, or receive any remuneration to induce referrals or services reimbursable by a federal health care program (e.g., Medicare, Medicaid). Each offense under the AKS is punishable by a fine of up to $100,000 and imprisonment for up to 10 years. Violators of the AKS can also be excluded from federal health care programs and face civil monetary penalties: (i) up to $50,000 and (ii) three times the amount of the remuneration in question.[8] Significantly, the 2010 amendment to the AKS clarified that a person or entity must act willfully to violate the statute, even though “a person need not have actual knowledge of [the AKS] or specific intent to commit a violation of [the AKS].” [9]
The FCA is the primary vehicle through which the government (on its own behalf and by virtue of the FCA private right of action provision) pursues fraud, waste, and abuse in the health care industry. Generally, the statute imposes liability on anyone who knowingly presents, or causes to be presented or conspires to present, a false or fraudulent claim for payment or approval.[10]
To establish a violation of the FCA, the government must prove by a “preponderance of the evidence”—a lesser standard than the criminal “beyond a reasonable doubt” standard—that a defendant “knowingly” violated the statute. The FCA defines the terms “knowing” and “knowingly” to mean that a person “(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information; or (ii) acts in reckless disregard of the truth or falsity of the information.” The statute further clarifies that proof of specific intent to defraud is not required.[11]
Before 2010, federal law did not specifically address whether a violation of the AKS could result in a claim being considered false for purposes of the FCA. For almost two decades, the government and qui tam relators attempted to “bootstrap” anti-kickback claims to the FCA to obtain civil penalties based on alleged AKS violations. This bootstrapping theory was premised on the argument that when a provider submits a claim to a federal health care program, the claim includes an implicit certification that the provider was in compliance with applicable laws, including the AKS.
For instance, in Roy v. Anthony,[12] a whistleblower sued under the FCA alleging that physicians in a medical practice referred patients to diagnostic centers in violation of the AKS. The defendants settled the case for more than $1.5 million following a district court decision holding that the plaintiff could prove that the charged claims were false because they were submitted in violation of the AKS. Similarly, the district court in Pogue v. American Healthcorp held that a violation of the AKS could constitute a false claim under the FCA if the whistleblower or the government could show that the defendants engaged in fraudulent conduct with the purpose of inducing payment from the government.[13]
In 2010, as part of the Patient Protection and Affordable Care Act,[14] Congress attempted to resolve the highly litigated issue of whether a violation of the AKS can serve as a basis for liability under the FCA by amending the AKS to state that a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of the [FCA].”[15]
Split Among the Courts Interpreting the Causation Standard
Despite the 2010 amendment, the debate has not ended regarding the relationship between the AKS and the FCA, with the courts splitting on what it means for a claim to “result from” a violation of the AKS. The Third Circuit has held that the government must merely prove a “causal connection” between an illegal kickback and a claim being submitted for reimbursement, while the First, Sixth, and Eighth Circuits have adopted the stricter “but-for” standard of causation.
Third Circuit: The “Causal Connection” Standard
In 2017, in United States ex rel. Greenfield v. Medco Health Solutions Inc., the Third Circuit first examined this issue in a case where the qui tam relator argued that the defendant’s alleged kickback scheme amounted to a violation of the FCA because at least some referrals or recommendations were for Medicare beneficiaries and because the defendant falsely certified compliance with the AKS.[16]
Relying on the U.S. Supreme Court’s ruling in Burrage v. United States, the defendant argued that “resulting from” requires “proof the harm would not have occurred in the absence of—that is, but for—the defendant’s conduct.”[17] The government/qui tam relator responded that requiring but-for causation would lead to the “incongruous” result that a defendant could be convicted of criminal conduct under the AKS but be insulated from civil liability under the FCA.
In interpreting the 2010 amendment, the Third Circuit examined the legislative history surrounding its passage. Specifically, the court referenced language from the congressional record in which one senator explained that Congress wanted to “strengthen” actions under the FCA and “ensure that all claims resulting from illegal kickbacks are considered false claims for the purpose of civil action[s] under the False Claims Act.”[18] The court agreed with the government’s position, concluding that imposing a “but-for” standard “would hamper FCA cases under the provision even though Congress enacted it to strengthen[] whistleblower actions based on medical care kickbacks.”
While the Third Circuit sided with the government by rejecting a but-for causation standard, the court, nevertheless, held in favor of the defendant. The complaint alleged that (1) the defendant paid illegal kickbacks to Party A, (2) Party A forwarded that money to Party B, (3) Party B included the defendant as an approved provider for Party B’s members, (4) the defendant filed claims on behalf of 24 federally insured patients, and (5) the defendant violated the FCA because the defendant incorrectly certified that it did not pay any illegal kickbacks. The Third Circuit disagreed, relying on an Eleventh Circuit case holding that a plaintiff cannot “merely … describe a private scheme in detail but then … allege … that claims requesting illegal payments must have been submitted, were likely submitted[,] or should have been submitted to the Government.”[19] Instead, the government/relator must provide evidence of the actual submission of a false claim. In Medco, the Third Circuit held that even if it were to assume the defendant paid illegal kickbacks, “that is not enough to establish that the underlying care to any of the 24 patients was connected to a breach of the AKS; we must have some record evidence that shows a link between the alleged kickback and the medical received by at least one” of the patients.
First, Sixth, and Eighth Circuits: The “But-For” Causation Standard
While the Third Circuit refused to find the Supreme Court’s Burrage decision controlling, the First, Sixth, and Eighth Circuits relied on Burrage to support the but-for causation standard.
In 2022, in United States ex rel. Cairns v. DS Medical LLC,[20] the Eighth Circuit relied on Burrage, as well as on several dictionary definitions of the words/phrases “resulting” and “results from,” and concluded that these words require a “but-for” causal connection. The Eighth Circuit addressed the Third Circuit’s holding in Medco and declined to follow that case, rejecting the Third Circuit’s approach of relying on legislative history and “the drafters’ intentions.” The Eighth Circuit held that if Congress had not intended to impose this “but-for” causation standard, then it could have adopted a different standard such as “tainted by” or “provided in violation of.”
The following year, the Sixth Circuit, relying on Burrage and United States ex rel. Cairns v. DS Medical LLC, held that the government/whistleblowers needed to satisfy the but-for causation standard and ruled in favor of the defendants where there was no evidence that the alleged kickback arrangement changed any of the parties’ behaviors. In other words, regardless of the improper payments, the same referrals would have occurred, and the same claims would have been submitted to the federal government. [21]
The First Circuit recently joined the Eighth and Sixth Circuits in adopting the but-for causation standard. The First Circuit noted that while the Supreme Court has held that “as a result from” imposes a requirement of causality—meaning that the harm would not have occurred but for the conduct—“that reading serves as a default assumption, not an immutable rule.” Nevertheless, the First Circuit determined that nothing in the 2010 amendment contradicts the notion that “resulting from” requires proof of but-for causation.
While it agreed that the criminal provisions of the AKS do not include a causation requirement, the First Circuit observed that different evidentiary burdens can exist for claims being brought for purposes of criminal versus civil liability. The First Circuit concluded that although the AKS may criminalize kickbacks that do not ultimately cause a referral, a different evidentiary standard can and should be applied when the FCA is triggered. As a result, the First Circuit affirmed the lower court’s decision that “to demonstrate falsity under the 2010 amendment, the government must show that an illicit kickback was the but-for cause of a submitted claim.”
In light of this decision, a majority of the Circuits that have addressed this issue have adopted the “but-for” causation standard based on the 2010 amendment, leaving the Third Circuit as the only circuit court to adopt the more lenient “causal connection” standard. Notably, while three Circuits have now aligned on interpreting the “resulting from” language in the 2010 amendment to require but-for causation, this standard applies to those FCA cases based upon AKS violations that do not involve a false certification theory. These but-for cause decisions do not address causation in AKS-based FCA cases where the alleged falsity is a false certification of compliance with the AKS. This false certification theory remains viable, which the First Circuit specifically addressed in Regeneron.
Conclusion
Entities in the health care and life sciences industries facing allegations of AKS and FCA violations should be aware of the current state of the law and be prepared to vigorously challenge efforts by the government, or qui tam relators, to seek to deviate from the but-for causation standard.
Although the U.S. Supreme Court denied a petition to review this specific issue in 2023, it may once again be called upon to weigh in, as there inevitably will continue to be a division in how the courts interpret this “resulting from” language.
ENDNOTES
[1] Montclair v. Ramsdell, 107 U.S. 147 (1883).
[2] See 42 USC § 1320a-7b(b).
[3] See 42 USC § 1320a-7b(g) (emphasis added). The federal False Claims Act (FCA) can be found at 31 U.S.C. § 3729 et seq.
[4] United States v. Regeneron Pharmaceuticals, 2025 WL 520466 (1st Cir. Feb. 18, 2025).
[5] United States ex rel. Martin v. Hathaway, 63 F.4th 1043, 1052–55 (6th Cir. 2023).
[6] United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828, 834–35 (8th Cir. 2022).
[7] United States ex rel. Greenfield v. Medco Health Solutions Inc., 880 F.3d 89, 100 (3d Cir. 2018).
[8] See 42 U.S.C. § 1320a-7b(b).
[9] See 42 U.S.C. § 1320a-7b(h).
[10] See 31 U.S.C. § 3729(a)(1).
[11] See 31 U.S.C. § 3729(b)(1).
[12] See United States ex rel. Roy v. Anthony, No. C-1-93-0559 (S.D. Ohio 1994).
[13] See United States ex rel. Pogue v. American Healthcorp., Inc., 1995 WL 626514 (M.D. Tenn. Sept. 14, 1995); United States ex rel. Pogue v. American Healthcorp., Inc., 914 F. Supp. 1507 (1996).
[14] Patient Protection and Affordable Care Act (PL 111-148).
[15] Id. at § 6402(f)(1) codified at 42 U.S.C. § 1320a-7b(g).
[16] United States ex rel. Greenfield v. Medco Health Solutions Inc., 880 F.3d 89, 100 (3d Cir. 2018). It should be noted that, in this case, the government originally declined to intervene.
[17] Id. quoting Burrage v. United States, 134 S. Ct. 881, 887-888 (2014).
[18] Id. citing 155 Cong. Rec S10852, S10853 (daily ed October 28, 2009).
[19] Id. citing United States ex rel. Clausen v. Lab Corp. of Am., 290 F3d 1301, 1311 (11th Cir. 2002).
[20] United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828, 834–35 (8th Cir. 2022).
[21] United States ex rel. Martin v. Hathaway, 63 F.4th 1043, 1052–55 (6th Cir. 2023).
BOLD: Before Even Being Allowed in the Case NCLC Submits An Aggressive Challenge to Eleventh Circuit IMC Ruling
The FCC’s TCPA one-to-one consent rule still has the faintest of pulses as the NCLC continues to struggle to bring it back to life.
In a new filing yesterday the National Consumer Law Center has submitted a proposed petition seeking a full en banc re-hearing and characterizing the Eleventh Circuit panel’s ruling in IMC v. FCC as a departure from established judicial review norms and contrary to supreme court precedent.
As the Czar previously explained the IMC ruling is, indeed, a breathtaking departure from the rules courts would ordinarily apply to such appeals. However, this change appears to have been enabled by the recent destruction of Chevron deference and concomitant strengthening of judicial review.
The issue really boils down to this:
In the old days (last year) a court had to defer to an agency’s interpretation of vague phrases in a statute. That is no longer the case.
The IMC could held, however, that an agency had to defer to a court’s interpretation of vague phrases statute. This had never happened before.
While IMC’s approach seems permissible following the death of Chevron it by no means follows that they adopted the correct framework. Under a doctrine called Skidmore deference courts and agencies are essentially equally powerful– and if Skidmore deference were applied IMC probably would have come out differently.
NCLC’s petition argues the Eleventh Circuit Court of Appeals–all of it–should get together and decide whether Skidmore applies here or whether IMC sets a vast new paradigm for judicial review of agency action.
Part of me kind of wants to know the answer because I’m a nerd.
But on the other hand, I don’t think lead gen is capable of handling another pendulum swing on one-to-one so let’s hope this whole thing stays dead.
Anyway you can read the whole petition here: NCLC En Banc
No Copyright Protection for Birkenstock Sandals: A Significant Decision from the German Federal Court of Justice
On 20 February 2025, the German Federal Supreme Court (BGH) delivered a landmark ruling in a case concerning the copyright protection of Birkenstock sandals. In its decision, the BGH firmly rejected the claim that Birkenstock’s sandal designs qualify for copyright as “applied art” under German copyright law. This judgment not only clarifies the scope of protection for industrial design works but also contrasts with prior rulings from regional courts in Hamburg and Cologne, highlighting the challenges of determining what constitutes “creative” or “artistic” design in functional products.
The Case: Birkenstock’s Fight for Copyright Protection
The case arose when Birkenstock, a prominent footwear brand, sought copyright protection for several of its sandal models, arguing that the designs were works of applied art. The company pursued legal action against various defendants selling or manufacturing sandals that allegedly infringed its copyright. Birkenstock’s argument was based on the claim that its models exhibited a level of artistic creativity deserving of copyright under Section 2 of the German Copyright Act (UrhG), which protects works of applied art if they meet certain requirements.
In earlier proceedings, both the Hamburg District Court and the Cologne Higher Regional Court had taken differing stances on the matter, with one court finding that the sandals could indeed be protected under copyright, and the other dismissing such a claim. However, the BGH ultimately sided with the Cologne Higher District Court, confirming that the Birkenstock sandals did not meet the required threshold for copyright protection.
The BGH’s Reasoning
The BGH’s decision hinges on the fundamental principle that copyright protection is reserved for creations with a certain degree of artistic and creative originality. The court emphasised that applied artworks, such as footwear designs, must reflect a “free and creative” use of design space. When a product’s design is primarily driven by technical or functional constraints, such as the necessity for comfort or durability, it cannot qualify for copyright protection. This has been described by the Cologne Higher District Court (6 U 89/23) as follows:
‘Art tends to be characterised by its freedom of purpose, design by its orientation towards use. Art begins with an idea. Design begins with a task.’
According to the BGH, the designs in question lacked the “design freedom” required to be considered works of applied art. The court pointed out that any creative contribution to the sandal designs was too minimal to meet the necessary level of artistic originality. Essentially, Birkenstock’s sandals were seen as primarily utilitarian products, with the decorative aspects insufficient to elevate them to the level of artistic creation worthy of copyright protection.
Diverging Opinion from the Hamburg District Court
Interestingly, the Hamburg District Court had previously taken a different view on the matter. In the 2022 case (310 O 40/22), the Hamburg District Court ruled that Birkenstock sandals were indeed eligible for copyright protection, recognizing the designs as works of applied art. The court took a more lenient approach, arguing that the aesthetic aspects of the sandals, despite their functional purpose, exhibited enough individuality to warrant copyright recognition.
Conclusion
In fact, the BGH’s decision probably does not change much from a practical perspective when seen in context with the BGH’s reference for a preliminary ruling to the European Court of Justice (ECJ) in the USM Haller case (BGH: ECJ referral on the concept of a work under copyright law — USM Haller GRUR 2024, 132, marginals # 18, 20).
In this reference for a preliminary ruling to the ECJ, the BGH stated that it does not understand the “Cofemel” decision of the Court of Justice (ECJ GRUR 2019, 1185 para. 50–52 — Cofemel) to mean that copyright protection for works of applied art should be subject to stricter requirements than copyright protection for works of purpose free art.
Furthermore, the BGH takes the view that the examination of originality for all types of works must be carried out objectively and uniformly based on the specific work submitted. The subjective view of the author in the sense of creative intention or the awareness of free creative decisions, according to the BGH, should not be relevant (BGH: ECJ referral on the concept of a work under copyright law — USM Haller GRUR 2024, 132, marginal # 27).
The examination is carried out based on circumstances in which a possible creative intention of the creator is expressed in an objectively ascertainable manner. It cannot be inferred from the case law of the Court of Justice that, in addition to the finding that the author made an objectively unconstrained and thus free (creative) decision, it is necessary to establish that the author was aware that he was making a free (creative) decision in this sense.
The awareness of making a creative decision cannot be required either, because artistic achievements can also be made unconsciously or subconsciously (BGH: ECJ referral on the concept of a work under copyright law — USM Haller GRUR 2024, 132, marginal # 30). Insofar as the Court of Justice in the “Brompton Bicycle” decision referred to the factors and considerations that guided the creator in choosing the shape of the product (ECJ GRUR 2020, 736 para. 35 f — Brompton Bicycle), it does not follow from this, in the opinion of the BGH, that the assumption of originality presupposes the establishment of a “conscious” creative decision by the creator. Rather, it follows from the context of the grounds of the court’s decision in the “Brompton Bicycle” case that what matters is whether the result of the creative process constitutes an artistic achievement.
Thus, the national courts must determine whether the author of the product has expressed his creative ability in an independent manner by choosing its shape, by making free creative choices and by designing the product in such a way that it reflects his personality (ECJ GRUR 2020, 736 para. 34 — Brompton Bicycle) (BGH: ECJ referral on the concept of a work under copyright law — USM Haller GRUR 2024, 132, marginal # 31).
While Birkenstock’s iconic sandals are undoubtedly well-recognised globally for their design and comfort, the BGH made it clear that these features alone are not sufficient for protection as copyright. Birkenstock’s iconic sandals, in the view of the BGH, began with a task rather than with an idea. As such, they do not meet the threshold of required creativity. While this ruling contributes to the ongoing dialogue around the limits of intellectual property protection for designs that straddle the line between functionality and artistry, it will certainly not mark the end of this dialogue.
Time Was Not on Her Side: 5th Circuit Rules Unpaid Mentor’s Claim of Discrimination Is Untimely
In Title VII actions, plaintiffs have a limited amount of time to file a charge of discrimination (or a court can dismiss the case as untimely). In the case of Wells v. Texas Tech University, the timeliness dynamic was further complicated by a question of whether unpaid participation in a program can make you an employee. The Fifth Circuit took a hard look at both and determined that the plaintiff’s claim was too late.
(Paid) Life in the Lab and Unpaid Mentoring
Cara Wells was a research assistant back in 2009 in the Animal and Food Sciences Lab at Texas Tech University. In that position, Wells claimed that two professors bullied and harassed her, including forcing her to share a hotel room with a male professor during certain conferences. After she graduated and started her PhD program, she continued to work in that lab. She graduated from her doctoral program in 2017 but stayed at the lab as an assistant. She then went on to participate in Texas Tech’s Accelerator Hub program and founded two companies, using one of her former professors as a mentor. There were some professional issues between Wells and the professor, and in 2020, Wells ultimately reported to the Texas Tech the harassment she claimed she suffered during her student days.
In May 2022 (about two years after her harassment report), Wells joined Texas Tech’s Hub program as an unpaid mentor. Texas Tech removed her from that program about a month later, removed her from the website, and took her off any publications. In November 2022, Wells filed an EEOC charge alleging sex discrimination, sex harassment, and retaliation. She claimed the harassment started in 2012 when she was an undergrad research assistant and continued through 2022 when she was removed as a Hub mentor. She later filed suit against Texas Tech for the same claims.
Employee Status and Timeliness
Texas Tech moved to dismiss Wells’ claims as untimely. Title VII requires that a charging party file an EEOC charge within 180 days of the unlawful employment action. The lower court determined that Wells’ last employment with Texas Tech was in 2017 (while she was a doctoral student), so her November 2022 charge was far outside the required time period. Wells argued that her participation in the unpaid Hub mentor program in 2022 gave her employee status.
The Fifth Circuit used the “direct-renumeration” test to determine whether Wells was an employee for the purpose of Title VII. The test requires that an individual receive either wages or job-related benefits to be considered in an employment relationship. As an unpaid mentor, the court decided that Wells received neither and therefore was not an employee after 2017. The court found that her claims were untimely.
Wells also argued that even if her employment with Texas Tech ended in 2017, she reported the harassment in 2020 and was retaliated against in May 2022 — so her November 2022 charge of discrimination was timely. The court did not agree and stated that while former employees had the ability to file retaliation claims, the system was not set up “to permit a perpetual cause of action for any unfavorable action taken in the future.” Courts should look to see if the time passing between the protected activity and the adverse employment action is too “attenuated” to support a claim for retaliation. In this case, the court held that the two years between her reporting the harassment and her subsequent removal from the mentor program was too long to establish a causal connection.
What Can We Learn from This?
As with most employment issues, documentation is key. When trying to establish a timeline of when things occurred, having memos in the file and completed forms with dates makes a big difference. An employer who can definitely show when a complaint was filed may be able to use it to further a timeliness defense.
The court’s discussion of the plaintiff’s unpaid mentoring status also shows why written job descriptions and payment/benefits statements are helpful. Employers should consistently update the duties and pay (or non-pay) of positions within the company. It is also important to evaluate what sort of benefits are provided to unpaid interns and fellows so you don’t put yourself into an employment relationship without knowing it.