LDT Final Rule Series: Part 4 – Rule Overturned by Federal District Court
Last Monday, the U.S. District Court for the Eastern District of Texas (the “District Court”) issued a highly anticipated – and unsurprising – opinion invalidating the U.S. Food & Drug Administration’s (“FDA’s” or the “Agency’s”) controversial rule that ended its longstanding policy of enforcement discretion for laboratory-developed tests, or “LDTs,” purporting to regulate them as “devices” under the Food, Drug, and Cosmetics Act (the “FDCA”) (the “LDT Rule” or the “Rule”). While this is a clear win for companies in the diagnostic and lab services space, we are now left wondering – is there any path forward for the LDT Rule? It’s not looking too likely but, these days, anything could happen.
A. The Opinion
The ruling in this case, which is a consolidation of two cases brought by the American Clinical Laboratory Association (the “ACLA”) and the Association for Molecular Pathology (the “AMP”) (collectively, the “Plaintiffs”),[1] granted the Plaintiffs’ motion for summary judgment to vacate and set aside the LDT Rule in its entirety. Although the Fifth Circuit, in which the District Court sits, is infamous for challenging agency actions, deciding the case on summary judgment is a relatively big deal, as it requires the moving party to demonstrate that there is no genuine dispute of material fact and that judgment is warranted as a matter of law – in other words, it has to be a pretty “open and shut” case. Here, the District Court overturned the Rule on the basis that FDA lacks the statutory authority to regulate LDTs, as LDTs do not qualify as “devices” under the FDCA, and LDTs should instead be regulated by the Centers for Medicare & Medicaid Services (“CMS”) under authority granted by the Clinical Laboratory Improvement Amendments (“CLIA”).
B. Looking Forward
Now that the LDT Rule has been vacated, it can only be revived judicially if FDA appeals it to the Fifth Circuit. This seems unlikely. The former Trump administration addressed the LDT issue directly when it issued a legal opinion explicitly stating that the FDCA does not give FDA the authority regulate LDTs, and the current Trump administration is purportedly acting on a generally pro-industry, de-regulation platform. Further, recently-confirmed Health and Human Services (“HHS”) Secretary, Robert F. Kennedy, Jr. (“RFK Jr.”) has a touted a laundry list of other proprieties for FDA, including food safety, vaccines, selective serotonin reuptake inhibitors (“SSRIs”), and rare disease treatments, to name a few – not to mention the fact that FDA’s workforce has recently been gutted – so the Agency likely cannot spend its now-precious resources to salvage the LDT Rule.
To be sure, the Agency surprised us in February when it vigorously defended the LDT Rule in oral arguments – using the rhetoric championed by the Biden-era administration that issued the Rule – when the general consensus predicted that FDA would change its position to align with the Plaintiffs. Further, recently-confirmed FDA Commissioner, Marty Makary, has been vocal about the need for greater oversight to ensure safety and efficacy/effectiveness for life sciences products, which aligns with the rationale presented in the preamble to the LDT Rule, emphasizing the need for increased regulation of LDTs. Thus, while the cards are certainly stacked against the survival of the LDT Rule, there is a world in which an FDA appeal could keep it alive (for a while at least).
If the LDT Rule remains vacated, it could ultimately have positive impacts on the diagnostic space, which – as heralded by the Plaintiffs – include increased access of critical tests for patients, lower costs due steady supply, and increased innovation, especially by small and rural laboratories and for specialized and rare diseases, due to a lower bar to market entry. However, as argued by supporters of the LDT Rule and extensively presented in the preamble to the Rule itself, patient safety is a serious concern when it comes to modern-day LDTs and, without the framework for regulatory oversight that would have gone into effect next month under the LDT Rule, an issue that remains unaddressed. Now that authority for ensuring LDT safety has been stripped from FDA, lawmakers in other part of the government will need to get creative about how to address the issue, if at all – perhaps Congress will step in and pass a reworked version of the Verifying Accurate Leading-edge IVCT Development (“VALID”) Act, or CMS will take on the cause under its CLIA policies. For now, at least, companies in the diagnostic and lab services space can hold onto the status quo of unregulated LDT development and use.
Depending on how things play out, this may be the last installment in our short-lived LDT Series. However, if any further developments occur, we’ll be sure to provide an update.
FOOTNOTES
[1] We covered these cases in detail in the previous installment of our LDT Series.
Crafting Composition Claims: Federal Circuit Reverses ITC on Polycrystalline Diamond Compact Patent Eligibility
The U.S. Court of Appeals for the Federal Circuit recently reversed an International Trade Commission decision that found certain composition claims for a polycrystalline diamond compact patent ineligible
This ruling provides valuable insights for companies drafting composition of matter claims in materials science, particularly when the claims involve measurable properties that reflect material structure
Companies drafting composition of matter claims should define a specific, non-natural material with measurable parameters, provide detailed specification support for enablement, and link measurable properties to structural features
In a significant decision for the materials science and patent law communities, the U.S. Court of Appeals for the Federal Circuit has overturned a ruling by the International Trade Commission (ITC) that found certain claims of a polycrystalline diamond compact (PDC) patent ineligible under U.S. patent laws. The case, US Synthetic Corp. v. International Trade Commission, decided on Feb. 13, 2025, offers important guidance on the patentability of composition of matter claims involving measurements of natural properties.
US Synthetic Corp. (USS) filed a complaint with the ITC alleging violations of customs laws known as Section 337 based on the importation and sale of products infringing its U.S. Patent No. 10,508,502 (‘502 patent), titled “Polycrystalline Diamond Compact.”
A PDC includes a polycrystalline diamond table bonded to a substrate, typically made from a cemented hard metal composite like cobalt-cemented tungsten carbide. PDCs are manufactured using high-pressure, high-temperature (HPHT) conditions. The process involves placing a substrate into a container with diamond particles positioned adjacent to it. Under HPHT conditions and in the presence of a catalyst (often a metal-solvent catalyst like cobalt), the diamond particles bond together to form a matrix of bonded diamond grains, creating the diamond table that bonds to the substrate.
The ‘502 patent describes several key properties of the PDC. It exhibits a high degree of diamond-to-diamond bonding and a reduced amount of metal catalyst without requiring leaching. The PDC’s magnetic properties reflect its composition, including coercivity, specific magnetic saturation, and permeability.
The patent discloses that USS developed a manufacturing method using heightened sintering pressure (at least about 7.8 GPa) and temperature (about 1400°C) to achieve these properties without resorting to leaching, which can be time-consuming and may decrease the mechanical strength of the diamond table.
ITC’s Initial Determination
The ITC initially found the asserted claims infringed and not invalid under Sections 102, 103, or 112 of U.S. patent laws. However, it determined they were patent ineligible under Section 101, preventing a finding of a Section 337 violation. Specifically, the ITC concluded the asserted claims were directed to the “abstract idea of PDCs that achieve . . . desired magnetic . . . results, which the specifications posit may be derived from enhanced diamond-to-diamond bonding,” and that the magnetic properties are merely side effects of the unclaimed manufacturing process.
Federal Circuit’s Analysis
The Federal Circuit focused its analysis on claim 1 and 2 of the ‘502 patent. Claim 1 recited, “a polycrystalline diamond table, at least an unleached portion of the polycrystalline diamond table including: a plurality of diamond grains bonded together via diamond-to-diamond bonding … a catalyst including cobalt … wherein the unleached portion of the polycrystalline diamond table exhibits a coercivity of about 115 Oe to about 250 Oe; wherein the unleached portion of the polycrystalline diamond table exhibits a specific permeability less than about 0.10 G∙cm3/g∙Oe.” Claim 2, depending from claim 1, further recited, “wherein the unleached portion of the polycrystalline diamond table exhibits a specific magnetic saturation of about 15 G∙cm3/g or less.”
The court emphasized that the claims were directed to a composition of matter, not a method of manufacture. It noted that USS had developed a way to produce PDCs with high diamond-to-diamond bonding and reduced metal catalyst content without leaching, addressing known issues in the field.
The Federal Circuit delved deeper into the relationship between the claimed magnetic properties and the structure of the PDC. The court recognized that coercivity, specific magnetic saturation, and specific permeability provide information about the quantity of metal catalyst present and the extent of diamond-to-diamond bonding, which were key features of the inventive PDC. As the court summarized, “Each of these magnetic properties provides information about the quantity of metal catalyst present in the diamond table and/or the extent of diamond-to-diamond bonding.”
The court also highlighted the importance of the specification’s disclosure, which included comparative data between the claimed PDCs and conventional PDCs. This data demonstrated that the claimed PDCs exhibited significantly less cobalt content and a lower mean free path between diamond grains than prior art examples. The court recognized that the prior art examples “exhibit a lower coercivity indicative of a greater mean free path between diamond grains and thus may indicate relatively less diamond-to-diamond bonding between the diamond grains.”
The Federal Circuit engaged in the two-step analysis established by Alice Corp. v. CLS Bank International. Applying Alice step No. 1, the court determined that the claims were directed to a specific composition of matter having particular characteristics, rather than being directed to an abstract idea and did not reach Alice step No. 2. The court found that, in view of the recitation of “a polycrystalline diamond table, at least an unleached portion of the polycrystalline diamond table,” a “plurality of diamond grains,” a “catalyst including cobalt,” and the limitations of magnetic properties, dimensional parameters, and the interface topography between the polycrystalline diamond table and substrate, the claims are plainly directed to matter.
In so holding, the court found the ITC erred when it concluded that the asserted claims are directed to the “abstract idea of PDCs that achieve . . . desired magnetic . . . results, which the specifications posit may be derived from enhanced diamond-to-diamond bonding.” The court also disagreed with the commission’s apparent expectations for precision between the claimed properties and structural details of the claimed composition. As the court noted, a perfect proxy is not required between the recited material properties and the PDC structure.
The court also affirmed the ITC’s finding that the claims were enabled under Section 112, indicating that the specification provided sufficient information for a person of ordinary skill to make and use the invention without undue experimentation. This determination was based on the detailed manufacturing methods and examples provided in the patent specification.
Takeaways
This decision provides valuable guidance for patent practitioners in the materials science field and reinforces the importance of carefully crafting claims and specifications to withstand Section 101 challenges. Composition of matter claims can remain patent-eligible under Section 101 even when they involve measuring natural properties, as long as they claim a non-naturally occurring composition.
When drafting claims for materials science inventions, practitioners should consider including specific, measurable parameters that distinguish the invention from naturally occurring substances or prior art.
The decision also highlights the importance of providing detailed descriptions in the specifications of how to measure claimed properties and how they relate to the composition’s structure or function.
TCPA CONSENT PRIMER: Here Are the Basics of the TCPA’s Requirements For Consent for Various Types of Calls
Here’s a quick look at the basic rules around consent for those interested in TCPA issues.
First the TCPA contains two general restrictions– those related to calls made using certain types of technology (“regulated technology”) and those made for marketing purposes to numbers on the DNC list.
Regulated technology includes calls made using an automatic telephone dialing system (ATDS), prerecorded or artificial voice calls and calls made using an AI voice. It also likely includes prerecorded and artificial or AI voicemails or ringless voicemails.
Calls made using regulated technology to a cellular phone require “express consent” when made for informational purposes and “express written consent” when made for marketing purposes.
Prerecorded or artificial or AI voice calls made to a landline require “express written consent” when made for marketing purposes or when made in excess of three per month for informational purposes (three prerecorded calls to landlines for informational purposes may be made monthly without consent.)
The precise contours of what constitutes express consent and express written consent is shifting, as is the definition of “marketing.”
Generally courts hold “express consent” means “consent that is clearly and unmistakably stated.” This include both a content requirement and format requirement.
As to content the FCC has required the inclusion of 9 critical pieces of information in a valid express written consent form. (See 47 CFR Section 64.1200(f)(9)).
The disclosure must also be presented in a manner that is not deceiving to the consumer and clearly and CONSPICOUSLY lays out the terms. Generally companies use the R.E.A.C.H. standards to assure they are complying with these rules.
For informational calling “express consent” does not require full written consent but does need to clearly have the consumer express an intention to receive calls. For many years an FCC ruling from 2009 implied express consent to use such technology any time a consumer provided their number to a caller for a purpose closely related to the purpose of the call. However that ruling is in doubt following recent Supreme Court determinations striking down Chevron deference. Accordingly, it is unclear whether the consumer must now specifically authorize the use of automated or prerecorded or artificial voice contact to provide valid express consent for informational purposes.
The line between what is marketing and informational is also fuzzy. The definition of marketing is broad an includes any effort to encourage a consumer to buy or rent any good or service. Whether a call is marketing looks at the INTENT of the caller– not the content of the call. Some courts have found a call made only to offer to buy something–or to offer a free service–are NOT marketing calls. But if any payment is to be expected of a consumer–directly or indirectly– you can expect a finding the call is marketing, even if serving a dual or informational purpose as well.
Finally, calls made to numbers on the DNC list for marketing purposes require either prior express invitation or permission or an established business relationship.
Like PEWC, PEIP must be in writing but the nine requirements of 47 CFR 64.1200(f)(9) are not required. Instead a consumer must merely ask for the messages at issue in a clear and written form.
An oral request for information qualifies as an inquiry EBR but only lasts for 90 days. During that 90 day period a caller may contact a consumer manually regarding the good or service the consumer inquired about, even if their number is on the DNC list.
These rules apply equally to B2C and B2B calls, although there is a narrow exception to the DNC rules for calls made to business numbers (note: B2B intent is irrelevant, what matters is how the number at issue is being used.)
Even after consent has been obtained properly it can be revoked for all purposes. As of April 11, 2025 a new FCC rule will go into effect that will massively expand the scope of revocation and will result in consent being treated as revoked across all channels for all purposes.
TRIAL DATE SET: QuoteWizard to Face TCPA Claims in Certified Class Action in November, 2025!
As TCPAWorld.com readers know QuoteWizard is embroiled in TCPA litigation linked back to a bad lead it purchased years ago.
Although QuoteWizard isn’t really alleged to have done anything wrong in the moral sense it still faces massive potential exposure in the suit following remarkable certification ruling last year.
QuoteWizard took a emergency appeal following that ruling but the Appellate Court refused to set aside the certification ruling. That put the case back in the hands of the district court.
The Court has now set the matter for trial on November 3, 2025.
Trial briefs and motions in limine are due October 30, 2025 and we should know a lot more about each party’s trial strategy when those documents roll in.
We’ll keep an eye on this for everyone.
Intentionally Discriminatory Public Offering Stalled At The SEC
In this February post, I pondered the question of whether an issuer could allocate shares on the basis of race, gender or ethnicity. That post was inspired by the case of Glennon v. Johnson, U.S. Dist. Ct. Case No. 1:25-cv-01057 (N.D. Ill. Jan. 6, 2025). That case involves a Fourteenth Amendment challenge to a proposed public offering by Bally’s Chicago, Inc. that would impose minority and gender based qualification requirements on investors. In February, U.S. District Court Judge Franklin U. Valderrama declined to issue a temporary restraining order, ruling that the plaintiff had shown neither a likelihood of success nor irreparable injury.
Despite winning this round in court, Bally’s still needs to have its registration statement declared effective by the Securities and Exchange Commission. That apparently has not yet occurred. On February 28, 2025, Bally’s filed a free writing prospectus with the SEC that included the following disclosure:
Bally’s Chicago, Inc. (“Bally’s Chicago”) thanks you for your interest and patience. Unfortunately, as of the time of this message, we have not yet received clearance from the U.S. Securities and Exchange Commission (“SEC”) to price and close our initial public offering. Consequently, prospective investors may seek to withdraw any amount deposited into their respective BitGo Trust accounts while we continue to work to obtain SEC clearance for our initial public offering. Bally’s Chicago intends to continue to make regular, periodic filings of its registration statement with the SEC once its annual financial statements for the fiscal year ended December 31, 2024, which are expected to become available in March. This process aims to fulfill the City of Chicago’s mandate of having 25% of Bally’s Chicago’s ownership held by individuals or entities that qualify as women or Minorities (as defined by MCC 2-92-670(n)), among other criteria, as required by the Host Community Agreement with the City of Chicago.
Apparently, Bally’s remains determined to effect a discriminatory offering. It remains to be seen whether the SEC is willing to declare effective a registration statement with respect to an unabashedly racist and sexist plan of distribution. In the meantime, Bally’s filed a Form D on March 14 disclosing that it had sold $83.15 million of an approximately $195 million offering of interests.
New-Aged Automakers Beware: CPPA’s Enforcement Action Against Honda Results in the Agency’s First Settlement
Key Takeaways:
CPPA launched its first major enforcement action in targeting connected vehicle-maker Honda.
Connected vehicles often collect various kinds of sensitive driver information, including geolocation, biometric and behavioral data.
After the CPPA found Honda in violation of several CCPA provisions, the company agreed to settle the enforcement action for approximately $650,000 while also agreeing to adopt certain remedial measures.
Other Connected vehicle-makers have also experienced a spike in regulatory scrutiny, signaling rising enforcement pressure and growing expectations for privacy-by-design.
CPPA’s Investigation into Connected Cars
In 2023, the California Privacy Protection Agency (“CPPA”) commenced a formal investigation into the data privacy practices of vehicle manufacturers (the “Investigation”), focusing primarily on the collection, use, and disclosure of personal information by “connected vehicles.”
Connected vehicles are vehicles equipped with technologies able to capture, among other kinds of consumer information, geolocation, biometric and behavioral data, including global positioning systems (“GPS”), telematics sensors, onboard cameras and smartphone integrations. With over 35 million registered vehicles in California and the rapid growth of these technologies in newer vehicles, automakers must educate themselves about the growing privacy concerns presented by these connected vehicles, especially where these technologies are still linked to third party service providers.
The Investigation marks the CPPA’s first formal inquiry since gaining full enforcement authority on July 1, 2023, and seeks to determine whether automakers were complying with key provisions of the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”). Specifically, the agency is examining whether these vehicle manufacturers: (i) provide sufficient notice; (ii) obtain valid consent; (iii) limit data collection consistent with data minimization principles; and (iv) maintain transparency around third-party data sharing practices. See Cal. Civ. Code § 1798.
CPPA’s inquiry underscores the agency’s intent to promote accountability among manufacturers and to ensure consumers retain meaningful control over their personal data.
Honda’s Privacy Violations and Settlement Terms
On March 12, the CPPA announced its first public enforcement action based on the Investigation[FAM3]. The action stemmed from a series of purported CCPA violations regarding American Honda Motor Co., Inc. (“Honda” or the “Company”)’s handling of consumer privacy rights. The CPPA found that:
Honda unlawfully interfered with consumers’ ability to exercise their data rights. For example, Honda required consumers to provide excess personal information even when such verification was not legally necessary. The CPPA determined that these burdensome conditions discouraged or delayed valid privacy requests, violating the CCPA’s intent to grant consumers meaningful control over their personal information without unreasonable obstacles.
Honda’s interface steered users toward surrendering their privacy rights. For example, Honda’s online privacy rights platform was designed in a way that made it easier for consumers to opt in to the sale of their personal information, while creating friction for those attempting to opt out. This unequal treatment of consumer choices violated CCPA’s requirement that options be presented in a fair and neutral manner.
Honda did not provide clear or accessible methods for consumers to authorize third-party representatives (i.e., “authorized agents”) to act on their behalf. The CPPA determined that this omission weakened an essential mechanism intended to support the exercise of privacy rights, which limited consumers ability to benefit from guaranteed privacy protections.
Honda failed to produce contracts with its advertising technology vendors that included the required privacy safeguards, raising serious concerns about whether the Company had properly limited how third parties could use, retain, or disclose consumer information as required under California law.
The CPPA enforcement action against Honda concluded with a settlement order (the “Order”) in which the Company agreed to pay $632,500 in monetary penalties and undertake significant reforms to its data privacy practices, including (i) creating a streamlined process for privacy rights requests, (ii) engaging a user experience designer to ensure the system meets CCPA fairness standards, (iii) training employees on proper handling of privacy requests, and (iv) revising contracts with third-party data recipients to include all required privacy protection clauses.
The Order also mandates several technical upgrades to Honda’s privacy infrastructure. For instance, Honda must establish separate processes for verifiable and non-verifiable privacy requests to reduce barriers to opting out. It must also add a “Reject All” button to its cookie management tool to ensure that privacy-protective choices are as accessible as opt-in options.
Broader Privacy Concerns in the Automotive Industry
Federal regulators and certain states, like Texas, have launched investigations into the data privacy practices of automakers, focusing on how personal information, such as driving behavior, is collected and shared with third party insurance companies. Recently Ford, Hyundai, Toyota and Fiat Chrysler Automobiles, were sent letters by the Texas Attorney General’s Office demanding sworn answers about how they collect, share and sell consumer data.
Other major automakers have also faced privacy controversies. Earlier this year, Tesla was sued over allegations that employees accessed and shared images and videos recorded by customers’ vehicles without their consent. Yeh v. Tesla, Inc.
California lawmakers are taking action to regulate in-vehicle data collection, including, for example, by restricting the collection and use of images and videos captured by in-car cameras.
Looking Ahead: CPPA’s Growing Role in Consumer Privacy
The CPPA is actively enforcing its authority across all industries, with penalties ranging from $2,500 to $7,500 per violation. The Honda settlement marks a clear warning: as connected devices like vehicles continue to harvest large volumes of personal data, the cost of noncompliance will continue to rise. In today’s fragmented U.S. privacy landscape, businesses must ensure they offer consumers clear, meaningful choices around data use. Working closely with legal counsel is essential to stay ahead of regulatory changes — because in this new era of enforcement, transparency and trust are no longer best practices; they’re legal imperatives.
Your Boss Is Not So Bad: At Least He Didn’t Spike the Coffee with Viagra
We’ve all had moments of frustration with our supervisors—whether it’s micromanaging, lack of communication, or forgetting to acknowledge hard work. But if you’ve recently muttered “my boss is the worst,” a recent case out of North Bergen, New Jersey might make you think twice.
According to shocking tort claims filed by multiple officers, the town’s police chief is alleged to have gone far beyond what anyone would consider typical workplace misconduct. The claims range from horrifying to absurd: defecating in department offices, spiking office coffee with Viagra and Adderall, and allegedly stabbing an officer’s genitals with a hypodermic needle. Yes, you read that correctly.
The officers involved also allege that the chief sent masturbation cream and a pride flag to an officer’s home (where it was seen by the officer’s family), exposed himself at work, and poisoned a fellow officer’s pet fish. One prank allegedly escalated to a health emergency when extremely hot peppers were placed in officers’ meals.
If these allegations are even partially true, they reflect not just poor leadership but an extreme and dangerous abuse of power. It’s the kind of misconduct that moves beyond civil liability into potential criminal consequences.
But what does this mean for everyday employees?
Too often, we dismiss or normalize workplace misconduct under the guise of “just a difficult boss.” We accept inappropriate behavior because we assume it’s part of the job or fear retaliation if we speak up. This case is an extreme reminder that inappropriate behavior, even when masked as humor or “pranks,” can create unsafe, hostile, and legally actionable work environments.
It’s also a lesson for employers: failing to act on complaints, or protecting high-level individuals despite credible allegations, can erode employee trust and open the door to serious liability.
The takeaway? If you’ve got a boss who’s a little disorganized, forgets your birthday, or occasionally sends a 7:00 a.m. email—count yourself lucky. A workplace led with professionalism, consistency, and respect should never be taken for granted.
And if you’re dealing with something that feels like more than just “difficult,” don’t shrug it off. There are legal protections for employees facing harassment, retaliation, or other forms of unlawful workplace conduct. Sometimes, your gut instinct is the best indicator that something isn’t right—and it’s worth talking to someone who knows the law.
Because as wild as this case may sound, there’s a spectrum of workplace misconduct—and you don’t have to wait until someone poisons your lunch or spikes your coffee to take it seriously.
Texas Supreme Court Declines The Chance To Rule On Whether There Is A Right To A Jury Trial In A Trust Modification Suit
First Appellate Decision. In In re Troy S. Poe Trust, a co-trustee of a trust filed suit to modify the trust to increase the number of trustees and change the method for trustees to vote on issues as well as other modifications, including, incredibly, directing the trustees to ignore duties to remainder beneficiaries. No. 08-18-00074-CV, 2019 Tex. App. LEXIS 7838 (Tex. App.—El Paso August 28, 2019). The trial court denied the defendant co-trustee’s request for a jury trial on underlying fact issues and held a two-day bench trial. After the trial court granted all of the plaintiff’s modifications, the defendant co-trustee appealed and argued that the trial court erred in refusing him a jury trial. The court of appeals held that Texas Property Code did not waive a party’s right to a jury trial regarding a claim to modify a trust, and that the defendant co-trustee had a right to a jury trial on underlying fact questions involved in a trust modification case. The court reversed and remanded for further proceedings.
Second Appellate Decision. In In re Poe Trust, the Texas Supreme Court reversed and remanded the court of appeals. 646 S.W.3d 771 (Tex. 2022). The Court held that parties to trust modification proceedings were not entitled to a jury trial under the Texas Property Code. But the Court remanded for the court of appeals to consider whether the defendant co-trustee had a right to a jury trial under the Texas Constitution:
The Texas Constitution provides “two guarantees of the right to trial by jury” in civil proceedings. The Bill of Rights ensures that the “right of trial by jury shall remain inviolate.” Our cases have said, and the parties here do not dispute, that this provision maintains a jury right for the sorts of actions tried by jury when the Constitution was adopted and, thus, “only applies if, in 1876, a jury would have been allowed to try the action or an analogous action.”
At the time of the Constitution’s adoption, there was no common-law right to a jury trial in equitable actions and, consequently, our courts have held that the Bill of Rights did “not alter the common law tradition eschewing juries in equity.” However, to provide a jury right in equitable actions, “a special clause was introduced.” In our present Constitution, that guarantee is found in Article V, the Judiciary Article. It provides: “In the trial of all causes in the District Courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury; but no jury shall be empaneled in any civil case unless demanded by a party to the case, and a jury fee be paid by the party demanding a jury, for such sum, and with such exceptions as may be prescribed by the Legislature.” We have held, and no party here disputes, that the Judiciary Article “covers all ’causes’ regardless of whether a jury was available in 1876.”
…
The court of appeals confronted none of these constitutional arguments, which were first presented on rehearing. By that time, the court of appeals had concluded that the Trust Code’s incorporation of the Rules of Civil Procedure conferred a right to a jury trial. That holding made in-depth treatment of the constitutional arguments unnecessary. Our holding today, however, changes that… Following our preferred practice, we remand the case to the court of appeals to address petitioners’ constitutional arguments in the first instance. And we echo the concurrence’s view that amici input could greatly aid the court of appeals’ decisional process.
Id.
Third Appellate Decision. In In re Poe Trust, the court of appeals held that the co-trustee defendant did not have a constitutional right to a jury trial in a trust modification case, and then affirmed the trial court’s modification of the trust. 673 S.W.3d 395 (Tex. App.—El Paso, 2023). The court held that there was no right to a jury trial under the Texas Bill of Rights. The court then turned to the Judiciary Article and stated:
[T]he “Judiciary Article” states: “In the trial of all causes in the District Courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury; but no jury shall be empaneled in any civil case unless demanded by a party to the case, and a jury fee be paid by the party demanding a jury, for such sum, and with such exceptions as may be prescribed by the Legislature.” In contrast with the Bill of Rights, this provision expanded the jury-trial right to all “causes” in both law and equity, regardless of whether a jury trial was available for the same in 1876. However, there are differences in opinion regarding how the term “causes” in this provision should be defined.
Id. The court then held that a trust modification proceeding is not a “cause” as that term is used in the Judiciary Article:
Bock, on the other hand, argues that “cause” should include only “ordinary” causes of action, also referred to as “personal” actions, in which a plaintiff is seeking a personal judgment against a defendant based on the defendant’s breach of a duty or other wrongdoing. He posits that a plaintiff must be asserting some “personal right” for which he may obtain a remedy or enforceable judgment against the defendant. And he argues that a trust-modification proceeding lacks the attributes of an ordinary cause of action—it is not brought by a plaintiff seeking a judgment against a defendant, but instead is brought in the interest of the beneficiary and will not result in an enforceable judgment against any of the interested parties.
We conclude that Bock’s approach is the correct one, as it more closely aligns with the 1876 Constitution drafters’ intent in formulating the Judiciary Article’s jury-trial right and best comports with Texas jurisprudence over time.
Id. The court further explained:
Professor Harris later described the proceeding in which a plaintiff sues a defendant seeking a personal judgment against the defendant as the “ordinary cause of action,” which he contrasted with “special civil proceedings” that do not share this key attribute… This interpretation of the term cause as meaning the ordinary cause of action in which a plaintiff seeks recourse against a defendant further comports with the Judiciary Article’s “plaintiff” and “defendant” terminology. During the era in which the 1876 Constitution was adopted, Bouvier’s Law Dictionary defined a plaintiff as a person “who, in a personal action, seeks a remedy for an injury to his rights.” Plaintiff. It defined the term “defendant” in the opposing stance as a “party who is sued in a personal action.” And in turn, it defined a “personal action” as one “brought for the specific goods and chattels; or for damages or other redress for breach of contract or for injuries of every other description; the specific recovery of lands, tenements and hereditaments only excepted.” In other words, a personal action encompasses a situation in which a party seeks a judgment against a defendant as a remedy for a violation of a personal right… [W]e find the ordinary-cause-of-action framework to be the correct framework or test by which to determine whether a proceeding can be considered a Judicial Article cause versus a special proceeding that falls outside its scope.
Id. The court then held that a trust modification proceeding is more of a special proceeding and does not involve an ordinary cause of action:
Utilizing the ordinary-cause-of-action framework, we agree with Bock that a trust-modification proceeding does not have any of the attributes of a cause for which a Judicial Article jury-trial right exists; instead, its nature is that of a special proceeding for which no jury-trial right exists. As Bock points out, in a trust-modification proceeding, there is no plaintiff seeking a right of recovery or a judgment against a defendant who has committed some wrong.
Id. So, the court of appeals affirmed the trial court’s decision to deny the defendant co-trustee’s request for a jury trial. The court then looked at the merits of the trust modification and affirmed it as well. The court essentially rejected the unambiguous intent expressed by the settlor in the trust document and focused on other evidence to modify the trust.
There was a dissenting justice who found that the defendant co-trustee did have a constitutional right to a jury trial. The dissenting justice stated:
In the years when the 1875 Constitution was drafted, Texas law used “cause” broadly… In other words, “cause” was viewed comprehensively as encompassing contested questions before a court… Moreover, as this Court held in our prior decision in this case, the record here establishes that statutory prerequisites include disputed questions of fact. Specifically, this Court concluded that “the predicate questions of whether the trust needed to be modified was a fact question that should have been decided by a jury[.]”We observed in our earlier decision that, “as a general rule, ‘when contested fact issues must be resolved before equitable relief can be determined, a party is entitled to have that resolution made by a jury.’” Because this suit is based on a long recognized equitable cause of action, I would hold it falls squarely within the meaning of “all causes” as included in the Judiciary Article’s terms.
The majority views a material distinction between the term “cases,” as included in the Constitution of 1869, and the term “causes,” as currently included. Specifically, the majority describes the term “causes,” as “narrower language.” On that point, I disagree. Controlling authorities of the era inform that “all cases of law or equity,” as included in the 1869 version, essentially means the same thing as “all causes,” which was adopted in 1876. Given the historical use of these terms, I see no indication that the voters of that era drew back from the otherwise expanding guarantee of a right to a jury trial.
Additionally, the majority places heavy importance on the use of the terms, “plaintiff” and “defendant,” as appearing in the Judiciary Article. Based in part on these terms, the majority concludes that the term “cause” can only be interpretated as meaning an “ordinary cause of action.” Again, I disagree… First, these same terms, “plaintiff” and “defendant,” appear in the Constitution of 1845, where the jury-trial guarantee was otherwise provided in “all causes in equity.” Second, the terms “plaintiff” and “defendant” are not used as terms of limitation but rather to describe that a jury trial is guaranteed to all participants when “application [is] made in open court.” Third and lastly, I see no indication here of any special circumstance that would cause a jury trial to be prohibitive. On that score, Justice Busby’s concurring opinion in Poe, which is joined by Justice Devine and Justice Young, largely provides the analytical framework for making that determination. Because this modification suit is a statutory substitute for a cause in equity, I would classify it as falling into the second category of Justice Busby’s framework. To that extent, the jury-trial right would extend in part to the disputed issues of fact of this suit while questions of equitable discretion should be decided by the court. Unlike the majority, I would hold that a trust modification proceeding qualifies as “a cause” within the meaning of the Judiciary Article’s guarantee.
Id.
Three Justices Concur in The Decision To Deny The Petition For Review. The defendant co-trustee filed a petition for review in the Texas Supreme Court on both the jury trial right issue and on the trust modification issue. The both issues are of great importance to Texas jurisprudence as they certainly impact trust modifications and many other equitable proceedings under the Trust Code and Estate’s Code.
One would think that the Texas Supreme Court would accept the petition in this case, again, and finally determine whether a party has a constitutional right to a jury trial on underlying fact disputes in these types of proceedings. Alas, the Court denied the petition for review without an explanation. However, three justices issued a concurring opinion that gave some insight on their thinking. In re Poe Trust, No. 23-0729, 2024 Tex. LEXIS 658, 2024 WL 3836556 (Tex. August 16, 2024) (concurring order). The concurring justices stated that they agreed with denying the petition because there was no showing of a fact issue that should have been presented to a jury. That in and of itself is very odd. The trial court held a two day bench trial where both parties introduced evidence to support both sides on the issue of whether the modifications should have been granted on fact specific elements of: “(1) [whether] the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill; (2) because of circumstances not known to or anticipated by the settlor, the order will further the purposes of the trust…” Id. (citing Texas Trust Code Section 112.054(a)(1), (2)). Whether the purposes of the trust have been fulfilled and whether circumstances not known to or anticipated by the settlor justify modification seem to be pretty fact specific issues. The court of appeals first decision clearly thought there was a fact issue because it remanded for a jury trial. The Texas Supreme Court’s first opinion clearly assumed that there was a fact issue because it went into great length in reversing and remanding the court of appeals for an analysis of the co-trustee’s constitutional right to a jury trial. Why would the Court waste its time and resources and the court of appeals’s time and resources, including the parties’ time and resources, if it felt that there was no fact issue?
In any event, the three concurring justices addressed whether the court of appeals correctly analyzed the constitutional right to a jury trial and would find that it did not:
That guarantee, which appears in the Judiciary Article, provides that “[i]n the trial of all causes in the district courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury.” We have held that this guarantee applies, among other things, to “ultimate issues of fact” in “equitable action[s],” analogous actions, and statutory or rule-based substitutes for such actions, as well as when challenging disputed facts addressed in proceedings ancillary to a cause. For example, it applies to contested matters of fact arising from receivership and probate proceedings.
We have also explained that the Judiciary Article guarantee was “intended to broaden the right to a jury,” and that the word “cause” had a “broad meaning . . . when our present Constitution was drafted” that included any “suit, litigation, or action” involving a “question . . . litigated or contested before a court” or “legal process . . . to obtain [a] demand” or “seek[] [a] right.” Thus, a “special reason” is necessary to conclude that particular “adversary proceedings” do not “qualify as a ’cause’.” Because we have identified certain special reasons—such as separate constitutional provisions—that some proceedings do not require a jury, “not all adversary proceedings are ’causes’ within the meaning of the Judiciary Article.” …
But on remand, a majority of the court of appeals panel did not examine whether there was a “special reason” of the sort we have held sufficient to exclude such an adversary equitable action from the Judiciary Article guarantee. Instead, the panel majority excluded these claims by disregarding the broader definition of “cause” we endorsed in Credit Bureau and selecting a narrower alternative definition derived from the common law: an “ordinary cause of action” or “personal action” in which a plaintiff alleges that a defendant breached a legal duty or violated a legal right and seeks recourse for that conduct…
Several weaknesses, however, underlie the panel majority’s definition and reasoning. First, the panel’s definition impermissibly departs from the “broad” definition of “cause” we endorsed in Credit Bureau, which was drawn from contemporaneous sources. Indeed, an amicus helpfully points out that Texas cases used the term “cause” in the 1870s to describe a wide variety of proceedings involving trusts. Second, the panel’s definition is based on the common law and thus excludes equitable actions, which we have long held the Judiciary Article guarantee was specifically enacted to include. The panel’s definition would collapse the Judiciary Article guarantee into the Bill of Rights guarantee, rendering the former surplusage…
For this additional reason, the panel majority erred in choosing a different and much narrower common-law definition of “cause,” which led it to depart improperly from several other binding precedents of this Court… Under these and other precedents, the court of appeals erred by adopting a binary view of the options for defining the scope of the Judiciary Article’s jury-trial guarantee and selecting the narrower option. Instead, it should have followed the middle path charted by our cases (hodgepodge though they may be), proceeding to examine whether there is a “special reason” of the kind we have held sufficient to deny a jury trial even though this adversary equitable action otherwise falls within the broad meaning of “cause” in the Judiciary Article guarantee. If any departure from our precedent is warranted, it must come from this Court. I do not analyze either point here, however—whether a “special reason” applies in this context under our existing jurisprudence or whether that jurisprudence is well grounded in the Constitution’s text and history. Because I conclude that there are no disputed questions of material fact in this case for a jury to resolve, those questions must await a future case.
Id. Of course, this order is just three justices’ opinion out of the nine-member Court as to the validity of the court of appeals’ reasoning. The Court could have accepted the case, affirmed the result, but corrected the reasoning of the court of appeals. The Court did not do that. So, as we sit today, the court of appeals’s analysis and narrow reading of “cause” in the constitutional right to a jury trial is the precedent in Texas.
FCC Opposes Effort to Re-Open One-to-One!: “The Government Has Decided Not to Seek Further Review of This Court’s Panel Decision Vacating an FCC Rule”
The FCC filed its brief responding to the effort of the National Consumers League to bring the TCPA one-to-one consent rule back from the dead.
In their filing today the FCC has affirmatively stated it will NOT challenge the Eleventh Circuit’s ruling and will oppose any effort by any other entity to do so:
The government has decided not to seek further review of this Court’s panel decision vacating an FCC rule. Allowing the Proposed Intervenors to become parties at this late stage, only to continue litigation that the government has decided no longer to pursue, would undermine the government’s prerogative to direct the course of this case.
Wow!
While everyone assumed (correctly) the FCC would not take any steps to defend the one-to-one ruling in the wake of the Eleventh Circuit’s IMC opinion this was its first direct public statement confirming as much.
The Commission goes onto argue the intervention effort is too late and the court should deny the discretionary request regardless and defer to the government’s decision not to appeal or challenge the ruling.
Really fascinating stuff. Can’t wait to see the ruling here.
Full brief available here: FCC brief
Beltway Buzz, April 4, 2025
The Beltway Buzz™ is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
House Republicans Postpone Votes on Key Bills. On April 1, 2025, Republican leaders in the U.S. House of Representatives canceled all remaining votes for the week after they failed to squash an effort within their own ranks to allow new parents in the House to vote by proxy. The unexpected abbreviated work week means that anticipated votes on the Safeguard American Voter Eligibility (SAVE) Act (a bill that passed the House in July 2024 that would require proof of citizenship to register to vote in federal elections) and the No Rogue Rulings Act (a bill that would prohibit federal district courts from issuing orders providing for injunctive relief beyond the parties to the litigation, meaning no nationwide injunctions) have been postponed. The Buzz will continue to monitor these bills when the House returns to Washington, D.C.
President Trump Sends Nominations for WHD Administrator, DOL Solicitor, to Senate. The political appointee picture at the U.S. Department of Labor (DOL) continues to come into focus. Secretary of Labor Lori Chavez-DeRemer and Deputy Secretary Keith Sonderling are already in place. Previously, the Buzz discussed President Donald Trump’s nominees to run the Occupational Safety and Health Administration (OSHA), as well as the Employment and Training Administration (ETA). This week, President Trump:
Nominated Andrew Rogers to serve as administrator of the Wage and Hour Division (WHD). Rogers served in the WHD during the first Trump administration before moving to the U.S. Equal Employment Opportunity Commission (EEOC), where he served as chief counsel to Commissioner Andrea Lucas. He has served as the Commission’s acting general counsel since February 4, 2025.
Nominated Jonathan Berry to serve as solicitor of labor, which is essentially the DOL’s top attorney. Berry served as the head of the DOL’s regulatory department in the first Trump administration, and also previously served in the U.S. Department of Justice.
Immigration News. The latest news on employment-based immigration policy includes the following:
H-1B Registration Completed; Petition Period Begins. Claudia P. Martorell and Sidra E. Cheema have the details on the closing of the H-1B registration period and the opening—beginning April 1, 2025—of the ninety-day petition filing period with U.S. Citizenship and Immigration Services (USCIS).
Bill Would Eliminate OPT. A group of nine Republicans in the House have introduced the ‘‘Fairness for High Skilled Americans Act of 2025’’ (HR 2315), which would eliminate the Optional Practical Training (OPT) for F-1 students. The OPT program provides F-1 students with up to three years of work authorization after graduation. The bill should not be confused with an identically named bill that has been introduced in previous congresses that would eliminate the 7 percent per-country cap for employment-based visas and make significant changes to the H-1B visa program.
Judge Blocks Vacatur of TPS Designation Venezuela. A federal district court in California temporarily blocked Secretary of Homeland Security Kristi Noem’s recent rescission of Temporary Protected Status (TPS) for certain individuals from Venezuela. The judge determined, in part, that the TPS statute “does not permit the Secretary to terminate a TPS designation ‘midstream’ during the term of the prior designation.” Protected status from deportation for covered individuals was scheduled to terminate on April 7, 2025. Amanda M. Mullane and Daniela Medrano Sullivan have the details.
House Republicans Introduce Labor Bills. House Republicans have introduced bills that address union organizing through the use of “salts,” as well as voting in union representation elections:
Union Salts. Republican Representative Burgess Owens (UT) reintroduced the Start Applying Labor Transparency (SALT) Act, which would require more transparency from union salts, who are professional union organizers who seek employment only in order to organize employees. The Buzz wrote about the SALT Act in 2024.
Representation Elections. Representative Bob Onder (R-MO) introduced the Worker Enfranchisement Act, which would allow a union to become the exclusive bargaining representative of employees only if it wins a majority of votes cast in a secret ballot election “in which not less than two-thirds of such employees vote.” Currently, unions can become the representative of an entire bargaining unit—impacting the terms and conditions of all employees in that unit—if they win a majority of the votes cast, no matter how poor the voter turnout is.
Remembering Justice Reed. On April 2, 1980, former Supreme Court Associate Justice Stanley Forman Reed passed away. While perhaps not as well-known as some of his contemporaries, Reed enjoyed quite a legal career. After serving in the United States Army in World War I, Reed returned to his Kentucky home where he carved out a legal career representing agricultural interests. This led to his 1929 appointment by President Herbert Hoover to serve as general counsel of the Federal Farm Board. In 1932, President Franklin D. Roosevelt appointed Reed as general counsel of the Reconstruction Finance Corporation and then, in 1935, as solicitor general of the United States. Here is where things got interesting for Reed:
As solicitor general, Reed was tasked with defending many of FDR’s New Deal programs. Among other cases, Reed argued and won West Coast Hotel Co. v. Parrish (1937) (the “switch in time that saved nine,” by upholding minimum wage laws) and National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937) (upholding the constitutionality of the National Labor Relations Act).
Reed argued and lost A.L.A. Schechter Poultry Corporation v. United States (1935), also known as the “sick chicken” case.
While defending New Deal programs, Reed once argued six cases before the Supreme Court in a span of two weeks, collapsing from exhaustion during the middle of one of the arguments in December of 1935.
In 1938, FDR nominated Reed to serve as an associate justice of the Supreme Court of the United States, where he served until his retirement in 1957.
In 1949, as a sitting justice on the Court, Reed served as a character witness on behalf of Alger Hiss, who was being tried for perjury in connection to accusations that Hiss was a spy for the Soviet Union. Hiss had served under Reed at the Reconstruction Finance Corporation.
Reed is the last serving justice who did not graduate from law school. (He attended law school, but he did not graduate).
Basic but Important Considerations for Corporations—Both For-Profit and Non-Profit: Understanding Director and Officer Liability Insurance
Insurance commonly referred to in the insurance industry as “directors and officers” or “D&O” insurance is insurance that is payable to directors and officers of a corporation, or to the corporation itself, as indemnification for losses or the advancement of defense costs in the event the corporation suffers a loss as a result of legal action brought for alleged wrongful acts by the corporation’s directors and/or officers that were taken in their capacity as directors and/or officers.
Depending on the scope of the policy, the policy may also provide coverage for members of corporate committees or defined classes of volunteers.
Who Needs D&O Insurance Anyway
Corporations do! Whether for-profit or non-profit, corporations act through their boards of directors and officers, whose decisions are subject to scrutiny and second-guessing by the corporation’s stockholders. As a result, the corporation’s directors and officers become targets of lawsuits brought by the corporation’s stockholders. Understanding this practical reality, a critical and recommended step that any corporation can take in an effort to protect its board members and officers, and in doing so, itself, is to obtain D&O insurance.
Non-profit corporations occasionally question whether they need D&O coverage given the additional protections provided by Chapter 55A. However, the additional protection afforded to non-profit officers and directors does not shield them from defending against D&O claims. D&O coverage offers great value to non-profits.
Purchasing Power
Both the North Carolina Business Corporation Act, which can be found in Chapter 55 of the North Carolina General Statutes, and the North Carolina Nonprofit Corporation Act, which can be found in Chapter 55A of the North Carolina General Statutes, specifically authorize—but does not require—for-profit and non-profit corporations, respectively, to purchase insurance on behalf of an individual who is or was a director, officer, employee, or agent of the corporation (and in the case of a non-profit corporation, also a committee member) to protect against liability asserted against, or incurred by, the individual in the individual’s official capacity or arising from his/her status as a representative of the corporation.
Considerations to Bear in Mind When Shopping for D&O Insurance
Corporations in the market for D&O insurance do themselves a service by being mindful that not all insurance policies are created equal, and not all policies cover every type of risk or need. Typically, the broader the coverage, the better protection the policy will afford the corporation’s directors and officers. However, carefully considering all options available and discussing the businesses’ needs and nuances with the corporation’s insurance broker are important steps for the corporation to take when obtaining D&O (and any other type of) insurance.
While not an exhaustive list, the following are important questions to ask when shopping for D&O insurance:
Does the policy’s definition of “insured” extend beyond the actual directors and officers (i.e., does it include, where applicable, committee members and desired classes of volunteers)?
Does the definition of “insured” protect past as well as present D&Os?
Does the policy provide a defense to claims and lawsuits (as opposed to just reimbursing for a judgment if one is eventually entered)? Even a successful defense can result in large attorney and court costs.
Does the policy cover against defamation (i.e., libel and slander) claims?
Does the policy provide a defense against claims seeking non-monetary remedies?
A non-monetary, or non-pecuniary, claim is one in which the plaintiff is not seeking money but instead asks the court for a declaration that the director or officer has acted wrongly (i.e., a suit for not fulfilling their mission or challenging an unpopular decision of the directors or an officer).
Does the policy cover derivative lawsuits?
A derivative action is a lawsuit brought by the corporation’s stockholders “in the name” of the corporation.
Does the policy defend against a claim or lawsuit for failure to maintain or obtain insurance?
Does the policy provide coverage for decisions directors/officers make in accepting or rejecting contracts?
Does the policy provide coverage for an investigation of a claim not yet in suit?
A shareholder accuses the director/officer of misconduct and demands an investigation, prior to filing a lawsuit.
Does the insurer provide the nonprofit corporation with risk management advice/training?
D&O Coverage as an Endorsed v. Standalone Insurance Policy
For many corporations, insurance premiums represent a significant annual cost of doing business. The list of typical policies/coverage types carried is not short and tends to grow rather than shrink, with many businesses carrying commercial general liability, commercial property, commercial auto, worker’s compensation, and employer’s practices liability coverages. In recent years, additional coverages have increasingly become more prevalent as typical coverages to see in place, such as crime, fidelity, and cyber insurance.
With the growing expense insurance premiums often represent for businesses, it is not uncommon for companies to source ways to lessen their insurance expense burden. Some do so by adding additional coverages as endorsements (i.e., provisions that add to, remove from, or otherwise alter a policy’s original scope of coverage) to their existing liability or businessowners’ policies as opposed to procuring a standalone D&O policy.
A downside of an endorsed policy is that too many claims against an endorsed policy can cause the premiums of the liability/property casualty coverage to increase, and sometimes dramatically, or can impact the policy’s renewal. There are other potential downsides to endorsed policies as well, to discuss with the corporation’s broker, like how aggregate limits can come into play when there is more than one claim or more than one insured involved in a claim under the same policy in a policy period.
While a standalone policy could be more expensive than an endorsed policy, standalone policies often provide better coverage, which can save money in the long run.
Characteristics of D&O Insurance to Keep in Mind
D&O insurance has several characteristics worth keeping in mind, as the application of these characteristics can have a significant impact on whether, and/or to what extent, there is coverage for a given claim/suit that has been brought and tendered to the D&O carrier for coverage. While not exclusive to D&O policies, these features tend to either not appear or to be less common in a number of the coverages that many businesses may be accustomed to interacting with to a higher degree of frequency, like their commercial general liability and commercial property coverages, for example. This article highlights but two of these characteristics.
First, D&O policies are typically either “claims-made” or “claims-made and reported” policies, meaning to trigger coverage the claim has to have been made during the policy period (claims-made) or both made and reported during the policy period (claims-made and reported). If these timing requirements, which are strictly interpreted and enforced, are not satisfied, there will be no coverage.
Second, D&O policies are generally “eroding limits” policies, meaning amounts spent on defending a covered claim/lawsuit reduce the policy’s available limit. For example, if the policy has a $1,000,000.00 limit applicable to the claim/suit, and $250,000.00 is spent on legal fees and expenses defending the case, the most the D&O insurer would ever be responsible to pay out under the policy would be $750,000.00 for indemnity, and that assumes there is full indemnity coverage. Of course, any applicable deductible/retention would need to be satisfied by the insured. Eroding limits can be a significant issue with the rising costs associated with litigating claims, and where multiple insureds may need to be defended by different sets of attorneys, should there be potential conflicts of interest that require engaging more than one set of legal counsel under the policy to defend those insureds.
One final note regarding D&O policies is that an insured generally has more freedom to select their counsel than under other types of coverage where the insurer assigns the matter to panel counsel without input from the insured.
Conclusion
Having proper D&O insurance coverage in place is an important risk management tool that corporations should secure and seek to tailor to meet their needs.
EPA Launches Historic Deregulatory Initiative: Key Legal Risks and Strategic Takeaways
On March 12, 2025, EPA Administrator Lee Zeldin announced the agency’s intention to reconsider 31 environmental regulations, describing the effort as the “single most impactful day of deregulation in EPA history.” While the scope of this initiative spans air, water, and climate regulations, the most consequential actions—legally and practically—center on a handful of cross-cutting programs and sector-specific rules.
Although the EPA’s announcement is styled as a deregulatory roadmap, none of the targeted rules are rescinded yet. Each proposed rollback will require full notice-and-comment rulemaking under the Administrative Procedure Act (APA), and legal challenges are inevitable. This GT Alert summarizes seven of the most significant rulemakings to watch and highlights the legal and procedural headwinds the EPA is likely to face.
Cross-Sectoral Rollbacks
Greenhouse Gas Endangerment Finding (2009)
The EPA’s plan to reconsider the 2009 Endangerment Finding (the “Finding”) threatens to upend the legal basis for regulating greenhouse gas (GHG) emissions under the Clean Air Act (CAA).1 The Finding, issued following the Supreme Court’s decision in Massachusetts v. EPA, required the EPA to determine whether GHGs “may reasonably be anticipated to endanger public health or welfare,” leading to regulation of CO₂ and other GHGs from mobile sources.2 The Finding concluded that six greenhouse gases, individually and in combination, contribute to climate change and pose a danger to public welfare.3 The EPA then applied the Finding more broadly to numerous stationary sources under its various CAA authorities.
Any move to revoke or materially alter this determination will face high procedural and evidentiary hurdles under controlling case law; any reversal must be supported by a well-reasoned explanation and contend with extensive factual records supporting both the original Finding and numerous other EPA rulemakings.4 In other words, it is likely to take EPA a fair amount of time to develop a package supporting a revocation of this finding.
Social Cost of Carbon (SCC)
The SCC, a key metric in regulatory cost-benefit analyses, has long been a focal point of legal and policy debate. The Biden administration set the SCC at $190 per metric ton of CO₂, significantly increasing the estimated benefits of GHG regulation and the costs of carbon-based sources of energy. The EPA now proposes to overhaul or potentially abandon the SCC, which could weaken the justification for existing and future climate-related rules.
This proposed shift, if implemented, could make it more challenging for agencies to justify the benefits of greenhouse gas regulations or mitigation measures required via Environmental Impact Statements (EISs). Plaintiffs may challenge the revision on grounds that it arbitrarily discounts intergenerational or global harm.5 Recent case law, including Missouri v. Biden, has addressed standing and the sufficiency of reasoning behind SCC-related decisions, suggesting courts are increasingly attentive to agencies’ cost-benefit frameworks.6 The SCC’s reevaluation also resonates with broader post-Loper Bright developments, requiring agencies to justify economic assumptions without the level of deference previously enjoyed.7
Enforcement Discretion and Termination of Environmental Justice (EJ) Programs
The EPA announced the closure of all “Environmental Justice and Diversity, Equity, and Inclusion arms of the agency” and a new posture on enforcement discretion—declining to prioritize actions not clearly tied to statutory mandates.8 Prior administrations have used enforcement actions to impose requirements via administrative consent orders that exceed regulatory requirements and to focus on enforcement of certain sectors. Although this aspect of EPA’s announcement is without much detail, the administration is likely to review and potentially change past enforcement practices and priorities.
Sector-Specific Rollbacks
Clean Power Plan Replacement (GHG Standards for Power Plants)
The EPA’s recent rule governing GHG emissions from existing power plants identifies carbon capture and storage (CCUS) as the “best system of emission reduction” (BSER) under Section 111 of the CAA.9 Reconsideration of the rule may focus on whether CCUS is “adequately demonstrated,” a required element of the BSER standard. Legal challenges could also invoke the Supreme Court’s decision in West Virginia v. EPA,10 which applied the major questions doctrine to restrict EPA’s authority to impose system-wide generation-shifting measures—raising questions about whether the Biden administration’s rule improperly shifted how electricity may be generated.
New Source Performance Standards for Oil & Gas (OOOOb/OOOOC)
These methane-centric rules apply to both new, and for the first time, existing oil and natural gas facilities.11 If the GHG Endangerment Finding is revoked or narrowed, the legal foundation for these rules could be undermined. Subpart OOOOc, which governs existing sources, establishes emission guidelines that specifically target methane, the primary greenhouse gas regulated under the rule. Although EPA currently limits the regulation to methane, its authority to do so derives from the broader Finding. If that Finding is reversed or weakened, Subpart OOOOc could be subject to legal challenge or rollback. A rollback could leave emissions regulation for a substantial portion of up- and midstream oil and gas infrastructure to individual states, creating a fragmented regulatory landscape.12
Subpart W – GHG Reporting Program
EPA’s greenhouse gas reporting requirements for oil and gas sources are closely tied to the Inflation Reduction Act’s methane fee, which remains a statutory requirement (although Congress voided EPA’s 2024 Waste Emissions Charge rule via the Congressional Review Act).13 Revisiting this (and other Greenhouse Gas Reporting Program requirements for other sectors) has already resulted in a legal challenge and raises uncertainty for obligated reporters.14 For example, on March 21, 2025, the Environmental Defense Fund filed a lawsuit challenging EPA’s extension of the Greenhouse Gas Reporting Program’s reporting deadline for 2024 data.15 EDF argues that the EPA unlawfully delayed the reporting requirements without public notice and comment, undermining the program’s role in providing vital information about pollution from major sources nationwide.
PM2.5 NAAQS and the Good Neighbor Plan
EPA’s reconsideration of the 2023 fine particulate matter (PM2.5) standards would have cross-industry implications, particularly for manufacturers and energy generators.16 The Good Neighbor Plan’s proposed reconsideration raises key issues for numerous industries and states dealing with cross-border ozone challenges, particularly given the most recent plan’s extension to non-power sector emissions.
This proposed reconsideration also coincides with ongoing litigation17 concerning CAA venue questions.18 On March 25, 2025, the Supreme Court heard oral arguments in Oklahoma v. Environmental Protection Agency, No. 23-106719, a case addressing whether challenges to the EPA’s disapproval of state implementation plans under the CAA’s “Good Neighbor” provision should be adjudicated in regional circuit courts or centralized in the U.S. Court of Appeals for the District of Columbia Circuit.
Oklahoma and other petitioners argued that the EPA’s disapproval of their state plans – designed to address interstate air pollution – should be reviewed in their respective regional circuits, as these actions were specific to individual states and localized regions. In contrast, the EPA asserted that because it used a uniform analytical approach and published the disapprovals collectively in a single Federal Register notice, the actions were nationally applicable and thus fell under the exclusive jurisdiction of the D.C. Circuit.
The Court’s decision in this case is expected to clarify the appropriate judicial venue for such challenges, which could impact how states and industries address issues and frame arguments on reconsideration of the Good Neighbor Plan.
GT Insights
While EPA’s announcement carries no immediate legal effect, its significance lies in the number and breadth of proposed changes and the foundational rules it seeks to reconsider. Each reconsideration will be subject to APA requirements, including proper scientific and economic justification, public comment, and interagency review, all of which will take time to undertake. Moreover, litigation is almost inevitable. Courts may apply heightened scrutiny notwithstanding Loper, particularly where the EPA departs from prior factual findings or statutory interpretations.20
Regulated entities should prepare for a prolonged period of legal and regulatory uncertainty at the federal level. Active participation in the reconsiderations’ public comment processes, submission of technical and economic data, and strategic litigation positioning will be essential in shaping the next phase of environmental policy.
1 42 U.S.C. § 7521(a)(1). See also 42 U.S.C. §§ 7470–7492, 7661–7661f (provisions for the PSD and Title V permitting programs).
2 Massachusetts v. EPA, 549 U.S. 497 (2007).
3 Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009).
4 Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983). See also Ethyl Corp. v. EPA, 541 F.2d 1 (D.C. Cir. 1976) (en banc) (discussing precautionary principles in environmental regulation); Chevron U.S.A. Inc. v. Nat. Res. Def. Council, 467 U.S. 837 (1984).
5 EPA, Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide – Interim Estimates (Feb. 2024).
6 Massachusetts v. EPA, 549 U.S. 497 (2007).
7 Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983). See also Ethyl Corp. v. EPA, 541 F.2d 1 (D.C. Cir. 1976) (en banc) (discussing precautionary principles in environmental regulation); Chevron U.S.A. Inc. v. Nat. Res. Def. Council, 467 U.S. 837 (1984).
8 See Missouri v. Biden, 576 F. Supp. 3d 622, 635 (E.D. Mo. 2021) (addressing standing to challenge SCC metrics).
9 Heckler v. Chaney, 470 U.S. 821, 831–32 (1985).
10 Control of Air Pollution From Existing Stationary Sources: Electric Utility Generating Units, 88 Fed. Reg. 33,692 (May 23, 2023).
11 West Virginia v. EPA, 597 U.S. ___, 142 S. Ct. 2587 (2022).
12 Standards of Performance for Crude Oil and Natural Gas Facilities for Which Construction, Modification, or Reconstruction Commenced After November 15, 2021, and Emissions Guidelines for Crude Oil and Natural Gas Facilities for Which Construction, Modification, or Reconstruction Commenced On or Before November 15, 2021, 88 Fed. Reg. 74,406, 74,408–10 (Nov. 29, 2023) (to be codified at 40 C.F.R. pts. 60, 62) (“EPA is finalizing GHG emission guidelines for methane from existing sources … These actions are based on the 2009 Endangerment Finding for greenhouse gases.”); Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 Fed. Reg. 66,496 (Dec. 15, 2009).
13 42 U.S.C. § 7411(d).
14 26 U.S.C. § 136(f)(5) (Inflation Reduction Act methane fee).
15 Environmental Defense Fund v. U.S. Environmental Protection Agency, No. 25-1056 (D.C. Cir. filed Mar. 21, 2025).
16 42 U.S.C. § 7414(a).
17 See 42 U.S.C. § 7607(b)(1) (CAA venue provisions).
18 National Ambient Air Quality Standards for PM2.5, 89 Fed. Reg. 12,844 (Feb. 7, 2024).
19 Transcript of Oral Argument, Oklahoma v. Envtl. Prot. Agency, No. 23-1067 (U.S. Mar. 25, 2025).
20 Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983). See also Ethyl Corp. v. EPA, 541 F.2d 1 (D.C. Cir. 1976) (en banc) (discussing precautionary principles in environmental regulation); Chevron U.S.A. Inc. v. Nat. Res. Def. Council, 467 U.S. 837 (1984).