TURNING UP THE HEAT: Summer Vibe Faces Putative Class Action Lawsuit Based on Alleged Violations of the Quiet Hours Provisions
Hi TCPAWorld! The Baroness here and a new TCPA lawsuit was just filed. Just in time for Summer!
Yes, another TCPA lawsuit has just hit the docket, and once again, it’s centered around the increasingly active quiet hours provision. No surprise, this one comes from Jibrael Hindi’s office, which has filed hundreds of these quiet hours cases in recent months.
For those keeping track, the “quiet hours” provision under the TCPA prohibits initiating telephone solicitations before 8:00 a.m. or after 9:00 p.m. local time of the called party. 47 C.F.R. § 64.1200(c)(1). This provision is rapidly becoming a favorite for the plaintiffs’ bar.
In this latest suit, Olivia Lee Pesce, alleges that between April 14, 2023 and November 17, 2023, she received 8 text messages from Summer Vibe Inc. d/b/a Cupshe (yes, the swimwear brand) before the hour of 8 a.m. or after 9 p.m. local time in her location. A screenshot of the text messages are as follows:
As you folks know, the TCPA carries statutory violations of $500 per text and up to $1,500 if they were knowing and willful violations. So at best, Olivia could recover $12,000 ($1,500 x 8 messages) for the texts she received.
But the real exposure lies in the putative class. Olivia isn’t just seeking damages for herself—she’s attempting to certify a nationwide class of individuals who also received marketing texts from Summer Vibe during the quiet hours:
All persons in the United States who from four years prior to the filing of this action through the date of class certification (1) Defendant, or anyone on Defendant’s behalf, (2) placed more than one marketing text message within any 12-month period; (3) where such marketing text messages were initiated before the hour of 8 a.m. or after 9 p.m. (local time at the called party’s location).
So now everyone Summer Vibe texted outside the quiet hours are potentially in the class. Let’s do the math. If just 100 people received similar texts, even at the base statutory amount, the potential liability is already at $50,000—and that number only goes up if willfulness is proven or more class members are found.
While these cases are multiplying, it’s important to remember quiet hours litigation is still a new and evolving area of law. It remains to be seen how far these cases will go.
Companies should keep a close eye on this trend. Hindi is clearly on the prowl.
As this case was just filed, not much has happened yet, but we will definitely keep a close eye on this one to see how it plays out. Pesce v. Summer Vibe Inc., Case No.: 2:25-cv-05042
Washington Strips Employers of Workers’ Compensation Immunity for Asbestos Claims
On May 29, 2025, the Washington Supreme Court overturned its own precedent, stripping an employer of Workers’ Compensation Immunity for asbestos claims by expanding the Deliberate Injury exception. The court held that mere “virtual certainty” that an injury could result, as opposed to the statutorily required “deliberate intention … to produce injury,” was sufficient to strip immunity in asbestos-related cancer cases. This ruling will likely result in a dramatic increase in liability for employers in Washington State whose employees may have been exposed to asbestos. The opinion also leaves open the potential for expanded liability for other, non-asbestos-related, long latency claims.
BackgroundIn Cockrum v. C.H. Murphy/Clark-Ullman, Inc., the plaintiff worked at the Alcoa Wenatchee Works aluminum smelter in Wenatchee, Washington, from 1967 to 1997. The facility is known to have contained both chrysotile and amphibole asbestos. Alcoa instituted a medical monitoring program in 1953 to screen their employees for asbestos-related disease, including screening for “pleural plaques … and early mesothelioma.” An internal 1982 memorandum states that “for a number of years, Alcoa has recognized the very serious potential health hazard represented by the various forms of asbestos use in our plant. Exposure to asbestos fibers can lead to asbestosis and various forms of cancer.”
Conversely, the plaintiff’s expert testified that “asbestos-related disease is never certain to result from asbestos exposure” and that this expert was “not aware of any carcinogen for which exposure at a particular dose is medically certain to cause cancer.” Despite this expert testimony, the Washington Supreme Court concluded that, based on these facts, “Alcoa ultimately knew of the harm of asbestos in its facilities prior to and contemporaneous with Cockrum’s exposures,” and that, therefore, the plaintiff had met the knowledge prong of the Deliberate Injury exception to Workers’ Compensation Immunity by way of a newly created multifactor test.
New Non-Exclusive Multifactor TestThe court articulated a new non-exclusive multifactor test for whether the knowledge component of the Deliberate Injury exception can be met: • The employer’s knowledge of ongoing, repeated development of symptoms known to be associated with the development of latent disease over time• The employer’s knowledge of symptoms developing in employees similarly situated to the plaintiff-employee• The timing of such symptoms developing prior to or contemporaneous with the plaintiff-employee’s exposure(s)• Whether the exposure arises from a common major cause within the employer’s control.
After the court considers these non-exclusive factors to establish knowledge, the court must still then perform the second part of the statutory test, determining if the employer disregarded this knowledge to cause an intentional injury to the plaintiff.
The Washington Supreme Court synthesized their new multifactor test down, concluding that “a plaintiff can satisfy the Deliberate Injury exception … if they demonstrate the employer had actual knowledge that latent diseases are virtually certain to occur and willfully disregard such knowledge.” Based on this, the Washington Supreme Court overturned the grant of summary judgment in favor of the employer and remanded the case back to the Superior Court to consider the second prong of the test, whether the employer disregarded their own knowledge by failing to take “known remedial measures within its control.”
TakeawayThis opinion represents a sea change in the potential for Washington employers, long sheltered by immunity, to face significant liability for asbestos disease in their own workforce. We can expect an increase in new filings against previously immune employer defendants, which should have an outsized impact on premises defendants and manufacturers with facilities within Washington State.
Alice Patent Eligibility Analysis Divergence before USPTO and District Court: Federal Circuit Clarifies Limits on Relying on USPTO Findings in § 101 Eligibility Disputes
In our prior article, we discussed instances in which the U.S. Patent and Trademark Office (USPTO) and the district courts made different findings with regard to patent eligibility under 35 U.S.C. § 101. A recent nonprecedential Federal Circuit decision, Aviation Capital Partners, LLC v. SH Advisors, LLC, No. 24-1099 (Fed. Cir. May 6, 2025), highlights a critical procedural point: District courts are not required to accept findings made by the USPTO as true at the pleading stage — unless those findings are specifically alleged in the complaint.
This issue came to the forefront on appeal after the Delaware District Court dismissed Aviation Capital’s patent infringement complaint under Rule 12(b)(6), finding the asserted patent claims ineligible under § 101. The plaintiff-appellant, Aviation Capital Partners (doing business as Specialized Tax Recovery (“STR”)), argued on appeal that the district court erred by failing to accept the USPTO’s prior eligibility analysis, which favored patent eligibility, as a factual finding at the motion to dismiss stage.
Specifically, STR contended that the USPTO’s conclusion — made during prosecution — that the claims were “integrated into a practical application” and “contained significantly more than an abstract idea” should have been accepted as a true factual finding by the District Court as part of deciding the motion to dismiss. But the Federal Circuit rejected that argument outright, stating:
STR additionally argues that, in deciding the motion to dismiss, the district court was required to assume as true the Patent Office’s “factual finding that the claims were integrated into a practical application and contained significantly more than an abstract idea.” Appellant’s Br. 23–25. We disagree. “[F]or the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true . . . .” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (emphasis added). Here, the complaint included no factual findings made by the Patent Office. J.A. 16–32; Oral Arg. at 4:38–5:45 (complaint alleged the Patent Office made two legal determinations but alleged no factual findings). Accordingly, the district court did not err by declining to accept as true any unalleged factual findings that the Patent Office may have made in its § 101 eligibility analysis.[
This passage underscores the procedural rigor applied to motions to dismiss: The court is bound only to the facts actually pled in the complaint. While STR tried to import the examiner’s analysis into the record, the Federal Circuit made clear that any “factual findings” by the USPTO must be explicitly alleged for a district court to credit them at the motion to dismiss stage.
Implications for Litigants and Drafting Complaints Where Examiner Made Comments Regarding § 101 Eligibility
This ruling serves as a practical guidepost for practitioners navigating § 101 disputes post-Alice. Litigants cannot assume that favorable examiner conclusions — such as an “integration into a practical application” — will be treated as facts unless those determinations are squarely and specifically alleged in the complaint.
The USPTO’s current guidance instructs examiners to evaluate whether a claim is “integrated into a practical application” and whether it includes “significantly more” than an abstract idea — criteria that may allow applications to clear the § 101 hurdle during prosecution. Yet, as Aviation Capital confirms, the deference afforded to such examiner determinations may vary, and on a Rule 12(b)(6) motion, only factual allegations specifically made in the complaint must be taken as true. This begs the question — if a patent owner explicitly alleges factual findings made by an examiner during prosecution regarding § 101, is that sufficient to defeat a motion to dismiss? Though nonprecedential, Aviation Capital suggests as much.
Takeaway
The Aviation Capital decision is a sharp reminder that litigators must be deliberate in pleading factual support for eligibility. To preserve arguments based on examiner findings, those examiner findings must be more than background — they must be alleged facts in the complaint, not just cited conclusions.
Otherwise, courts remain free to assess eligibility from a clean slate. And as this decision reaffirms, that assessment may diverge from what the USPTO previously concluded.
[1] Aviation Capital Partners, LLC v. SH Advisors, LLC, No. 24-1099 at 7 (Fed. Cir. May 6, 2025).
Hot Topics in Employee Benefits: A Primer for In-House Lawyers
Employee benefits compliance has many traps for the unwary and is ever evolving. Below, we have provided a primer on current issues of importance in the employee benefits area to help in-house attorneys identify potential risks, mitigate them, and know when to call an outside ERISA lawyer.
1. What Is Old Is New: Get Your Health Plan Governance in Order
Employers that sponsor self-funded health plans have a host of complicated obligations. There are greater potential legal, regulatory, and fiduciary risks than in years past with managing health plans because of increased congressional legislation, increased Department of Labor (DOL) focus on group health plan compliance, and increased group health plan litigation, often by the same plaintiffs’ firms that have been suing 401(k) plans in fee litigation the past 20 years or more.
Employers should consider properly establishing a benefits committee, much like how they established committees for their retirement plans, that will serve to govern and oversee their employer-sponsored group health plans, especially those that are self-funded. A formal committee could help employers stay compliant, formalize their prudent decision-making process, and shift certain fiduciary liability to the benefits committee from the Board, thus insulating the Board from the underlying fiduciary decisions.
2. Stay Calm and Carry On: Mental Health Parity Non-Enforcement Policy Pauses Only Certain Requirements
Self-insured health plans must show that the plan does not include more restrictions on access to mental health benefits than on access to medical benefits. The law looks at both financial limits (e.g., coinsurance, copays, and deductibles) and other types of limits (e.g., pre-authorization requirements, provider network design, and prescription drug formulary design).
Beginning in 2021, plans were required to produce a written analysis of the non-financial limits, also known as non-quantitative treatment limitations (NQTLs), and the DOL has been actively auditing those analyses. Such audits have been time- and resource-intensive, given that the DOL has yet to approve an analysis without changes.
Late last year, the agencies released a final rule with details on the DOL’s expectations with respect to the NQTL analysis. They have since been sued for the rule, with the plaintiffs claiming overreach by the DOL. On May 15, 2025, the DOL stated that it would not enforce the final rule but would continue to enforce the statute and prior guidance.
Therefore, self-insured plans should continue to produce and update their NQTL analysis. We expect at least some continued audit activity, as well as the threat of private litigation.
3. To Report or Not to Report, That Is the Question: Florida Data Request to Self-Insured Plans Under Pharmacy Benefits Management Law
Several states have recently enacted laws designed to increase oversight of pharmacy benefit managers (PBMs) and limit certain PBM practices. Many of these laws impose reporting obligations on PBMs and the plans and employers with which they contract. While some of these laws exempt self-funded group health plans from their reach, recognizing that states are generally preempted from regulating such plans under ERISA, others explicitly include self-funded group health plans within their reach. For example, Florida’s Prescription Drug Reform Act includes “self-insured employer health plans” in its definition of “pharmacy benefits plan or program”—the category of plans to which the law applies.
This year, Florida’s Office of Insurance Regulation issued data requests under the PBM law, asking PBMs and group health plans to submit a broad range of prescription drug data, including participants’ names, dates of birth, prescriptions filled, and doctors visited. For sponsors of self-funded health plans, these data requests and similar requests made by other state agencies raise questions regarding both ERISA preemption and Health Insurance Portability and Accountability Act (HIPAA) obligations.
We expect that these questions may soon be answered through litigation, but in the meantime, employers with self-funded plans should work with counsel to evaluate these requests on a case-by-case basis. In some instances, the requested data may be minimal, and the state laws may fall outside of ERISA’s broad preemption protection. In other cases, where states request sweeping, specific data, such requests might be preempted by ERISA, especially where sharing the information would violate HIPAA.
4. If You Didn’t Document It, It Didn’t Happen: Takeaways from Cunningham v. Cornell University
On April 27, 2025, the U.S. Supreme Court ruled in Cunningham v. Cornell University that a plaintiff can allege that a transaction between a plan and a “party in interest,” such as a plan service provider, is a “prohibited transaction” under ERISA even if the plaintiff doesn’t directly allege that the transaction was unreasonable or unnecessary. Why did the Supreme Court conclude a plaintiff doesn’t have to allege something specifically wrong, especially where transactions between plans and plan service providers are common? The Court took a textualist approach and concluded that ERISA’s structure puts the burden on the plan fiduciary to prove the transaction was necessary and reasonable, and because of this, a plaintiff need not plead “unreasonableness” in its complaint. As the Court conceded, the result is that the bar to get past a motion to dismiss is lowered, making it more difficult for plans to avoid costly litigation for weak—if not downright meritless—prohibited transaction claims. Recognizing that this may be problematic for plans, the Supreme Court urged lower courts to use other tools at their disposal to weed out meritless claims sooner rather than later, such as additional pleadings or the threat of shifting plan legal fees to a plaintiff.
So, what can a prudent plan administrator take away from a case about technical ERISA pleading standards? The clearer a fiduciary’s prudent process for selecting and compensating a plan service provider, the better. Clear documentation of the fiduciary’s process, such as in committee meeting minutes (preferably, vetted by experienced counsel), makes it more likely that a court will see the prudence a fiduciary has exercised from the get-go, before individuals have to defend their efforts in depositions.
5. How Well Is Your Wellness Plan?
HIPAA’s wellness program rules provide an exception to its general rule that prohibits an employer from determining premiums or benefits based on a health factor. Employers offering wellness programs should be mindful of ongoing challenges to health-contingent programs. These programs require participants to satisfy a standard related to a health factor to earn a reward. Health contingent programs can be outcomes-based or activity-only programs. While many of the requirements apply to both programs, challenges—and litigation—focus on health-contingent programs that are outcomes-based. These programs require employers to allow a “reasonable alternative standard” for meeting the requirements, regardless of whether it is medically inadvisable for a participant to try to meet the standard, or if meeting the standard is unreasonably difficult due to a medical condition. Cases focus on the availability of, or communication related to, a “reasonable alternative standard.”
Employers offering these plans should review their communications ahead of open enrollment season to make sure reasonable alternative standards are disclosed in all printed and electronic communications. Employers should also ensure that they are, in fact, offering a reasonable alternative standard as well as ensuring payment is made for any retroactive periods while the standard is being met.
6. Don’t You Forget About Me: Cybersecurity Guidance Applies to All Employee Benefit Plans
In April 2021, in the wake of a rash of phishing and hacking incidents that resulted in the theft of retirement funds, the DOL issued cybersecurity guidance for plan sponsors, plan fiduciaries, record keepers, and plan participants. Recognizing the vast assets being held in private-sector pension and defined contribution plans without sufficient vigilance, protections, and accountability, these assets may be at risk from both internal and external cyber threats.
The guidance issued by the DOL includes Tips for Hiring a Service Provider, Cybersecurity Program Best Practices, and Online Security Tips. However, it was heavily focused on ways to protect retirement plan data and the financial assets in retirement accounts, leading many to the misconception that the guidance didn’t extend to the data maintained by the plan sponsors, plan fiduciaries, and the contractors and vendors for health and welfare plans.
As cybercrime evolved and hackers began to use malware and ransomware, health care data became an increasingly attractive target because the services that health care organizations and their IT systems support keep people alive and healthy. Hackers appreciated that there was little tolerance for allowing health care systems to remain offline, making it more likely a ransom will be paid, creating the perfect storm and magnifying the value of health care data to cybercriminals. Breaches by large vendors made it abundantly clear that, in a digital world, the need for strong cyber hygiene transcends all boundaries, prompting the DOL to issue an update in November 2024 to the cybersecurity guidance to confirm that it applies to all ERISA plans.
A Day of Near-Unanimity on Six Important Cases – SCOTUS Today
As this term draws to a close, the U.S. Supreme Court is getting busy in reducing its inventory of pending cases. Yesterday, six of them were resolved.
Unfortunately for me, as well as other lawyers who frequently deal with class actions, the case I was most eagerly awaiting, Laboratory Corporation of America Holdings v. Davis, was resolved summarily with a one-liner indicating a “DIG,” that is, “cert. dismissed as improvidently granted.”
Usefully for us interested lawyers, though, Justice Kavanaugh dissented from this per curiam decision, and his dissenting opinion gives us a good idea of what the other eight Justices were thinking and how the issue in the case might come up again in future terms.
The question presented was whether a federal court may certify a damages class pursuant to Federal Rule of Civil Procedure 23 (“Rule 23”) when the class includes both injured and uninjured members. The underlying case was simple: various blind and visually impaired individuals alleged that Labcorp had violated the Americans with Disabilities Act and a state analog with respect to the accessibility of touchscreen kiosks by which patients can check in for their medical appointments. The class that these individuals sought to represent contained persons who, though legally blind, either would not use the kiosks at all or were indeed unable to use them. Nevertheless, the U.S. Court of Appeals for the Ninth Circuit ultimately approved the class, notwithstanding that it “potentially includes more than a de minimis number of uninjured class members.”
Justice Kavanaugh believes that the Court “digged” the case because it was unwilling to wade into the threshold issue of mootness. He would have done so and held that a Rule 23 damages class cannot include uninjured members. To be fair, the majority very well might have been motivated by the doctrine of avoidance, but for those of us involved in securities and employment litigation and, more recently, cybersecurity and data privacy cases, this issue of inclusion in classes of uninjured persons is very much live. This is a bad news / good news issue, however: Bad in the sense that a lively issue will not be decided, at least at present, good in the sense that it is likely to recur. At that point, we know at minimum how Justice Kavanaugh will vote.
Now, let’s turn to the cases that actually were decided on the merits.
On behalf of a unanimous Court in Ames v. Ohio Dept. of Youth Services, Justice Jackson wrote that the Sixth Circuit’s “background circumstances” rule—which requires members of a majority group to satisfy a heightened evidentiary standard to prevail on a claim under Title VII, 42 U. S. C. §2000e– 2(a)(1)—“cannot be squared with the text of Title VII or the Court’s precedents.” Most of this blog’s readers understand that Title VII’s disparate-treatment provision bars employers from intentionally discriminating against their employees on the basis of race, color, religion, sex, or national origin. It is usually “not onerous” for a plaintiff to state a prima facie case of discrimination, but the “background circumstances” rule requires plaintiffs who are members of a majority group to bear an additional burden at the outset of a disparate impact, reverse discrimination case. “The question in this case is whether, to satisfy [its] prima facie burden, a plaintiff who is a member of a majority group must also show ‘background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.’”
The Court answers that question in the negative, holding that the “background circumstances” requirement “is not consistent with Title VII’s text or our case law construing the statute.” In doing so, the Court recognized that Title VII’s pleading requirements are the same whether the plaintiffs are members of minority or majority groups. The statute bars discrimination against “any individual,” not groups, because of protected characteristics. “Congress left no room for courts to impose special requirements on majority-group plaintiffs alone.” The Court thus reversed the case and remanded it for further proceedings under a uniform pleading standard.
Interestingly, Justice Thomas, joined by Justice Gorsuch, wrote a separate concurring opinion decrying “the problems that arise when judges create atextual legal rules and frameworks.” Pending cases in other areas of the law, especially where a spate of recent executive orders is at issue, will likely confront certain Justices with the adage about “what is sauce for the goose is sauce to the gander.” One would not be surprised if, say, Justice Kagan were to remind her concurring colleagues of that observation in future cases where textual literalness might be questioned. For the present, employment law practitioners should take note of the Ames case in a litigation environment increasingly rich in reverse discrimination cases spawned by executive orders banning diversity, equity, and inclusion or similar programs.
Smith & Wesson Brands, Inc. v. Estados Unidos Mexicanos is another case decided by a unanimous Court. The decision was written by Justice Kagan, with the odd couple of Justices Thomas and Jackson also separately concurring. The case arose with a lawsuit filed by the government of Mexico against seven American gun manufacturers, claiming that the companies aided and abetted unlawful sales of guns that were routed to Mexican drug cartels. The suit was premised on the theory that the manufacturers failed to exercise “reasonable care.” The Protection of Lawful Commerce in Arms Act (PLCAA) provides that a “qualified civil liability action . . . may not be brought in any Federal or State court,” against a firearms manufacturer or seller stemming from “the criminal or unlawful misuse” of a firearm by “a third party,” §7903(5)(A).
But there is a “predicate exception” to this protective language, applying in cases where a defendant manufacturer or seller “knowingly violated a State or Federal statute applicable to the sale or marketing” of firearms, and the “violation was a proximate cause of the harm for which relief is sought.” §7903(5)(A)(iii). “The predicate violation PLCAA demands may come from aiding and abetting someone else’s firearms offense. PLCAA itself lists as examples two ways in which aiding and abetting qualifies—when a gun manufacturer (or seller) aids and abets another person in making a false statement about a gun sale’s legality or in making specified criminal sales.” This exception derives from the federal law that whoever “aids [and] abets” a federal crime “is punishable as a principal.” See 18 U. S. C. §2(a).
Although Mexico’s complaint was rife with details concerning the companies’ lack of downstream controls over the distribution of the firearms that they produce, including selling guns to distributors whom they know deal with Mexican drug traffickers, it did not pinpoint any particular criminal transactions in which the defendants allegedly assisted and otherwise spoke in general terms more to what the defendants might have known than what they actually did or didn’t do. Thus, the Court, per Justice Kagan, held that the complaint was implausible, a conclusion that “aligns with PLCAA’s core purpose. Congress enacted PLCAA to halt lawsuits attempting to make gun manufacturers pay for harms resulting from the criminal or unlawful misuse of firearms. Mexico’s suit closely resembles those lawsuits. And while the predicate exception allows some such suits to proceed, accepting Mexico’s theory would swallow most of the rule. The Court doubts Congress intended to draft such a capacious way out of PLCAA, and in fact it did not.” The judgment below, therefore, was reversed and the case remanded.
Catholic Charities Bureau, Inc. v. Wisconsin Labor and Industry Review Commission is yet another case in which the Court was unanimous. And again, Justice Thomas and Justice Jackson filed concurring opinions. The issue before the Court derived from a Wisconsin law that exempts certain nonprofit religious organizations from paying unemployment compensation taxes. The exempted organizations must be “operated primarily for religious purposes” and be “operated, supervised, controlled, or principally supported by a church or convention or association of churches.” Catholic Charities and four of its subsidiaries controlled by the Roman Catholic Diocese of Superior, Wisconsin, sought and were denied the exemption on the ground they were not “operated primarily for religious purposes” because they neither engaged in proselytization nor limited their charitable services to Catholics.” The Supreme Court, per Justice Sotomayor, held that the Wisconsin Supreme Court’s interpretation violated the First Amendment, which “mandates government neutrality between religions and subjects any state-sponsored denominational preference to strict scrutiny.” Justice Sotomayor writes that the Wisconsin Supreme Court imposes an improper denominational preference by differentiating between religions based on theological lines. The petitioners’ eligibility for the exemption comes from inherently religious choices such as whether to proselytize or serve only fellow Catholics, “not ‘“secular criteria”’ that ‘happen to have a “disparate impact” upon different religious organizations.’” Because that regime explicitly differentiates between religions based on theological practices, strict scrutiny applies, and Wisconsin failed it.
The Court’s unanimity, with Justices Thomas and Jackson expanding upon what the Court as a whole was willing to endorse, is not surprising. But it does open the door to future cases that deal with controversial secular issues, such as reproductive rights, gender, etc., in which church-sponsored entities are involved. This Wisconsin case, significant in itself, might be no more than a piece in a large construction still under development.
Yesterday’s “kumbaya” moment continued with a unanimous decision in CC/Devas (Mauritius LD.) v. Antrix Corp. The matter originated in a breach of contract suit between an entity owned by the government of India and a satellite leasing company that terminated a contract when India demanded increases in capacity that the company rejected, defending its position based on force majeure. Under the Foreign Sovereign Immunities Act of 1976 (FSIA), personal jurisdiction exists when an immunity exception applies and service is proper.
However, reversing the Ninth Circuit (no surprise there), the Supreme Court held that FSIA does not require proof of “minimum contacts” over and above the contacts already required by the FSIA’s enumerated exceptions to foreign sovereign immunity. The law determines when the district court has subject-matter jurisdiction, which the FSIA grants whenever an enumerated immunity exception applies, and service must have been made under FSIA’s rules. “When both criteria are satisfied,” the Court writes, “personal jurisdiction ‘shall exist.’ Accordingly, the most natural reading of the operative text is that personal jurisdiction over a foreign sovereign is automatic whenever an immunity exception applies and service of process has been accomplished. Notably absent from the provision is any reference to ‘minimum contacts.’ And the Court declines to add what Congress left out, as the FSIA was supposed to ‘clarify the governing standards,’ not hide the ball.”
This was another day when, as Justice Kagan has in the past suggested of her colleagues and herself, as regards textualism, “we are all colleagues now.”
The Court was also essentially unified in its decision in Blom Bank Sal v. Honickman. Analysis of this case sends us back to federal procedure class in law school, covering the application of Fed. R. Civ. P. 60(b)(6) concerning vacating a final judgment and whether its extraordinary circumstances standard must be tempered by Rule 15(a)’s liberal amendment policy. Here, the plaintiffs were the victims and victims’ families of Hamas attacks in the early 2000s. They claimed that Blom Bank aided and abetted violations of the Anti-Terrorism Act by providing financial services to customers affiliated with Hamas.
The district court dismissed the case with prejudice, finding that the plaintiffs had failed to allege that the bank had sufficient awareness to support aiding and abetting liability. The plaintiffs had stated repeatedly that they would not seek to amend their complaint if it were dismissed. Nevertheless, they decided to so move following dismissal, but the district court denied leave to amend because the plaintiffs, having declined several previous opportunities to amend their complaint, also failed to identify additional facts that could be alleged if leave were granted. That ruling was affirmed by the Second Circuit, but the plaintiffs did not quit. They went back to the district court with a Rule 60(b)(6) motion seeking to vacate the judgment and then amend the complaint to conform with the standards described by the Second Circuit.
While that stratagem failed in the district court, it succeeded in the Court of Appeals, which held that the consideration of 60(b)(6) relief should have been tempered by balancing its severity with the lenience of the relaxed standards of Rule 15. None of the Supreme Court Justices bought that. Instead, the Court held that the extraordinary circumstances required for vacating a judgment under Rule 60(b)(6) do not become less demanding when a party invokes Rule 15(a)’s lenient standard for amendment. Again, looking to text, the Court concluded that, while Rule 15 might be applied liberally in pretrial proceedings, it’s a different story following judgment. Then, a party must demonstrate extraordinary circumstances regarding what they claim they would do if the case were reopened. The balancing test that the plaintiffs sought is incompatible with the text and with a long line of Second Circuit decisions.
A big day ended with a series of unrelated cases having been decided, but with many of them offering very useful guidance in the prosecution and defense of litigation. Summer is coming, and the decisions ending the term are flowing. Six in a day is plenty.
SEC Continues to Scrutinize Investment Adviser Fee Disclosures
Although certain enforcement priorities of the U.S. Securities and Exchange Commission (SEC) have shifted under new Chairman Paul S. Atkins, the SEC continues to scrutinize investment advisers’ disclosures regarding the fees charged to their clients. A recent case filed on June 2, 2025, SEC v. Nagler, illustrates that the SEC’s Division of Enforcement continues to police this area to ensure that fees and potential conflicts of interest are disclosed accurately.
Overview
The SEC sued David Nagler and his advisory firm, New Line Capital, LLC, under the antifraud provisions of the Investment Advisers Act of 1940. As alleged in the complaint, New Line was an investment adviser with assets under management (AUM) of nearly $30 million. Nagler was the founder, owner, and chief compliance officer of New Line.
As investment advisers, Nagler and New Line owed fiduciary duties to New Line’s clients. Those duties, according to the complaint, required Nagler and New Line to act in their clients’ best interest, to employ reasonable care to avoid misleading their clients, and to disclose all material facts to their clients.
The SEC alleged that defendants breached their fiduciary duties by making insufficient – and thus misleading – disclosures regarding two types of fees: annual advisory fees and hourly fees for services.
The Annual Fee Disclosures
Regarding the annual fees, each New Line client entered into an advisory agreement, providing that New Line was entitled to an annual management fee. The agreement disclosed that the annual fee ranged from 1.0% to 1.5%, depending on the client’s amount of AUM. The advisory agreement also disclosed that each account was “subject to a minimum annual fee of $10,000.” Additionally, and critically from the SEC’s perspective, the advisory agreement provided that, “[r]egarding our minimum fee, we take care to assure that our standard advisory fee does not compute to be greater than 2% per annum.” (Emphasis in original.)
In the SEC’s view, a “reasonable advisory client” would understand the italicized language above to mean that, regardless of the $10,000 minimum annual fee disclosed in the advisory agreement, the advisory fees New Line charged each year “would be no more than 2% of the value of the client’s [AUM].” Thus, according to the SEC, “if the value of the client’s [AUM] by New Line was $100,000, so that charging the $10,000 minimum annual fee would be 10% per year, Defendants would charge no more than 2% of the client’s [AUM], which would be no more than $2,000.”
The SEC alleged that New Line’s annual fee disclosures were misleading and that clients were charged approximately $125,000 in excess fees.
The Hourly Fee Disclosures
As to hourly fees, New Line disclosed to its clients that “[s]ervices may be offered in connection with advising you on matters not involving your managed assets or securities…. The charge for this consultation is $250 per hour …. Any consulting service fees are in addition to” advisory management fees.
As alleged by the SEC, a “reasonable advisory client” would understand these disclosures to mean that “clients would not be charged Hourly Fees unless the clients accepted an offer from Defendants to provide a specific service in exchange for Hourly Fees.” Further, according to the complaint, multiple clients were charged hourly fees without their specific consent to those fees or their knowledge that those fees were charged to their accounts.
Further, the complaint alleged that defendants breached their fiduciary duties to clients by failing to disclose all material facts regarding the conflicts of interest resulting from the hourly fees. Specifically, by charging hourly fees on a discretionary basis “without specific notice to affected clients,” there was a material conflict of interest between defendants (who allegedly had an interest in charging hourly fees) and clients (who allegedly had an interest in not being charged hourly fees and being informed of each hourly fee charged).
The SEC claimed that, during the relevant period, approximately $325,000 in improper hourly fees were deducted from New Line client accounts.
Takeaways
It remains to be seen how the SEC’s claims will unfold in litigation, but the SEC’s complaint highlights several points for investment advisers:
First, while the SEC policing investment advisers’ fee disclosures is not new, this remains an area of focus for SEC enforcement under new Chairman Atkins. So, it is critical for investment advisers to ensure that their fees and conflicts of interest are properly disclosed, as potentially inaccurate disclosures may come to the SEC’s attention through various sources, including routine examinations, client complaints, or whistleblowers.
Second, simply disclosing a fee may not be sufficient if the wording is not accurate. In the Nagler case, both the minimum annual fee of $10,000 and the $250 per hour consultation fee were disclosed, but, in the SEC’s view, those disclosures conflicted with other language provided to clients in a manner that was misleading.
Third, mid-size and smaller investment advisers should not assume the SEC is more concerned with monitoring larger firms. Indeed, New Line was a relatively small investment adviser – with less than $30 million AUM – yet the SEC saw fit to expend enforcement resources on this matter.
Finally, this case illustrates the old adage that “an ounce of prevention is worth a pound of cure.” While carefully assessing disclosures before a problem arises may seem unnecessary, that view may be shortsighted. The cost of proactive compliance measures likely pales in comparison to the cost of defending against an SEC investigation and litigation.
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BUYING ACTIVITY VS. SELLING ACTIVITY: Court Holds Offers to Buy Houses Are NOT Telephone Solicitations– And Of Course They Aren’t (But this is a BIG WIN Regardless)
The Courts have been pretty consistent that a pure offer to buy a property is not a solicitation, but a an offer to buy tied to a hidden service for which the consumer is charged is a solcitation.
This matters because folks really like to cold call property owners in an effort to buy their properties. But folks also really like to cold call FSPOs and expired listings in an effort to list their properties– which is very different.
Well in Cofey v. Fast Easy Offer, 2025 WL 1591302 (D. Az. June 5, 2025) the Court held calls asking “Have you given up on selling your…property?” were not telephone solicitations because they did not offer to sell or rent anything to the call recipient.
The court thoroughly analyzed the facts and law and determined the calls only related to future selling activity by the Plaintiff, not future buying activity. The fact that the caller would profit from a sale of the Plaintiff’s property was of no moment. The caller wanted to buy the property– not sell something to the Plaintiff.
As the Court summed up its analysis:
The Court is sympathetic to Plaintiff’s skepticism regarding this buying/selling distinction, especially where the end result is the same: Defendants make money off Plaintiff. It is true that, construing Plaintiff’s factual allegations in the most favorable light, were Plaintiff to agree to use FEO’s services to sell her house, Defendants would ultimately benefit from an “effective fee” deducted from the offer price. In that sense, the calls and texts might constitute “solicitations” in the colloquial sense of the word. But even if, in that hypothetical scenario, Plaintiff did not make as much money as she might have made selling her home without FEO’s services, she would still be making money and not spending a cent on purchasing any goods or services from Defendants. The calls and texts therefore cannot constitute “solicitations” within the plain statutory meaning of the term, and it is this statutory meaning that must carry the day. Ultimately, Plaintiff’s “quarrel is with Congress, which did not define” solicitation “as malleably as [she] would have liked.” Cf. Facebook, 592 U.S. at 409. This Court cannot rewrite what Congress wrote simply to make the outcome fairer to Plaintiff.
Bingo.
Great analysis. Great ruling.
Now Keller Williams was involved here as the likely lead buyer so people may get confused. The Court DID NOT hold a real estate agent can call a property owner to offer to list their property. In that instance the consumer is engaging in “buying” activity– they are “buying” help selling their property. Don’t get it twisted and be careful!
No More Extra Hurdles: Court Strikes Down Title VII Bias Rule
Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against any individual based on race, color, religion, sex, or national origin. But does that protection apply equally to white, male, or heterosexual employees? Or should they have to clear a higher bar to prove discrimination? On June 5, 2025, the United States Supreme Court answered with a unanimous “no” in its decision in Ames v. Ohio Department of Youth Services. Ames eliminates the “background circumstances” rule, which mandated that majority-group plaintiffs in Title VII discrimination cases provide additional evidence suggesting that the employer was the “unusual” type that discriminates against the majority.
The case involved Marlean Ames, a heterosexual employee, who alleged that the Ohio Department of Youth Services discriminated against her. Ames interviewed for a new management position, but the agency instead hired a lesbian candidate. Shortly after, she was removed from her role as program administrator and demoted to a secretarial job, with a pay cut. The agency then hired a gay man to replace her as program administrator. Ames sued under Title VII, claiming she was denied the promotion and demoted because of her sexual orientation.
The Unites States District Court for the Southern District of Ohio granted summary judgment to the agency. And the U.S. Court of Appeals for the Sixth Circuit affirmed, reasoning that as a heterosexual individual, the plaintiff needed to present proof that a member of the relevant minority group (in this case, gay individuals) made the employment decision or statistical data demonstrating a pattern of discrimination against the majority group. Since Ames presented neither type of evidence, the Sixth Circuit upheld the dismissal.
The Supreme Court rejected that approach. “Title VII’s disparate-treatment provision draws no distinctions between majority-group plaintiffs and minority-group plaintiffs,” Justice Jackson wrote. That law “makes it unlawful ‘to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” Title VII is about individual rights, not demographic majorities or minorities: “Congress left no room for courts to impose special requirements on majority-group plaintiffs alone.” Citing Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971), the Court reaffirmed that “[d]iscriminatory preference for any group, minority or majority, is precisely and only what Congress has proscribed.” The ruling thus resolved a split between federal appellate courts, some of which required majority-group plaintiffs to show “background circumstances”—like a minority-group decisionmaker or statistical evidence of anti-majority discrimination—and circuits that did not.
Key Takeaways
Importance of Continued Compliance. It is prudent for employers to continue monitoring their employment practices (including hiring, promotions, terminations, and other personnel decisions) to ensure compliance with Title VII, as the ruling may heighten scrutiny of decisions affecting “majority-group” employees.
Potential Increase in Litigation Risk: The uniform evidentiary standard may embolden majority-group employees to pursue Title VII claims. Employers face heightened litigation risk if employment decisions lack clear, non-discriminatory justifications. Proactive measures, including regular audits of hiring and promotion practices, may aid in mitigating this risk.
Legitimate, Non-Discriminatory Reason for Adverse Employment Action. Employers retain the ability to defend against discrimination claims by demonstrating that employment actions were based on legitimate, non-discriminatory reasons. And the Court emphasized that the plaintiff always bears the ultimate burden of proving intentional discrimination.
DEI Implications? While Ames is a Title VII case, the Court’s emphasis on neutrality and individualized treatment may also have broader implications. The decision reinforces the principle that employment decisions—regardless of motive—must be free from group-based preferences.
Seven County Infrastructure Coalition v. Eagle County: A Turning Point For The National Environmental Policy Act
Last week, the Supreme Court issued its eagerly awaited National Environmental Policy Act decision in Seven County Infrastructure Coalition v. Eagle County. We were not disappointed. The Court held, 8-0,1 that the U.S. Surface Transportation Board reasonably explained in an environmental impact statement (“EIS”) that the agency did not need to consider the indirect environmental impacts of its decision to approve an 88-mile railroad spur that would connect Uinta Basin oil and gas resources to the national rail network. The Court of Appeals for the D.C. Circuit had set aside the STB’s decision on the basis that the STB did not consider the indirect environmental impacts that would result from upstream oil and gas drilling or from downstream petroleum refining. The Supreme Court reversed.
Apparently hearing our call from last spring that NEPA reforms were necessary to streamline permitting processes, the majority opinion in Seven County acts as a “course correction of sorts,” and an important and substantial step to reign NEPA back in. As the Court describes, “a 1970 legislative acorn has grown over the years into a judicial oak that has hindered infrastructure development under the guise of just a little more process.” In an opinion that will survive decades, the Supreme Court demands a high degree of deference in reviewing agency analyses performed pursuant to NEPA.
The Majority Opinion
The most striking line of the majority opinion2 is that “[t]he bedrock principle of judicial review in NEPA cases can be stated in a word: Deference.” In concluding that courts owe a high degree of deference in the NEPA context, the majority noted that NEPA is a “purely procedural statute that, as relevant here, simply requires an agency to prepare an EIS—in essence, a report.”
The Court marched through each aspect of an agency’s NEPA analysis to which courts owe deference. First, “[t]he agency is better equipped to assess what facts are relevant to the agency’s own decisions,” including whether an EIS is sufficiently detailed. Second, an agency has substantial deference in identifying “significant environmental impacts and feasible alternatives” and the reviewing court must be at its “most deferential” when reviewing such decisions. Third, regarding the scope of an EIS, courts must provide “broad latitude” so that the agency may “draw a ‘manageable line.’”
Notably, the Court distinguished the NEPA deference regime from its recent decision in Loper Bright Enterprises v. Raimondo. When an agency interprets a statute, as in Loper, judicial review of the agency’s interpretation is de novo. In contrast, when the agency exercises discretion granted by a statute or is evaluating issues of fact, the Administrative Procedure Act’s deferential arbitrary-and-capricious review standard applies.
Thus, regarding some of the most litigated NEPA issues where the agency exercises discretion granted by statute (the detail, impacts and alternatives, and scope), the Court instructs that reviewing courts must defer to the agency. In the majority’s words:
When assessing significant environmental effects and feasible alternatives for purposes of NEPA, an agency will invariably make a series of fact-dependent, context-specific, and policy-laden choices about the depth and breadth of its inquiry—and also about the length, content, and level of detail of the resulting EIS. Courts should afford substantial deference and should not micromanage those agency choices so long as they fall within a broad zone of reasonableness.
In addition to the level of deference owed to agency NEPA decisions, the Court also noted that even if an EIS “falls short in some respects,” that is not necessarily reason to vacate the underlying approval. Thus, the “zone of reasonableness” declared by the Supreme Court is quite broad. Indeed, the Court did not hesitate to clarify that the “adequacy of an EIS is relevant only to the question of whether an agency’s final decision (here, to approve the railroad project) was reasonably explained.”
Central to this particular case was whether the EIS at issue should have evaluated the possible environmental effects from upstream oil drilling and downstream oil refining, projects that were separate from the proposed railway. This question of “reasonably foreseeable impacts” has been a long-debated issue, and one that nearly every presidential administration has opined on. The Supreme Court largely put the issue to bed:
While indirect environmental effects of the project itself may fall within NEPA’s scope even if they might extend outside the geographical territory of the project or materialize later in time, the fact that the project might foreseeably lead to the construction or increased use of a separate project does not mean the agency must consider that separate project’s environmental effects. . . This is particularly true where, as here, those separate projects fall outside the agency’s regulatory authority.
The Court concluded that NEPA requires agencies to focus on the environmental effects of the project at issue. And even then, the agency’s only obligation is to prepare an “adequate report.”
There is one area, however, where the Court suggested that agency determinations may not be subject to the same level of deference: decisions to deny projects based on environmental impacts. In footnote 4, the Court explained that a denied applicant may argue that the agency acted unlawfully in weighing the environmental consequences of a proposed action. In these circumstances, “NEPA does not alter those judicial inquiries.”
The Concurrence
Justices Sotomayor, Kagan, and Jackson concurred in the Court’s reversal, but they would have done so on narrower grounds. Under their view, and the 2004 Supreme Court case Department of Transportation v. Public Citizen, the STB did not need to consider the environmental impacts of upstream oil and gas development or downstream oil refining because the STB is not authorized to consider such impacts under its organic statute. The concurrence explained: “That is the rule of Public Citizen.”
And that leads to the most notable aspect of the concurrence: its framing of the majority opinion as grounding its “analysis largely in matters of policy” and ruling more broadly than necessary to decide the case at hand. The concurrence itself is significant evidence that the majority opinion has significantly shifted the lay of the land in NEPA cases by expressly affording agencies high degrees of deference.
The majority decision will affect all NEPA cases, whereas the concurrence’s reasoning would only have affected decisions where the agency in question is not authorized to consider environmental impacts. Other agencies that approve federal projects, including the U.S. Department of the Interior, the U.S. Forest Service, and the U.S. Nuclear Regulatory Commission, would arguably not be affected under the Public Citizen line of cases because those agencies are directed to consider environmental impacts. Under the majority’s framework, however, all agencies enjoy broad deference in limiting the scope of their analysis or deciding that certain impacts on the environment are not significant.
Practical Takeaways
NEPA litigation has long been used as a tool to dictate a particular outcome of an agency decision and to halt project development. And in many cases, appellants have been successful in those efforts. In this landmark decision, the Court fortified those principles that are core to NEPA. “Simply stated, NEPA is a procedural cross-check, not a substantive roadblock.” At the very least, the Court’s opinion can be expected to deter the most frivolous NEPA litigation.
The Supreme Court repeatedly underscored that judicial review of agency analyses performed pursuant to NEPA are afforded “substantial deference.” This decision can have an immediate impact for all ongoing judicial challenges raised under NEPA. Even in cases where the merits are fully briefed, the government will likely file supplemental briefs or letters explaining why the decision in Seven County further supports the reasonableness of the agency’s explanation.
Over the longer term, Seven County may have substantial salutary follow-on effects that allow for more efficient agency approvals. Indeed, the Court was acutely aware of how stringent judicial review incentivized agencies to bullet-proof their NEPA analyses to avoid judicial reversals: “All of that has led to more agency analysis of separate projects, more consideration of attenuated effects, more exploration of alternatives to proposed agency action, more speculation and consultation and estimation and litigation.”
The Supreme Court opinion was not shy in expressing frustration with the “continuing confusion and disagreement in the Courts of Appeals over how to handle NEPA cases.” The Court’s admonishment and clear command to apply deference should dissuade courts from policymaking from the bench—at least in the NEPA context.
The Court also took head on an issue tangential to the case at hand, but that has “been too often overlooked”—the length of a NEPA document. The Court went out of its way to warn that “[b]revity should not be mistaken for lack of detail,” clearly encouraging agencies and courts to be more efficient in the paperwork.
Although Seven County reviewed an EIS, nothing in the majority opinion’s reasoning or analysis would limit the deferential regime to just the EIS context. Applying Seven County, courts are also likely to apply a high degree of deference to agency decisions that an EIS is unnecessary because the proposed project will not significantly affect the quality of the environment. For this reason, more agencies might decide to pursue environmental assessments rather than EISs.
From the perspective of parties challenging agency NEPA analyses, the effort just became more difficult. Given the Supreme Court’s repeated emphasis that judicial review under NEPA is deferential, challengers will likely need to identify glaring holes in the agency’s analysis or facial inconsistencies in how the agency determines scope or which environmental impacts are significant. It is also possible that challengers will shift their focus to other statutory schemes like the National Historic Preservation Act, Endangered Species Act, or the Clean Air Act, which do indeed impose substantive constraints.
References
1 Justice Gorsuch recused himself from the case. 2 Justice Kavanaugh wrote the majority opinion, in which Chief Justice Roberts and Justices Thomas, Alito, and Barrett joined.
Prof. Examines Recent Suit for Corporate Records of Delaware Corp–filed in Illinois
The inestimable Professor Bainbridge, one the country’s leading corporate law scholars, has done a deep dive into the issues presented by a recent filing in Illinois for corporate records of a Delaware corporation. The good professor has written three articles on the issues raised, such as the internal affairs doctrine. Despite the oddity of the suit being filed in Illinois, the article still provides insights for those grappling with DGCL Section 220 claims in light of the recent changes enacted via SB 21.
Texas Legislature Passes Business Court Amendments on Last Day of Session
On June 1, 2025, which was the last day of the 2025 Regular Session of the Texas Legislature, the Legislature passed House Bill 40 (“HB 40”), which would amend Texas Government Code Chapter 25A, the statute that established the Texas Business Court, and would make various other clarifying and technical amendments to Texas statutes in relation to the Business Court. HB 40 has been sent to the desk of Governor Abbott for his signature. Unless vetoed by the Governor, these amendments will go into effect on September 1, 2025. HB 40 was the subject of much backroom negotiation over the course of the legislative session, and many of the amendments that were in the original draft of HB 40 were removed as a result of opposition or requests from various legislators.
A summary of the most significant amendments contained in HB 40 that may affect our clients are set forth below. As passed, HB40:
Lowers the threshold for the amount in controversy from $10 million to $5 million for suits arising under a “qualified transaction” and for certain actions arising out of a violation of the Finance Code or the Business & Commerce Code, among other claims.
Expands definition of “qualified transaction” to include a series of related transactions.
Provides that the amount in controversy for the Business Court’s jurisdictional purposes is “the total amount of all joined parties’ claims.”
Clarifies that, assuming the amount in controversary threshold is met, the Business Court has jurisdiction over any action “arising out of a business, commercial or investment contract or transaction,” as opposed to any action “that arises out of a contract or commercial transaction,” in which the parties to the contract or transaction agreed in the contract or a subsequent agreement that the Business Court has jurisdiction of the action.
Adds to the Business Court’s jurisdiction (1) actions arising under the Texas Uniform Trade Secrets Act, Chapter 134A, Civil Practice and Remedies Code and (2) actions arising out of or relating to the ownership, use, licensing, lease, installation or performance of intellectual property, including computer software, software applications, information technology and systems, data and data security, pharmaceuticals, biotechnology products, bioscience technologies and trade secrets.
Confirms that the Business Court has jurisdiction concurrent with district courts over actions to enforce an arbitration agreement, appoint an arbitrator, review an arbitral award and take other judicial actions relating to or in support of arbitration proceedings, so long as a claim included in the arbitration is within the Business Court’s jurisdiction and satisfies the required amount in controversy.
Moves Montgomery County (The Woodlands, Conroe) from the not yet operational Second Business Court Division, to the currently operating Eleventh Business Court Division (Houston).
Removes language in Chapter 25A that would have abolished the remaining six non-operational geographic divisions of the Business Court on September 1, 2026. These amendments preserve the potential for these six divisions to commence operations if and when the Legislature appropriates funding for their operations.
Aligns the language regarding the Business Court’s supplemental jurisdiction with its federal analog. The statute now gives the Business Court supplemental jurisdiction “over any other claim so related to the action that the claim forms part of the same case or controversy.” The statute retains the requirement that a supplemental claim may only proceed in Business Court if all parties to the claim and the Business Court judge agree to the exercise of supplemental jurisdiction.
Excludes from the Business Court’s jurisdiction any claim related to a consumer transaction to which a consumer in Texas is a party that arises out of a violation of federal or state law.
Directs the Texas Supreme Court to “establish procedures for the prompt, efficient, and final determination of business court jurisdiction on the filing of an action in the business court,” with a focus on “efficiently addressing complex business litigation in a manner comparable to or more effective than the business and commercial courts operating in other states.” The new provision authorizes the Supreme Court to, among other things, (1) provide for jurisdictional determinations based on pleadings or summary proceedings, (2) establish limited periods during which issues or rights must be asserted, and (3) provide for interlocutory or accelerated appeals.
Allows entities to establish venue in a county located in an operating division of the Business Court by provisions in the entities’ governing documents with respect to actions regarding (1) governance, governing documents or internal affairs; (2) acts or omissions of an owner, controlling person or managerial official; (3) breach of duty by an owner, controlling person or managerial official; or (4) the Business Organizations Code.
Authorizes transfers of cases from district and county courts that are within the jurisdiction of the Business Court that were commenced prior to September 1, 2024, upon an agreed motion of a party and permission of the Business Court, under rules to be adopted by the Supreme Court for that purpose. When adopting such rules, the Supreme Court is directed “to (1) prioritize complex civil actions of longer duration that have proven difficult for a district court to resolve because of other demands on the court’s caseload, (ii) consider the capacity of the business court to accept the transfer of such actions without impairing the business court’s efficiency and effectiveness in resolving actions commenced on or after September 1, 2024, and (iii) ensure the facilitation of the fair and efficient administration of justice.”
Vice Chancellor Pens Law Review Article on Delaware Corporate Law
A law review article authored by a Vice Chancellor of the Delaware Court of Chancery that chronicles nine eras of Delaware court decisions on Delaware corporate law, from the State’s founding in 1776 through the present, is featured on the Harvard Law School Corporate Governance blog (where yours truly has published several articles over the years.)
The article focuses on three areas of the law: controller transactions; third-party mergers and acquisitions; and derivative actions. Must reading for those interested in the nuances of Delaware corporate law.