Federal Circuit Refuses to Rehear Case Involving Orange Book Listing of Device Patents
Late last year we reported on the United States Court of Appeals for the Federal Circuit decision holding that certain device patents should not have been listed in the FDA’s Orange Book since the claims of the patents in question did not recite the active drug substance.
Following that decision, the brand company patent holder, Teva, filed a petition to request the Federal Circuit to rehear the case in front of all judges in the Circuit. Teva’s position was supported by a number of brand pharmaceutical companies, as well as the Pharmaceutical Research and Manufacturers of America.
On Monday, March 3, 2025, the Federal Circuit entered an Order denying Teva’s rehearing request. Teva may still attempt to appeal the December 2024 Federal Circuit decision to the United States Supreme Court, but there is no guarantee that the Supreme Court will agree to hear the case.
If left undisturbed by the Supreme Court or further legislative or regulatory actions, the Federal Circuit decision begins to provide some clarity regarding whether device patents can be listed in the Orange Book when they do not recite the active ingredient. Either way, further litigation involving Orange Book patent listings can be expected. It will be important for both brand and generic companies to carefully review the specific language of all patent claims that may be or are currently in the Orange Book for approved drugs where there are device components associated with the drug.
What to Do If the Government Doesn’t Pay You as a Federal Contractor
Winning a federal contract can be a significant opportunity, but what happens if the government doesn’t pay you on time — or at all? While the federal government is typically a reliable payer, delays or disputes can arise, especially in today’s political climate. If you’re facing non-payment under your contract, here’s what you need to do:
Review Your Contract
Start by carefully reviewing the payment terms in your contract.
Check deadlines, invoicing requirements, and any clauses related to payment disputes.
Government contracts generally follow the Federal Acquisition Regulation (FAR), which provides guidelines for how and when payments must be made.
Follow Up with the Contracting Officer
Your contracting officer is your primary point of contact.
If a payment is late, send a formal inquiry to confirm the status of your invoice.
Sometimes, delays result from administrative errors that can be resolved quickly.
If a formal inquiry from the contractor doesn’t do the trick, then consider having your attorney contact agency counsel about the matter.
Submit a Proper Invoice
Ensure that your invoice meets all federal requirements, including:
Proper formatting per FAR 32.905
Correct payment information
Invoice submission through the designated payment portal (such as Wide Area Workflow (WAWF) for DoD contracts)
File a Claim Under the Contract Disputes Act
If informal efforts fail, you can file a formal claim under the Contract Disputes Act (CDA).
For a formal claim, the contractor should prepare (usually with the assistance of legal counsel) and submit a written claim to the contracting officer, clearly stating the amount owed, the basis for payment, citing relevant law, and certifying the claim, if appropriate.
As the U.S. Court of Appeals for the Federal Circuit has made clear, “a ‘pure breach’ [of contract] claim accrues when a [contractor] has done all [they] must do to establish [their] payment and the [government] does not pay.” Brighton Village Assoc. v. United States, 52 F.3d 1056, 1060 (Fed. Cir. 1995).
The contracting officer has 60 days to respond to the claim.
Escalate the Issue
If the contracting officer denies your claim or fails to respond, you have the right to appeal to:
The Civilian Board of Contract Appeals (CBCA) for civilian contracts
The Armed Services Board of Contract Appeals (ASBCA) for defense contracts
The U.S. Court of Federal Claims for both civilian and defense contracts
Final Thoughts
Unfortunately, non-payment by the government is becoming more common lately.
However, understanding your contract, maintaining proper documentation, communicating with your contracting officer, and following dispute resolution procedures can help you recover your rightful payments.
TRANSFERRED: Shelton Suit Against Freedom Forever Pulled from PA and Sent to California
Famous TCPA litigator James Shelton had home court advantaged yanked away from him yesterday when a court ordered his TCPA suit against Freedom Forever, LLC transferred to California.
In Shelton v. Freedom Forever, 2025 WL 693249 (E.D. Pa March 4, 2025) the Court ordered the case transferred where the bulk of the activity leading up to the calls at issue took place in California.
While Shelton claims to have received calls in PA, the calling parties and all applicable principles and policies were California based. Since the case was a class action–and not an individual suit–the court determined Shelton’s presence in one state was not important as an entire nation worth of individuals must be taken into account.
On balance it made more sense to have the case tried in California where the key defense witnesses were rather than in PA where only Shelton resided.
Pretty straightforward and good ruling. TCPA defendants should consider transfer motions where a superior jurisdiction may exist that aligns with the interests of justice.
Generally California is not where one wants to litigate a case but let’s assume Freedom Forever thought that through before filing their motion.
CASE OF THE STOLEN LEADS?: Court Refuses to Enforce Lending Tree Lead That Was Not Transferred to the Mortgage Company That Called Plaintiff
So a loan officer at one mortgage company leaves the mortgage company he was with and seemingly steals leads and takes them to another mortgage company (maybe this was allowed, but I doubt it.)
While at the new mortgage company he sends out robocalls to the leads he obtained from the prior company–including leads submitted on leandingtree.com.
One of the call recipients sues under the TCPA claiming she had consented to receive calls from the first mortgage company but not the second because Lending Tree had only transferred the lead to the first company.
The second mortgage company–Fairway Independent Mortgage Company– moved for summary judgment in the case arguing that because it too was on the vast Lending Tree partners list, the consumer’s lead was valid for the calls placed by the LO while employed by it as well.
Well in Shakih v. Fairway, 2025 WL 692104 (N.D. Ill March , 2025) the Court determined a jury would have to decide the issue.
Although Plaintiff submitted the Lending Tree form and thereby agreed to be contacted by over 2,000 companies–including both of the mortgage companies at issue– the Lending Tree website provided the information would only be provided to five of those companies.
In the Court’s view a jury could easily determine the consumer’s agreement to provide consent was limited to only the five companies Lending Tree selected on the consumer’s behalf to receive calls– not to all 2,000 companies.
Lending Tree itself submitted a brief explaining that sharing leads between partners is not permitted, and the Court found this submission valuable in assessing the scope of the consent the consumer was presumed to have given.
The Court was also unmoved that the LO had previously spoken to the plaintiff while employed at his previous mortgage company–the mere fact that the LO changed jobs did not expand the scope of the consent that was previously given.
So like I said, absolutely fascinating case. The jury will have to sort it out and we will pay close attention to this one.
ESG Update: Texas Federal Court Cites Loper Bright in Upholding Biden-Era ESG 401(k) Investing Rule
A Biden-era US Department of Labor (DOL) Rule permitting consideration of environmental, social, and governance (ESG) factors when choosing investments as a “tiebreaker” was recently upheld by Texas federal Judge Matthew Kacsmaryk. This decision applied the US Supreme Court’s 2024 ruling in Loper Bright v. Raimondo, revisiting three topics lost in 2025’s Department of Government Efficiency-era drama.
With a February 14 decision, Judge Kacsmaryk upheld the Biden-era Rule allowing retirement plan fiduciaries to consider ESG factors when choosing investments as a “tiebreaker.” In other words, when all other considerations for competing investments are equal. The court held that the Rule was in accordance with a strict reading of the Employment Retirement Income Security Act of 1974 (ERISA). The decision is available here.
Below, we break down the court’s decision and answer four questions on the minds of regulatory decisionmakers.
But first, some background. Until President Trump took office in January, ESG litigation, Loper Bright, and indeed, Judge Kacsmaryk were among our most chronicled topics:
Past content referencing ESG litigation is here, here, and here.
Here and here are discussions of the impact of the Supreme Court’s decision in Loper Bright v. Raimondo.
We last discussed Judge Kacsmaryk here, here, and here.
What Is in the Rule?
The Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights Rule (Investment Duties Rule) was adopted in late 2022 and became effective on January 30, 2023. The DOL intended this rule to permit consideration of “climate change and other environmental, social, and governance factors” by plan investors “as they make decisions about how to best grow and protect” retirement savings, clarifying the duties of fiduciaries to ERISA employee benefits plans. The Biden Administration’s Rule neutralized a Trump-era Rule forbidding retirement plan fiduciaries from considering nonpecuniary factors — generally considered as factors that do not have a material effect on financial risk, financial return, or both — when making investment decisions.
In Texas federal court, 26 states and several other parties challenged the DOL’s Investment Duties Rule. After the case was filed, defendants moved to transfer the case to the US District Court for the District of Columbia or a district court where a plaintiff resided. The plaintiffs in turn amended their complaint to add the State of Oklahoma and Alex L. Fairly, an Amarillo, Texas, resident, as plaintiffs. After this amendment, a Texas federal court determined that the venue was proper.
What Is in the Decision?
The Valentine’s Day decision in Utah v. Micone, which began as Utah v. Walsh then Utah v. Su, came after a 2024 Fifth Circuit remand for reconsideration after the Supreme Court’s decision in Loper Bright, which overruled precedent giving rise to “Chevron deference.” Chevron deference used to require a court to defer to the relevant agency’s interpretation of an ambiguous statute so long as the agency interpretation of the statute was reasonable. In Loper Bright, the Supreme Court overruled Chevron and held that courts must “exercise their independent judgment” when interpreting federal statutes and may not defer to agency interpretations simply because they determine that a statute is ambiguous.
Earlier, the initial Northern District of Texas ruling upheld the Biden-era Rule relying, in part, on Chevron deference, holding that the DOL’s interpretation of fiduciary duty provisions in ERISA was reasonable. On remand, the Fifth Circuit instructed the District Court to reconsider whether the Rule violated ERISA under a post-Chevron, Loper Bright analysis.
To some’s surprise (particularly considering another Northern District of Texas ruling issued days earlier, read more here), Judge Kacsmaryk again upheld the Rule as being in accordance with ERISA following remand. The opinion rejected Republican-state (and other) plaintiffs’ claim that the Investment Duties Rule’s nonpecuniary factor or tiebreaker provision violates ERISA’s text. The opinion explained that ERISA’s fiduciary provisions require that “a fiduciary must always discharge his duties in the interest of the beneficiary alone and only for the purpose of gaining financial benefit.” However, the provisions do not explicitly limit what a fiduciary may consider while discharging his or her duty.
Does Loper Bright Indicate the Executive Branch Always Loses?
The court stated that, under a strict textual reading, “ERISA’s text does not invalidate” tiebreaker provisions. In conclusion, Judge Kacsmaryk warns fiduciaries against letting impermissible considerations taint their decisions but further notes it is not the province of the court to decide the “wisest” outcome, ultimately holding that the Investment Duties Rule “does not permit a fiduciary to act for other interests than the beneficiaries’ or for other purposes than the beneficiaries’ financial benefit. For that reason, under the Loper Bright standard, it is not contrary to law.”
Despite the court’s cautioning and explicit reference to the replaced Trump-era Rule as potentially wise guidance, the decision remains significant. While narrow, the decision acts as a considerable example of a court approving the use of ESG principals and stands as a potential case study for the limited impact Loper Bright may have on agency deference decisions.
What Happens Next?
It is no secret that the Trump Administration does not support ESG investment considerations. Republicans have consistently stated that embracing ESG considerations ignores fiduciary duties, and both Florida and Texas have enacted laws prohibiting ESG considerations and banning money managers that engage in climate-action causes.
With the Biden-era Rule now affirmed at the District Court level, we see three paths forward for the Trump Administration: (1) stand back while plaintiffs potentially appeal the decision to the Fifth Circuit, allowing another bite at the apple for overturning the Rule without executive action; (2) begin a DOL formal notice-and-comment rulemaking process to issue a new Rule, revoking and replacing the Investment Duties Rule promulgated in 2022; or (3) work through a less formal process, allowing agencies like the DOL’s Employee Benefits Security Administration to use their sub-regulatory power to interpret law and make enforcement recommendations.
While the regulations do not carry legal weight in the same way a formal rule would, they can impact the actions and decisions those regulated take. There is certainly precedent for such an approach, provided by the 2022 DOL compliance assistance release, which warned against 401(k) investments into cryptocurrency and was upheld after a federal court challenge.
Whichever route is taken, we think it is unlikely the Trump Administration will allow the Rule to remain on the books into perpetuity.
Trump Media Claims Corporate Law Decisions Are Better When Made Locals
Trump Media & Technology Group Corp., a Delaware corporation, operates Truth Social and its securities trade on The Nasdaq Stock Market LLC. The company’s largest stockholder is Donald J. Trump, Jr. Given Trump pere’s affiliation with Elon Musk and Mr. Musk’s disdain for Delaware’s corporate law regime, it likely will come as no surprise that TMTG has filed preliminary proxy materials that include a proposal to reincorporate from Delaware to Florida. Also, it should forgotten that President Trump’s erstwhile rival for the presidency hails from Delaware.
TMTG makes the interesting argument that is better to have corporate law decided by the locals:
Another advantage of home-state incorporation is that the legislators and judges making corporate law - and the juries deciding fact disputes - are drawn from the community in which the Company operates. Corporate law and litigation often overlap with and impact business, employment and operational matters. The Board believes that local decision-makers have a deeper understanding of our business, and therefore are best situated to make decisions about our corporate governance.
TMTG supports this position by citing other companies that have chosen to be incorporated in their home states:
Successful companies are incorporated in many U.S. states and other jurisdictions outside of the United States. Some of the most successful consumer-facing companies in the United States are headquartered and incorporated in the same state, demonstrating identification with their home state, including, among others, Apple and Southwest Airlines. For example, Microsoft reincorporated from Delaware to its home state in order to reunite the company’s legal and physical homes. One of the reasons given by Microsoft when it left Delaware was that Washington was “the location of the Company’s world headquarters and the location of its primary research and development efforts.” Similarly, the Board believes there is value in unifying TMTG’s legal and physical homes
Although the Silicon Valley has spawned a great many public companies, Apple Inc. is one of the very few publicly traded companies that has remained incorporated in California.
TMTG also takes aim at two recent Delaware court decisions, In re Match Group, Inc. Derivative Litigation, 315 A.3d 446 (Del. 2024) and Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024), concluding that reincorporation “will result in less unmeritorious litigation against the Company, our directors and officers and our controlling stockholder, which in turn would better allow our directors and officers to focus on our business and save the Company the costs of such litigation”.
Finally, TMTG discounts the recently proposed and highly controversial amendments to Delaware’s General Corporation Law:
Though there are proposed amendments to the DGCL to, among other things, increase protections for officers of a corporation, we believe Florida strikes a better balance between the benefits and costs of litigation to the Company and its stockholders than does Delaware because Florida has a statute-focused approach to corporate law whereas Delaware’s approach depends upon judicial interpretation that lends itself to greater uncertainty.
In a recent post, Professor Stephen Bainbridge asseverated:
“Assuming SB 21 passes the Delaware legislature, those decisions will be overturned and the incentive driving DExit will be significantly reduced”.
Evidently, TMTG does not agree.
District Court Enjoins DEI Executive Orders
On February 21, 2025, a U.S. District Court judge blocked portions of Trump Administration executive orders focused on diversity, equity, and inclusion programming (“DEI”). The preliminary injunction issued in National Association of Diversity Officers in Higher Education et al. v. Trump et al., Dkt. No. 1:25-cv-00333 (D. Md. Feb. 21, 2025) applies narrowly to specific aspects of the orders, but may have further impact not only to institutions of higher education that receive federal funds, but also the private sector. On February 25, an additional lawsuit was filed challenging the Department of Education’s February 14 Dear Colleague Letter (“DCL”), which may lead to further court action to block the administration’s attempts to ban DEI programming.
The executive orders subject to the February 21 preliminary injunction were issued on January 20 and 21, 2025. These executive orders required that:
all executive agencies terminate “equity-related grants or contracts” (the “Termination Provision”);
all executive agencies require federal contractors or grantees to certify that they do not operate illegal programs promoting DEI and agree that they are in compliance with “all applicable Federal anti-discrimination laws” (the “Certification Provision”); and
directed the Attorney General to take “appropriate measures to encourage the private sector to end illegal discrimination and preferences” including by identifying “potential civil compliance investigations” to deter illegal DEI programs (the “Enforcement Provision”).
By focusing on federal contractors and grantees and private sector entities, the executive orders would have allowed executive agencies to withdraw federal funding and potentially subject federal contractors and grantees and private sector entities to False Claims Act liability. Notably, the executive orders did not state criteria to evaluate the legality of a given DEI program.
In National Association of Diversity Officers in Higher Education et al. v. Trump et al., the plaintiffs, including the National Association of Diversity Officers in Higher Education (NADOHE) and the American Association of University Professors (AAUP), sued to block the enforcement of these executive order provisions, alleging that the executive orders’ lack of definitions for illegal DEI rendered them unconstitutionally vague, and that the executive orders amounted to speech restrictions based on content and viewpoint that violated the First Amendment. The plaintiffs further argued that the executive branch does not have the authority to place conditions – including the Certification Provision – on government spending that had been authorized by Congress.
The U.S. District Court for the District of Maryland found that the plaintiffs had cognizable claims that were likely meritorious, and issued a nationwide preliminary injunction preventing the executive orders from being enforced while the litigation is pending. The preliminary injunction applies nationwide, as follows:
The administration may not pause, freeze, impede, block, cancel or terminate its obligations or awards under current contracts, or change the terms of current obligations due to DEI programming as contemplated in the Termination Provision;
The administration may not require any grantee or contractor sign “certification” or other representation regarding its DEI programs as contemplated in the Certification Provision; or
The administration may not bring enforcement action based on allegedly illegal DEI programs as contemplated in the Enforcement Provision.
What does this mean for institutions of higher education?
Institutions of higher education who receive federal funds through grants or contracts should be aware that under the terms of the preliminary injunction, their DEI programming cannot be the reason for the federal government or their granting agencies to terminate those grants or contracts.
Further, pursuant to the court’s findings, the federal government may not require institutions of higher education who receive federal funds through grants or contracts to make certifications or representations regarding their DEI programming as a condition of receiving such grants or contracts.
Institutions of higher education should also be aware that additional challenges have been mounted to the Department of Education’s February 14 DCL, which asserts that DEI programming is unlawful discrimination in violation of Title VI, and should pay close attention to developments in that matter.
As the federal government’s interpretation of discrimination law changes, colleges and universities are referring to and relying upon state law, written regulations, and court precedent for guidance. Institutions seeking assistance with reviewing their institutional policies or programs, complying with requests for certification for their federal grants or contracts, or clarifying their obligations under federal or state discrimination law, should reach out to their Hunton lawyer for guidance.
Michigan Federal Court Holds CTA Reporting Rule Unconstitutional, Enjoins Enforcement Against Named Plaintiffs
On March 3, 2025, a Michigan federal district court in Small Business Association of Michigan v Yellen, Case No. 1:24-cv-413 (W.D Mich 2025) (SBAM), held that the CTA’s reporting rule is unconstitutional under the Fourth Amendment (unreasonable search) and entered a judgment permanently enjoining the enforcement of the CTA reporting requirements against the named plaintiffs and their members only. The district court did not find it necessary to, and did not, rule on the plaintiffs’ separate Article 1 and Fifth Amendment constitutional claims, instead leaving them “to another day, if necessary.”
The SBAM plaintiffs include (a) the Small Business Association of Michigan and its more than 30,000 members, (b) the Chaldean American Chamber of Commerce and its more than 3,000 members, (c) two individual reporting company plaintiffs, and (d) two individual beneficial owner plaintiffs owning membership interests in reporting companies.
We are not aware as of the date of this Alert whether the defendants have, or intend to, appeal the SBAM judgment to the Sixth Circuit Court of Appeals.
Federal Lawsuit in New York Raises Questions About Remote Workers’ Rights Under State WARN Laws
The media companies Paramount Global and CBS Interactive, Inc., are facing a class-action lawsuit in federal court over recent layoffs, which allegedly occurred without the proper warning. The outcome of the case may shed light on when remote workers who live out of state can have standing to sue under state laws requiring advance notice before a mass layoff.
Quick Hits
Employees sued Paramount Global and CBS Interactive after mass layoffs in New York in 2024.
Employees claim the companies did not provide ninety days’ notice under New York’s Worker Adjustment and Retraining Notification (WARN) Act. But the companies argue they fulfilled their legal duty because the workers stayed on payroll and benefits for ninety days.
Some of the laid-off employees worked remotely in other states, and the parties disagree as to whether remote workers may sue under the New York WARN Act.
On September 24, 2024, about 350 employees, mostly based in New York City, were notified that their last day of work would be September 30, 2024. The separation agreement stated the employees would remain on the payroll and continue to participate in benefit plans in until November 25, 2024, regardless of whether they signed the separation agreement.
On October 3, 2024, employees brought a class-action lawsuit against Paramount Global and CBS Interactive Inc., alleging a violation of New York’s WARN Act for not giving the requisite ninety days’ notice before a mass layoff.
One of the named plaintiffs worked remotely from his home in Orange County, California, and reported to headquarters in New York City. The employers argued he did not meet the requirements to sue as an “affected employee” under the New York WARN Act.
On January 31, 2025, the plaintiffs filed a memo in opposition to the employers’ earlier motion to dismiss the class action.
New York Law
New York’s WARN Act covers employers with fifty or more full-time employees, including remote workers. Under the state law, a “mass layoff” means a reduction in force that results in employment loss for at least 250 full-time workers at one worksite, regardless of the total number at the worksite, or employment loss for at least twenty-five full-time employees constituting at least 33 percent of the total full-time employees at the worksite.
If an employer fails to provide an employee ninety days’ advanced notice before a mass layoff, the employer must pay that employee the equivalent of sixty days of wages and fringe benefits, such as insurance coverage, retirement plan contributions, and accrued vacation days.
Meanwhile, the federal Worker Adjustment and Retraining Notification (WARN) Act requires employers with more than one hundred workers to provide sixty days’ notice before a mass layoff or plant closing.
Paramount Global and CBS Interactive argued that the New York and federal laws do not require employers to keep employees actively working during the notice period. The companies noted the laid-off workers received their full pay and benefits for ninety days after receiving notice of the layoffs, regardless of whether they signed the separation agreement.
Next Steps
It’s unclear what the court will ultimately decide in this case, but the ruling could help to guide employers in how to address remote workers during layoffs.
At least thirteen states have state-level versions of the WARN Act. Before proceeding with large-scale reductions in force, multistate employers may wish to update employees’ locations to ensure they are accurate. Employers also may wish to carefully plan the timing and wording of layoff notices to give adequate warning and comply with federal and state laws.
Plaintiffs, Not Defendants, Must Initiate Arbitration
Arzate v. Ace American Insurance Company, — Cal. Rptr. 3d — (2025) began as a familiar case: plaintiffs signed arbitration agreements (“Agreement”) with their employer that contained a class action waiver. But when a dispute arose, plaintiffs disregarded their Agreements and filed a class action lawsuit. The defendant filed a motion to compel arbitration. The trial court granted the motion, enforced the class action waiver, and stayed the action pending arbitration.
However, plaintiffs did not initiate arbitration. Unsurprisingly, neither did the defendant. After all, who sues themselves? Nonetheless, the trial court concluded that based on the terms of the Agreement, the defendant—not the plaintiffs—was required to initiate arbitration. And because the defendant did not do so, it waived the right to arbitrate the dispute.
The express terms of the Agreement are instructive. Specifically, the Agreement required that the “party who wants to start the [a]rbitration [p]rocedure should submit a demand,” which must be filed “within thirty (30) calendar days from the date of entry of the court order.”
The trial court reasoned that while the plaintiffs filed the class action suit and sought relief, “they have heavily contested any requirement to arbitrate these claims” and therefore never “wanted” or “demanded” arbitration. Instead, the court held that the defendant was the party who “wanted” arbitration. And because the defendant “took no action within 30 days” of the court’s order staying the action pending arbitration, it was “in material breach.”
The California Court of Appeal sided with the defendant/employer and reversed the trial court’s decision. When doing so, the Court of Appeal explained that contract interpretation rules required that the arbitration-initiation provisions be read in the context of the Agreement as a whole, not in isolation.
The Court of Appeal explained that, in the context of an arbitration agreement, the provision for “wanting” arbitration could not “refer to a preference for arbitration over litigation becausethe parties already ruled out litigation as an option in any dispute governed by the arbitration agreements.” Instead, “wanting” arbitration could only refer to a desire to seek redress for an employment-related claim. The Court of Appeal also noted that the Agreement incorporated the American Arbitration Association’s Employment Arbitration Rules and Mediation Procedures, which defined the “claimant” as the initiating party. The Court of Appeal reasoned that because the employees initiated the lawsuit, they were the claimant and were responsible for initiating arbitration.
Arzate stands for the proposition that—where valid and enforceable arbitration agreements exist—employees bringing claims against their employers must initiate arbitration. But for the avoidance of any doubt, employers should consider drafting their arbitration agreements to expressly state which party must initiate arbitration.
Litigation Minute: Emerging Contaminants: What’s on the Horizon?
What You Need to Know in a Minute or Less
Emerging contaminants are synthetic or natural chemicals that have not been fully assessed from a health or risk perspective and are reportedly finding their way into consumer products and the environment. These include chemicals that have been widely used throughout society for decades but are now being targeted due to scientific developments and public scrutiny regarding their uses. Across industries, we are seeing increased regulation of consumer products, manufacturing processes, and industrial emissions, as well as new waves of litigation against unsuspecting businesses, putting their operations and financial stability at risk.
The first edition in this three-part series underscores the impact of the regulatory regime on the legal landscape and forecasts what lies ahead with a new regime and the substances likely in line for increased scrutiny, particularly ethylene oxide (EO) and perfluoroalkyl or polyfluoroalkyl substances (PFAS), as well as other chemicals.
In a minute or less, here is what you need to know about what is on the horizon for emerging contaminants litigation and regulation.
Regulation Drives Litigation
EO is a versatile compound used to make ethylene glycol and numerous consumer products, including household cleaners and personal care items. Also used to sterilize medical equipment and other plastics sensitive to heat or steam, its uptick in litigation was largely driven by regulators’ positions surrounding EO’s alleged carcinogenic risk.
In 2016, the US Environmental Protection Agency (EPA) released its Integrated Risk Information System (IRIS) Assessment, finding that EO was 60 times more toxic than previous estimates and “carcinogenic to humans.”1 Widespread litigation soon followed, despite:
the EPA recognizing that its assessment included several uncertainties;2
state agencies, such as the Texas Commission on Environmental Quality, concluding that the EPA significantly overestimated EO’s carcinogenic risks;3 and
state agencies, such as the Tennessee Department of Health, finding no evidence for the clustering of high numbers of cancers near facilities that emit EO.4
The takeaway: A lack of robust science does not minimize litigation risk. Immature and incomplete scientific information will drive early litigation, particularly when it receives regulatory attention and is widely publicized on social media and the popular press.
Where Federal Efforts Slow, States Pick Up the Slack
With Republicans taking control of the Senate, House of Representatives, and White House in November, expect that some legislation and regulation concerning emerging contaminants will be scaled back or unlikely to gain traction. This includes the EPA’s regulation of EO under the Clean Air Act and requirements for the use of EO as a pesticide, as well as bills introduced in Congress to phase out certain uses of PFAS, which are used in firefighting foams, personal care products, food packaging, and other consumer product applications.
But where federal legislation and regulation slow, expect state-level efforts and private litigation such as citizen suits to increase. For example, more than 20 states identified PFAS as an immediate, mid-, or long-term focus for 2025, and President Donald Trump’s first term saw a significant increase in environmental citizen suits.
The takeaway: Do not expect that the new administration will result in a lack of focus on emerging contaminants nationwide. Companies with products or intermediaries that become the focus of emerging contaminant legislation or regulation should consider whether it is appropriate to participate in legislative meetings, hearings, stakeholder sessions, and opportunities to comment and testify; meet with regulators and representatives in critical states; or contribute to the development of model legislation for use in various states.
Other Chemicals “Emerging” as Emerging Contaminants
With increased scientific scrutiny and regulatory activity acting as catalysts for litigation involving emerging contaminants, many other ubiquitous chemical substances may get caught up in the next waves of regulation and litigation—including, for example, microplastics, formaldehyde, and phthalates.
Microplastics
Microplastics can come from several sources, such as cosmetics, glitter, clothing, or larger plastic items breaking down over time. While a definitive correlation between microplastic exposure and adverse health effects has not yet been established, and the EPA states that “[m]icroplastics have been found in every ecosystem on the planet, from the Antarctic tundra to tropical coral reefs, and have been found in food, beverages, and human and animal tissue,” recent petitions to the EPA have called for increased monitoring of microplastics in drinking water. Examples of early litigation involving microplastics include consumer fraud and greenwashing claims.
Formaldehyde
Used in the production of construction materials, insulation, and adhesives, and as a preservative in cosmetics and personal care products, formaldehyde has seen an uptick in the filing of personal-injury claims and class actions alleging harm due to alleged exposure. These cases draw on the EPA’s August 2024 IRIS Toxicological Review of Formaldehyde and December 2024 final risk evaluation for formaldehyde under the Toxic Substances Control Act, despite high-profile challenges to the EPA’s assessments that have highlighted concerns with its scientific shortcomings.
Phthalates
The use of ortho-phthalate plasticizers in industrial applications and consumer products such as cosmetics, plastics, and food packaging has recently diminished. However, the listing of numerous phthalates as alleged reproductive toxicants and carcinogens under California’s Proposition 65, combined with Consumer Product Safety Commission restrictions on the use of phthalates in children’s toys and articles and the US Food and Drug Administration’s removal of 25 ortho-phthalate plasticizers from the Food Additive Regulations, are keeping phthalates in the spotlight. Recent phthalate litigation includes mislabeling and false advertising claims for food and childcare products containing trace phthalate residues.
The takeaway: Although litigation and regulatory developments related to EO and PFAS continue to capture headlines, more is on the horizon. Again, immature science can drive early litigation.
Supreme Court Update: Republic of Hungary v. Simon (No. 23-867)
In Republic of Hungary v. Simon (No. 23-867), the Supreme Court addressed, for the second time, whether Jewish survivors of the Hungarian Holocaust have alleged enough facts to pierce the sovereign immunity of Hungary and its state-owned railway. And just as it did the last time, a unanimous Court concluded that the plaintiffs hadn’t done enough for U.S. courts’ exercise of jurisdiction over Hungary. In so doing, the Court rejected the D.C. Circuit’s “comingling” theory of the FSIA’s expropriation exception. We’ll explain exactly what that means in a second, but for those who want to cut to the chase, the end result is that it is now very difficult for plaintiffs to sue foreign states over alleged expropriations of property in cases where the foreign state long ago sold the disputed property, effectively limiting the expropriation exception to disputes over specifically identifiable pieces of property that are still in the foreign state’s possession.
Understanding Simon’s holding requires a bit of background on the complicated law of sovereign immunity. For most of its history, the United States adhered to the “absolute” theory of foreign sovereign immunity, under which foreign states were essentially always immune from suit in United States court. That changed in 1952, when the State Department adopted the so-called restrictive theory of immunity, which “restricts” sovereign immunity to cases where the foreign state is acting in its sovereign capacity, while abrogating immunity for commercial acts. In 1976, Congress codified the restrictive approach with the Foreign Sovereign Immunities Act (“FSIA”). It grants foreign states and their agencies and instrumentalities a baseline of immunity in U.S. court, subject to various statutory exceptions. Consistent with the restrictive theory, most of those exceptions deny states sovereign immunity for their commercial activities (like entering contracts). One of them, though, the so-called expropriation exception, has a different focus. Drafted in response to Communist nations’ expropriation of American-owned property abroad, it eliminates a foreign state’s sovereign immunity in any suit where “rights in property taken in violation of international law are in issue.” But the exception also contains what’s called the “commercial nexus,” which limits the exception to cases where the expropriated “property or any property exchanged for it” is present in the United States in connection with certain types of commercial activity here.
In 2010, a group of Jewish survivors of the Hungarian Holocaust sued Hungary and Hungary’s national railroad in federal court, seeking compensation for Hungary’s genocide of hundreds of thousands of Hungarian Jews in 1944–45. One part of Hungary’s genocidal campaign was property expropriations: Before sending Jews to their death, Hungary stripped them of their personal property, which it then auctioned off. While no recognized FSIA exception allowed the plaintiffs to assert tort-like claims over their mistreatment, they asserted that they could sue for the value of that stolen property under the expropriation exception. But unlike most expropriation-exception cases—where a plaintiff seeks to reclaim an identifiable piece of property still in the foreign state’s possession—the property was long gone. Plaintiffs tried to avoid that problem by arguing that the proceeds Hungary obtained from selling off their property amounted to “property exchanged for” their long-lost possessions. And while the plaintiffs could not trace those specific funds to Hungary’s present day commercial activity in the United States, they argued they didn’t have to: Because Hungary “commingled” the proceeds from those property confiscations with the funds in its general treasury, all the money in its treasury became “property exchanged for” their stolen property. And because Hungary uses money in its general treasury to engage in some commercial activity in the United States (like buying military hardware), a small piece of those proceeds are likely present in the United States now in connection with commercial activity here.
The District Court and then the D.C. Circuit endorsed this “commingling” theory, holding that plaintiffs’ allegations were enough to satisfy the expropriation exception’s commercial nexus and that the burden should be on Hungary to disprove that any of the proceeds from its property theft had made their way to the United States. At the same time, the lower courts rejected several other arguments made by Hungary that the expropriation exception didn’t cover the plaintiffs’ claims. One of those other holdings made its way to the Supreme Court back in 2020, alongside a companion case, Federal Republic of Germany v. Philipp. In that case, the Court ultimately held that the expropriation exception is not satisfied by allegations that a foreign state expropriated the property of its own nationals. Hungary argued that Philipp disposed of the case, but on remand, the D.C. Circuit concluded that some of the Simon plaintiffs were not Hungarian nationals when their property was taken. In the meantime, though, the Second Circuit had considered and rejected the D.C. Circuit’s comingling theory, holding that in order to satisfy the expropriation exception, a plaintiff had to plead and prove that identifiable property—or in cases of sold property, specifically identifiable proceeds from the sale of that property—were present in the United States. The D.C. Circuit declined to reexamine its earlier decision endorsing the commingling theory, so the Supreme Court granted cert to resolve this newly arisen circuit split.
Writing for a unanimous court, Justice Sotomayor rejected the D.C. Circuit’s expansive approach to the expropriation exception’s commercial nexus. She started with some points where the parties agreed: In a suit involving a piece of property that the foreign state still owns—say a work of art—the expropriation exception clearly requires the plaintiff to plead that the property is “present in the United States” in connection with commercial activity here. And if the foreign state exchanged that originally expropriated work of art for another piece of identifiable property—say another work of art—the plaintiff would have to show that this subsequently acquired work of art is present here in the United States. But what happens if rather than exchanging the expropriated work of art for another piece of art, the foreign state sells it? In some cases, the proceeds from that sale can still be traced to the United States, say if the foreign state transferred the proceeds to a particular bank account and then used those funds for some transaction here. But plaintiffs and the D.C. Circuit held that this level of specificity wasn’t required given the fungible nature of money: In essence, they argued the once a foreign state sells expropriated property and commingles the proceeds in its general treasury, any specific tracing requirement goes out the window and all the state’s money presumptively becomes property “exchanged for” the original disputed property unless the foreign state can disprove any alleged connection.
The Court concluded that this went too far for two main reasons. First, not unlike plaintiffs in any other suit, plaintiffs in FSIA cases have to “plausibly” allege that an exception to foreign immunity applies. But states raise money from all sorts of sources, and they spend it on a wide range of commercial and non-commercial activities both at home and abroad. As a general matter, then, it is not “plausible” that the specific proceeds from Hungary’s auctioning off of Jewish-owned property in 1944 and 1945 have ended up in the United States today in connection with one of Hungary’s limited commercial actions here. The factual connection between 1944 Hungary and present-day Hungary’s purchases of military hardware in the United States is just not that plausible given all that’s happened in the interim. Second, the expropriation exception is itself a bit of an anomaly, as it departs from the “restrictive” theory of sovereign immunity by subjecting foreign states to suit in the United States for takings of property, “sovereign” acts if there ever were any. Justice Sotomayor was thus unwilling to read the expropriation exception’s commercial-nexus requirement in a way that would further extend the exception’s reach.
All this is not to say that a plaintiff can never rely on the expropriation exception to sue a foreign state over the expropriation of property the foreign state has since sold. Rather, Justice Sotomayor took pains to point out prior examples—including one that figured prominently in Congress’s creation of the expropriation exception—where the proceeds from the sale of expropriated property could be directly tied to the United States without relying on some commingling presumption. And while Sotomayor acknowledged that it may be difficult for plaintiffs to provide similar evidence in many other cases, including perhaps this one, that is the inevitable result of the statute Congress created. The Court thus once again remanded to the D.C. Circuit where the plaintiffs can decide whether to try to plead and prove that the specific proceeds from the sale of property stolen from them can be traced to the United States.