Supreme Court Scales Back the NEPA Roadblock to Infrastructure Projects
Overview
On May 29, 2025, the U.S. Supreme Court issued a significant decision clarifying the scope of environmental review required under the National Environmental Policy Act (“NEPA”) for major infrastructure projects. The Court recognized and reined in what infrastructure practitioners have long understood: NEPA strayed far beyond its “procedural” and “informational” roots to become an obstruction to infrastructure projects across the country.
As brief background, a project developer filed an application with the Surface Transportation Board (“STB”) for a proposed 88-mile railroad line in Utah. The STB, pursuant to its NEPA requirements, issued a 3,600-page environmental impact statement (“EIS”) analyzing the environmental effects of the project and ultimately approved the railroad line. Groups challenged the STB’s approval, and the D.C. Circuit vacated the STB’s decision, ordering the STB to analyze the potential “upstream” impacts of the proposed railroad, which included possible increased oil and gas drilling activities in Utah, and potential “downstream” impacts of the railroad, such as increased oil refining in Texas.
The Supreme Court reversed the D.C. Circuit Court’s prior decision, finding that the D.C. Circuit: (1) did not afford substantial deference to the STB required in NEPA cases, and (2) incorrectly ordered the STB to review the environmental effects of projects separate in time and place from the actual 88-mile railroad under consideration.
Substantial Deference to Agencies in NEPA Reviews
First, the Court emphasized that lower courts should provide deference to agencies when evaluating the agencies’ NEPA review of a project. This is because an agency’s environmental review will include “a series of fact-dependent, context-specific, and policy laden choices about the depth and breadth of [the agency’s] inquiry….” Courts should thus afford agencies “substantial deference” when the agencies’ choices are “within a broad zone of reasonableness,” described further as “a rule of reason.”
Reasonably Close Causal Relationship to the Project
Second, the Court reined in the scope of what the environmental review must consider, i.e., the “proposed action.” Future or geographically separate projects that may be built or expanded are not generally part of NEPA’s scope. The Court characterized this finding in legal terms as “proximate causation,” those effects that have a reasonably close causal relationship between the project at hand and the environmental effects of other projects would be included in a NEPA review.
The Court rejected, however, a “but for” causal relationship, providing that even though environmental effects may be reasonably foreseeable, such as increased oil and gas development from the proposed railroad line, lower courts should not second guess an agency’s decision to exclude from NEPA review projects that are separate in time or place from the actual project being considered. The Court noted that the agency may draw a “manageable line” for what it reasonably concludes should be considered. Summarizing this point, the Court stressed that “[a] relatively modest infrastructure project should not be turned into a scapegoat for everything that ensues from upstream oil drilling to downstream refinery emissions.”
Conclusion
While a significant victory for project proponents, this decision does not foreclose the scope of the extent of an environmental review in a NEPA EIS beyond the confines of the actual project. Project proponents should evaluate potential environmental impacts beyond the actual project and analyze whether or not those environmental impacts would be considered “reasonable,” for example:
Does the agency that is making the decision regulate the potentially foreseeable environmental effects?
Are the potentially foreseeable environmental effects geographically separate from the actual project?
Are the potentially foreseeable environmental effects a hypothetical future event?
Are the potential environmental effects speculative?
U.S. Supreme Court Reverses ‘Reverse’ Employment Discrimination Pleading Standard
Takeaways
The U.S. Supreme Court invalidated the “background circumstances” rule for Title VII claims, resolving a split in the circuits and holding that courts must evaluate claims brought by majority-group plaintiffs under the same evidentiary framework as minority-group plaintiffs.
Justices Thomas and Gorsuch outlined their criticisms of the McDonnell Douglas framework and encouraged parties to litigate Title VII discrimination claims under the summary judgment standard used in almost all other contexts.
Employers should continue to focus on equal employment for all individuals regardless of their race, color, sex, national origin, religion, age, disability, or other classification and regardless of any perceived “majority” status.
On June 5, 2025, the U.S. Supreme Court invalidated the “background circumstances” rule in “reverse” employment discrimination claims brought under Title VII of the Civil Rights Act in a unanimous decision overturning precedent held by five federal circuit courts of appeals. Ames v. Ohio Department of Youth Services, No. 23-1039.
The background circumstances rule required plaintiffs from historically advantaged groups — typically, white or male employees — to provide additional evidence suggesting that their employer was inclined to discriminate against the majority. Justice Ketanji Brown-Jackson, writing for the Court, explained that under this framework, “plaintiffs who are members of a majority group bear an additional burden … : They must also establish background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.” The imposition of this additional burden, Justice Jackson wrote, “cannot be squared with the text of Title VII or our longstanding precedents.”
The Supreme Court’s decision resolves a split in the circuits and now all courts must evaluate claims brought by majority group plaintiffs under the same framework as any other Title VII claim, without the need for plaintiffs to prove “background circumstances.”
Background
Marlean Ames, a straight woman, started working for the Ohio Department of Youth Services (DYS) in 2004. Ames claimed that DYS discriminated against her when it promoted a gay man instead of her.
Holding
The Court held that the “background circumstances” rule is irreconcilable with the plain text of Title VII. Title VII establishes “the same protections for every individual—without regard to that individual’s membership in a minority or majority group,” the Court said, leaving “no room for courts to impose special requirements on majority-group plaintiffs alone.” And Supreme Court precedent has consistently interpreted Title VII faithfully to its plain text.
Citing Bostock v. Clayton County, 590 U.S. 644 (2020), Justice Jackson outlined the basic principle “that the standard for proving disparate treatment under Title VII does not vary based on whether or not the plaintiff is a member of a majority group,” but rather “works to protect individuals … from discrimination.”
Justice Jackson observed that the Court always has said that courts should be flexible when determining whether a plaintiff met her burden of proving her initial case. Justice Jackson wrote, “The ‘background circumstances’ rule disregards this admonition by uniformly subjecting all majority-group plaintiffs to the same, highly specific evidentiary standard in every case.… [T]he rule effectively requires majority-group plaintiffs (and only majority-group plaintiffs) to produce certain types of evidence—such as statistical proof or information about the relevant decisionmaker’s protected traits—that would not otherwise be required to make out a prima facie case.”
Thomas/Gorsuch Concurrence; Fate of McDonnell Douglas Framework
Justice Clarence Thomas and Justice Neil Gorsuch joined the Court’s opinion in full but wrote separately “to highlight the problems that arise when judges create atextual legal rules and frameworks.” In their concurrence, Justices Thomas and Gorsuch criticized the longstanding McDonnell Douglas framework, a legal standard established by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U. S. 792 (1973), and applied when there is no direct evidence of discrimination.
Acknowledging that Ames did not present the question of whether the McDonnell Douglas framework is an “appropriate tool for evaluating Title VII claims at summary judgment,” Justice Thomas promised that if that issue comes before the court, he would “consider whether the framework should be used for that purpose.” Justice Thomas noted that litigants and lower courts were free to apply the standard until that time but encouraged them instead to apply the straightforward summary judgment standard used by district courts “every day—and in almost every context except the Title VII context.”
The issue, in fact, did come before the Court early this year on plaintiff’s petition for certiorari in Hittle v. City of Stockton, 145 S. Ct. 759 (2025). The Court denied review on March 10, 2025. Justices Thomas and Gorsuch wrote a rare dissent to the denial outlining their criticisms of the framework.
Impact on Employers
Ames v. Ohio Youth Services joins two other recent Supreme Court cases with significant impact on employment discrimination law: Students for Fair Admissions, Inc. v. President & Fellows of Harv. Coll., 600 U.S. 181 (2023); and Muldrow v. City of St. Louis, 601 U.S. 346 (2024). Although Justice Thomas’s concurrence questioning the legitimacy of the McDonnell Douglas framework is not controlling, it likely will affect how parties plead and litigate discrimination cases going forward. Employers may see an uptick in discrimination claims from all individuals (including, but not limited to, those historically believed to be in the “majority”).
Employers should continue to focus on equal employment for all individuals regardless of their race, color, sex, national origin, religion, age, disability, or other classification and regardless of any perceived “majority” status.
A Fact-Intensive Inquiry: How California Courts Are Resolving Authenticity Disputes of Electronically Signed Arbitration Agreements
For more than a decade, California courts have wrestled with the challenge of how to resolve disputes over the authenticity of electronically signed arbitration agreements.
While the State Supreme Court has not yet offered conclusive guidance, decisions by the State’s various appellate courts offer insight into what factors a court is likely to consider.
As we have noted before, the holding in Epic Systems v. Lewis contributed to a proliferation of arbitration agreements with class and collective action waivers. Our prior analysis predicted certain datapoints one should consider capturing to support a petition to compel arbitration when disputing the authenticity of an electronically signed agreement. The holdings in four cases over the last 11 years confirm that success will require surviving a demanding and fact intensive inquiry, one that asks much of parties seeking to compel arbitration.
Ruiz v. Moss Bros. Auto Group, Inc., 232 Cal. App. 4th 836 (2014)
Well before remote work and remotely onboarding employees were common practice, California courts faced the question of how to determine the authenticity of electronically signed arbitration agreements. In Ruiz v. Moss Bros. Auto Group, Inc., the Court of Appeal addressed this issue in resolving a wage and hour class action dispute. Citing an electronically signed arbitration agreement from 2011, the defendant petitioned the trial court for an order compelling arbitration of the named plaintiff’s individual claims. In support of its petition, the defendant provided declarations by an employee that summarily described the company’s onboarding process and—based on that summary description—asserted that the named plaintiff electronically signed the agreement by virtue of his employment with the company. The evidence also included a copy of the executed agreement, which bore the named plaintiff’s alleged electronic signature and the date and time the document was signed. In response, the named plaintiff stated he did not recall signing an arbitration agreement, insisted that he would not have signed such an agreement, and argued that the defendant had not proven the authenticity of his electronic signature by a preponderance of the evidence. The trial court denied the petition, finding that the defendant failed to establish the existence of an enforceable agreement to arbitrate.
The Court of Appeal for the Fourth District affirmed the trial court’s decision, holding that the defendant-appellant failed to carry its burden of proving the authenticity of the electronic signature because the summary language and assertions in the employee’s declarations did not explain how the employee reached her conclusions or how she was able to infer that the named plaintiff was in fact the person who signed the agreement. While the declarations explained the steps the company took for employee onboarding—including the use of a unique login ID and password to complete the onboarding paperwork, which included the arbitration agreement—the Court held that this evidence was lacking because it did not explain with sufficient specificity how the employee could conclude the named plaintiff actually executed the agreement. The Court also rejected the defendant-appellant’s argument that it was not required to authenticate the named plaintiff’s signature, holding that precedent and statute both shifted the burden of authentication back onto the defendant when the named plaintiff claimed he did not recall signing the agreement and that he would not have signed it if presented to him.
In short, Ruiz introduced the concept that a summary statement of how an arbitration agreement might have been electronically signed in the normal course of an employee’s onboarding is insufficient. Instead, it called for a specific, detailed explanation of how one could conclude no one else but the signatory could have placed his or her electronic signature on the document.
Espejo v. Southern California Permanente Medical Group, 246 Cal. App. 4th 1047 (2016)
Two years after Ruiz, another appellate court weighed in. This time, however, the court reached the opposite conclusion and held in favor of the party moving to compel arbitration. In Espejo, the plaintiff sued his former employer for wrongful termination. As in Ruiz, the defendant petitioned for an order to compel arbitration on the basis of an electronically signed agreement. The defendant also submitted declarations that described in detail the company’s employee onboarding program, its process for reviewing electronically signed documents, and security features meant to ensure the authenticity of the electronic signature. Specifically, the declarations referenced the use of private and unique login credentials provided directly to the employee, system safeguards that required the employee to reset credentials with their own self-selected password before being able to complete the onboarding paperwork, and explained how only the employee could have inserted their name into the electronic signature fields. The plaintiff denied signing the arbitration agreement, and, despite the detailed declaration, the trial court denied the petition to compel arbitration in part because it declined to consider a supplemental declaration submitted by the defendant that contained the detailed information that explained how no one other than the employee could have caused the electronic signature.
On review, the appellate court outlined the same process and approach as used in Ruiz, but found its way to a different outcome by holding that the declarations in Espejo went further than the summary and conclusory statements offered by the declarant in Ruiz. The appellate court concluded that the defendant-appellant did meet its burden here and that it did not repeat the error the defendant in Ruiz committed. The appellate court further held that the trial court committed error by refusing to consider the defendant-appellant’s supplemental declaration, concluding that it was timely submitted and that the trial court’s refusal to consider the document was an abuse of discretion.
Post-Espejo Cases
Bannister v. Marinidence Opco, LLC, 64 Cal. App. 5th 541 (2021)
Whether it realized this or not, the court’s holding in Espejo signaled to future courts when an electronically signed arbitration agreement is sufficiently authenticated. This is demonstrated in Bannister, which came five years after Espejo and concerned an action for discrimination, retaliation, and other claims. Like in Espejo, the plaintiff in Bannister denied signing the arbitration agreement. In response, the defendant did not present evidence of any kind of unique or user-specific credentials or log in data. Instead, the record was mixed and suggested that a single employee input personnel data for as many as 20 employees, including data for the plaintiff, who may or may not have used the computer terminal to complete her onboarding paperwork. In the absence of a secure, user-specific login method, as well as the suggestion that another person input key data, the Bannister court concluded the defendant did not satisfy its burden of proving the authenticity of the electronic signature.
Garcia v. Stoneledge Furniture, LLC, 102 Cal. App. 5th 41 (2024)
More recently, the Court of Appeal for the First District seemingly endorsed the approach in Espejo and went further by outright suggesting that the proponent of an arbitration agreement must offer substantive assurances that no one other than the plaintiff could have signed the arbitration agreement in question. In Garcia, the plaintiff sued her former employer and other entities for sexual harassment. Citing an electronically signed arbitration agreement completed during Ms. Garcia’s onboarding, the defendants petitioned to compel arbitration. In support of their petition, the defendants relied on a declaration by a human resources information systems analyst, which stated that Ms. Garcia would have created a unique user ID and confidential password for her onboarding paperwork. The analyst’s declaration further averred that Ms. Garcia’s unique credentials would have served as her electronic signature on her new hire documentation, that she accessed the arbitration agreement through a dedicated link, and that her electronic signature on that document signaled her assent to the arbitration agreement. In other words, the evidence presented echoed that offered by the defendants in Espejo.
Ms. Garcia, however, disputed the authenticity of her signature on the arbitration agreement by pointing to discrepancies between the electronic signature there and other signature fields in her onboarding paperwork. She further noted that the arbitration agreement did not contain an indication that her unique credentials had been entered or used to complete that form, unlike the other documents she completed for her onboarding. Ms. Garcia also noted the absence of an IP address on the arbitration agreement, which stood in contrast to the other documents, all of which did have an IP address listed. Ms. Garcia also alleged the analyst’s declaration was insufficient because the analyst did not have personal knowledge of her completing the onboarding paperwork.
At the hearing on the petition to compel arbitration, the defendants argued that an evidentiary hearing was necessary to resolve the factual dispute, but the trial court denied this request and found in favor of Ms. Garcia, citing the absence of a date, time, or IP address on the executed arbitration agreement, as well as the fact that the analyst was not a percipient witness to Ms. Garcia’s alleged completion of the paperwork.
On review, the Court of Appeal affirmed the trial court’s decision. In reaching that conclusion, the Court deferred to the trial court’s findings of fact and noted that the analyst’s declaration merely explained how the signature could have gotten there rather than show that only Ms. Garcia could have placed the electronic signature on the arbitration agreement. In short, the Garcia court took a concept first articulated in Ruiz—the idea of confirming the electronic signature was the act of the plaintiff—and extended it further in two ways. It did so first by not rejecting the trial court’s suggestion that the analyst, who did not personally witness the act of Garcia signing the document, could not unilaterally prove the authenticity of the electronic signature. By not engaging with this idea, the appellate court may have inadvertently endorsed a standard where a percipient witness is always necessary to determine authenticity. The appellate court also went further than Ruiz by requiring that the defendant offer evidence that excluded the possibility that anyone other than the plaintiff could have been the source of the signature. In essence, the Court held that proving authenticity necessarily includes eliminating all possible or even imaginary doubt over the authenticity of the electronic signature. This is a staggering requirement given California law has long recognized that the concept of eliminating even imaginary or all possible doubts exceeds proof beyond a reasonable doubt—the highest burden in the American legal system,[1] suggesting that the proponent of an arbitration agreement must meet a burden even higher than the one that safeguards our most fundamental Constitutional rights.
The evolution from Ruiz to Garcia suggests an embrace of exacting requirements on parties seeking to enforce arbitration agreements. This new standard, however, raises two untested questions: 1.) Does the requirement of excluding all possible alternatives prejudice proponents of arbitration agreements by impermissibly subjecting them to a heightened evidentiary standard (i.e., one beyond a preponderance of the evidence), and 2.) Do these demanding standards work against the long held and recognized public policy that favors use of arbitration as a means of dispute resolution? Both are questions that could be raised and explored as the law further develops.
Takeaways
For the time being, parties seeking to ensure the enforceability of arbitration agreements should take the lessons from these four cases to heart and design their processes in a way that arms them with the facts necessary to convince a trial court that an electronic signature is authentic. Such strategies include:
Developing or using secure platforms that can trace back directly to the intended recipient/signatory to an arbitration agreement;
Requiring the electronic signatory to the arbitration agreement to create a unique username and password;
Ensuring that no one else accessed the electronic signatory’s account;
Recording the date, time, and IP address at the time the agreement is electronically signed;
Requiring written consent from the electronic signatory that they consent to using an electronic signature;
Using consistent formatting and eliminating any differences or inconsistencies in how an electronic signature appears across different forms or fields when presented together;
Having another person present to witness the electronic signature; and
Sending a confirmation email to the signatory and the originating party listing and providing copies of all electronically signed documents.
While these steps might be burdensome or challenging, the holdings in these cases demonstrate their significance should litigation arise.
ENDNOTES
[1] See CALCRIM No. 220, Judicial Council of California Criminal Jury Instructions (2024 edition).
SCOTUS Declines to Rule on Whether District Court can Certify a Class Containing Uninjured Members
On Thursday, June 5, 2025, the United States Supreme Court issued an 8-1 Opinion in the matter of Laboratory Corp. of Am. Holdings v. Davis in which it declined to take up the issue of whether district courts can certify a class that contains uninjured members.
In the Opinion, the Supreme Court dismissed as improvidently granted the appeal of a Ninth Circuit decision affirming class certification despite the fact that the class, as certified, contained some uninjured class members.
Writing in dissent, Justice Kavanaugh framed the question presented as “whether a federal court may certify a damages class pursuant to Federal Rule of Civil Procedure 23 when the class includes both injured and uninjured class members.” Justice Kavanaugh stated that he would hold that a federal court may not certify such a class under Rule 23.
Notably, Justice Kavanaugh also examined the real-world consequences of improvidently granted motions for class certification on business, explaining: “[c]oerced settlements substantially raise the costs of doing business. And companies in turn pass on those costs to consumers in the form of higher prices; to retirement account holders in the form of lower returns; and to workers in the form of lower salaries and lesser benefits. So overbroad and incorrectly certified classes can ultimately harm consumers, retirees, and workers, among others.”
The Court’s decision to dismiss the appeal defers a potentially significant decision impacting businesses throughout the country. Given this lack of clarity, it is important that businesses facing class action allegations retain knowledgeable and sophisticated counsel to advance their rights.
FTC Permanently Bans Debt Collector for UDAP and FDCPA Violations
On April 30, the FTC filed a stipulated order for a permanent injunctive relief and a monetary judgment against a Georgia-based debt collection company and its owner, which the court granted on May 9, to resolve allegations that the company used false claims, threats, and harassment to collect more than $7.6 million in bogus debts.
The FTC’s complaint alleged violations of Section 5(a) of the FTC Act, the Fair Debt Collection Practices Act (FDCPA) and Regulation F, the Gramm-Leach-Bliley Act, and the FTC’s Impersonation Rule. Under the order, the defendants are permanently banned from participating in debt collection or brokering activities. The judgment imposes a $9.6 million in monetary relief, which was partially suspended based on the defendants’ inability to pay.
The FTC alleged the company engaged in several unlawful practices, including:
Making false claims. The company allegedly fabricated or misrepresented debts to extract payments from consumers.
Threatening consumers with arrest or lawsuits. Consumers were told they would face arrest, wage garnishment, or civil litigation unless they paid immediately.
Harassing consumers and family members. The company made repeated, unsolicited calls and contacted relatives to pressure consumers into paying.
Obtaining financial information through false pretenses. The company misrepresented its purpose to gain access to consumers’ bank accounts and personal data.
Pretending to be affiliated with other businesses. The company used fictitious names and falsely claimed to represent, or be associated, with legitimate lenders or mediation firms.
Putting It Into Practice: The enforcement action highlights the FTC’s ongoing focus on UDAP violations, particularly those involving threats, impersonation, or deception (previously discussed here). Debt collectors and affiliated vendors should ensure their practices comply not only with the FDCPA and Regulation F, but also with broader federal UDAP standards and the FTC’s Impersonation Rule.
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Proposed Rule 707 Targets AI-Crafted Evidence
Artificial Intelligence is taking society by storm and has even made a name for itself in the courtroom. With the ease of utilizing AI to generate various forms of data, presenting evidence at trial can be a much less arduous process than in years prior, when technology was not as sophisticated. However, alongside AI’s countless benefits lie the risks of reliability and authenticity concerns, which are critical issues in litigation when expert witness testimony and case-related evidence and data are concerned.
On May 2, 2025, the U.S. Judicial Conference’s Advisory Committee on Evidence Rules voted 8-1 in favor of Rule 707 – Machine-Generated Evidence – a proposed rule to mitigate the risk of introducing potentially unreliable AI-generated evidence at trial. Rule 707 would subject all AI and machine-generated evidence without an accompanying expert witness to the same reliability standards and scrutiny as standard expert witness testimony under Rule 702 of the Federal Rules of Evidence. In its notes to the proposed rule, the Advisory Committee made clear that the “rule is not intended to encourage parties to opt for machine-generated evidence over live expert witnesses. Indeed, the point of the rule is to provide reliability-based protections when a party chooses to proffer machine evidence instead of a live expert.”
While it’s simple to see the benefits of protecting the integrity of evidence introduced at trial with such a rule, not everyone is certain that the proposal is in the courtroom’s best interest. Judges have questions about the proposed rule’s ability to be implemented, with some committee members expressing the potential need for public commentary to avoid potential blind spots, considering the ever-evolving nature of AI and its advancements. A representative for the U.S. Department of Justice, the sole dissenting vote on the committee, stated that it was the DOJ’s view that Rule 702 already covers the use of machine-generated evidence, and that Rule 707 only seeks to predict and regulate future needs.
The Advisory Committee acknowledged the limits of its expertise on matters of technology and deemed public comment as the best way to obtain the necessary information to support or reject the rule. Before Rule 707 is circulated for comment, however, the Standing Committee on Rules of Practice and Procedure must meet on June 10 and critique the proposed rule.
Top Five Labor Law Developments for May 2025
The U.S. Supreme Court granted the Trump Administration’s application to stay former National Labor Relations Board Member Gwynne Wilcox’s reinstatement. Trump, et al. v. Wilcox, et al., No. 24A966 (May 22, 2025). The U.S. Court of Appeals for the D.C. Circuit had previously enjoined President Donald Trump’s removal of Wilcox, citing the Supreme Court’s 1935 decision in Humphrey’s Executor that upheld the constitutionality of for-cause removal protections for federal agency leaders. The Trump Administration then filed an emergency application to the Court for a stay of the D.C. Circuit’s order, arguing subsequent case law narrowed Humphrey’s Executor to apply only to multi-member agencies that do not wield substantial executive power, making the case inapplicable to the Board. In granting the stay, the Supreme Court found the Trump Administration is likely to show that Board members exercise considerable executive power, but the Court did not decide whether the Board falls within recognized exceptions for removal protections. The 6-3 order aims to avoid the disruptive effect of Wilcox’s repeated removal and reinstatement while the D.C. Circuit decides the merits of the case.
A coalition of unions, nonprofit groups, and local governments requested that a California federal court issue a nationwide injunction to stop an executive order (EO) requiring federal agencies to downsize or reorganize. American Federation of Government Employees, AFL-CIO, et al. v. Trump, et al., No. 3:25-cv-03698 (N.D. Cal. May 14, 2025); National Nurses United, et al. v. Kennedy, Jr., No. 1:25-cv-01538 (D.D.C. May 14, 2025). The lawsuit stems from EO 14210 aiming to reduce the size of the federal government’s workforce and directing each agency head to work with the Department of Government Efficiency on hiring plans. The coalition, which includes national unions and municipalities, argues the EO violates the U.S. Constitution’s separation of powers and the Administrative Procedure Act. Although the court previously granted a temporary restraining order, the coalition argues a nationwide injunction against the federal agencies is appropriate to avoid “piecemeal” litigation. Similarly, in a separate lawsuit, a coalition of unions, including National Nurses United, is seeking an injunction to stop the Department of Health and Human Services from implementing staff cuts at the National Institute for Occupational Safety and Health.
A Kentucky federal judge ruled the U.S. Department of Treasury lacks standing to rescind its collective bargaining agreement with employees, while the U.S. Department of Defense (DoD) is seeking to confirm its right to terminate them. U.S. Department of Treasury v. National Treasury Employees Union, Chapter 73, No. 2:25-049 (E.D. Ky. May 20, 2025); U.S. Department of Defense, et al. v. American Federation of Government Employees AFL-CIO District 10, et al., No. 6:25-cv-00119 (W.D. Tex. May 5, 2025). The lawsuits stem from EO 14251, which exempts certain agencies from the Federal Service Labor-Management Relations Statute that provides organizing and collective bargaining protections for federal employees. The federal court dismissed the action based on the Treasury’s lack of standing, as it had not enforced the EO against the local union at the time of filing. The court emphasized that the Treasury’s claimed injuries were speculative and, therefore, did not address the merits of the case. In a separate lawsuit in a Texas federal court, the DoD and other federal agencies are seeking declaratory relief against several union affiliates to confirm their rights under the EO. The unions have also moved to dismiss the case based on standing, among other claims.
The Nevada legislature passed a bill banning mandatory captive audience meetings; Washington will now provide unemployment benefits for striking workers. If signed by the governor, the Nevada legislation will prohibit employers from taking any adverse employment action against employees who decline to attend or participate in a meeting “sponsored by the employer” or listen to an employer communication if its purpose is to communicate the employer’s opinion on religious or political matters. Many states have similar legislation, and the Biden Board issued a decision holding such meetings violative of the National Labor Relations Act. Under the bill, “political matters” includes the decision to join or support any labor organization. Meanwhile, Washington’s governor signed a bill that provides unemployment benefits for striking workers under certain circumstances. The Washington law will take effect Jan. 1, 2026.
Acting General Counsel William Cowen issued a memorandum emphasizing the need for efficiency in resolving unfair labor practice (ULP) cases. Memorandum GC 25-06. The memorandum’s key points include granting discretion to exclude default language in settlements, permitting non-admission clauses, authorizing unilateral settlements, and approving settlements for less than full remedies. The memo also addresses the Board’s 2022 Thryv, Inc. decision, which expanded the scope of remedies for ULPs, noting regional directors should “focus on addressing foreseeable harms that are clearly caused by the unfair labor practice.” The memo represents a shift in policy from former General Counsel Jennifer Abruzzo and provides updated guidance on settlement efforts following Cowen’s previous memo rescinding several of Abruzzo’s memos and enforcement priorities.
By Any Other Name: Rules Limiting Alternative Pleading in Professional Liability Actions
Most states allow former clients to assert claims against a licensed professional in either tort or contract. The stereotypical tort claim alleges that the professional failed to act in accordance with the standards expected by members of the profession, resulting in damages to the client. The stereotypical contract claim alleges that the professional was given a specific instruction and their failure to act in accordance with that instruction resulted in damages to the client. In a professional liability claim, it is not unusual to see multiple causes of action pleading professional failures, but in many circumstances case law has concluded that there is only one “real” appropriate claim.
In the majority of U.S. jurisdictions, the statute of limitations period for a contract claim is longer than the period for a tort claim. Former clients who fail to file a timely malpractice case, or those wishing to supplement a claim of delay in discovering an allegedly negligent act, will often allege a contract claim in the alternative. Often the allegation is a purported failure to conform to a professional standard of care, which constitutes a breach of the contract for professional services. In this way, a former client-plaintiff will try to avail themselves of a longer statute of limitations to assert a claim.
The ability of a plaintiff to allege a professional negligence claim as a contract (or vice-versa) may be limited by state-specific doctrines that seek to preserve the separation between tort and contract theories. These doctrines vary in both name and application but share a common goal of differentiating between tort and contract by examining the nature of the claim and the source of the duties giving rise to the claim. This distinction can be the difference between a malpractice claim going to trial or being dismissed as a matter of law. It is therefore important to be aware of whether and how your particular jurisdiction draws the line between claims of professional negligence, claims for breach of a contract, and various alternative legal bases to recover damages from a professional for services rendered.
Montana’s Gravamen Test
In Montana, the statute of limitations for a breach of a written contract is eight (8) years while a breach of an oral contract must be commenced within five (5) years. MCA §27-2-202(1); MCA §27-2-202(2). By contrast, the statute of limitations for a negligence claim in Montana is three (3) years. MCA §27-2-204(1). Montana recognizes a case may involve both breach of contract and negligence claims, but plaintiffs are prohibited from recasting a tort claim into a contract claim solely to take advantage of the longer statute of limitations. Instead, Montana has adopted the Gravamen Test to determine the nature of the claim.
In Montana, the label given to the claim by the plaintiff does not control which statute of limitations applies. Northern Montana Hosp. v. Knight, 248 Mont. 310, 315, 811 P.2d 1276, 1278-79 (1991); Billings Clinic v. Peat Marwick Main & Co., 244 Mont. 324, 341, 797 P.2d 899, 910 (1990). The statute of limitations for contract claims applies only if the alleged breach of a specific provision in a contract provides the basis of the plaintiff’s claims. Collection Professionals, Inc. v. Halpin, 2009 Mont. Dist. LEXIS 688, 3-5. If the plaintiff claims breach of a legal duty imposed by law that arises during the performance of the contract, the claim is governed by the three-year statute of limitations applicable to negligence actions. Northern Montana, 248 Mont. at 315, 811 P.2d at 1278-79. If doubt exists as to the gravamen of the action, the longer statute of limitations will apply. Billings Clinic., 244 Mont. at 341.
Pennsylvania’s Gist of the Action Doctrine
In Pennsylvania, the statute of limitations for a breach of contract action is four (4) years. 42 Pa.C.S.A. § 5525(a)(1). The statute of limitations for a claim sounding in professional negligence is two (2) years. 42 Pa.C.S.A. § 5524(7). Under Pennsylvania’s “gist of the action” doctrine, a party is precluded from recasting breach of contract claims as actions sounding in tort. Bruno v. Erie Ins. Co., 106A.3d 48, 60 (Pa.2014); Etoll, Inc. v. Elias/Savion Advertising, Inc., 811 A.2d 10, 14 (Pa. Super. Ct. 2002).
The Pennsylvania Supreme Court has clarified this doctrine, holding that the label placed on the claim does not control – the operative question is whether the duty breached is one created by the parties in contract (as in a specific instruction from the client to the professional) or a broader social duty imposed on all practitioners (a standard of care). Bruno, 106 A.3d at 68; Norfolk So. Ry. Co. v. Pittsburgh & West Va. R.R., 101 F.Supp.3d. 497, 534 (W.D. Pa. 2015); see also Phico Ins. Co. v. Presbyterian Med. Servs. Corp., 444 Pa. Super. 221, 663 A.2d 753, 757 (1995) (citing Bash v. Bell Telephone Co., 411 Pa. Super. 347, 601 A.2d 830 (Pa. Super. 1992) (“the important difference between contract and tort actions is that the latter lies from the breach of duties imposed as a matter of social policy while the former lie for the breach of duties imposed by mutual consensus.”); accord Simons v. Royer Cooper Cohen Braunfeld, LLC, 587 F.Supp.3d 209 E.D.Pa. 2022) (gist of the action doctrine prohibits contract claim based upon alleged failure to comport to professional standard of care).
The Texas Anti-Fracturing Rule
In Texas the statute of limitations for a claim for professional negligence is two (2) years and the statute of limitations for claims of breach of contract, breach of fiduciary duty, and fraud is four (4) years. Tex. Civ. Prac. & Rem. Code §§16.003 [2 year]; §§16.004 [4 year].
In a recent suit against an accounting firm, the Texas Supreme Court agreed that the state’s courts of appeals’ application of the Anti-Fracturing Rule applied. The Anti-Fracturing Rule limits plaintiffs’ attempts “to artfully recast a professional negligence allegation as something more – such as fraud or breach of fiduciary duty – to avoid a litigation hurdle such as the statute of limitations.” Pitts v Rivas, 2025 Tex. LEXIS 131 1 (Tex. Feb. 21, 2025). The Court cautioned that it is the “gravamen of the facts alleged” that must be examined closely rather than the “labels chosen by the plaintiff.” Id. at 7. If the essence, “crux or gravamen of the plaintiff’s claim is a complaint about the quality of professional services provided by a defendant, then the claim will be treated as one for professional negligence even if the petition also attempts to repackage the allegations under the banner of additional claims.” Id. To survive application of the rule, a plaintiff needs to plead facts that extend beyond the scope of what has traditionally been considered a professional negligence claim. Id. at 7.
Conclusion
The question of whether a case involves an allegation of a failure to observe a general professional duty or a specific instruction can control whether or not a case is time-barred. Many courts apply the same analysis to determine the “gravamen” of a claim and the applicable statute of limitations, though they refer to this test by different names. It is important to look beyond the text of an opposing party’s pleadings and examine the nature of the claims asserted. Failing to do so may leave you litigating claims that are otherwise time-barred and that may be removable from suit under proper motions to dismiss.
Imagining Lawyer Malpractice in the Age of Artificial Intelligence
My dear Miss Glory, the Robots are not people. Mechanically they are more perfect than we are; they have an enormously developed intelligence, but they have no soul. 1
This was a quote at the outset of Bunce v. Visual Tech. Innovations, Inc.2 – a recent case involving a lawyer who used ChatGPT to write a legal brief containing hallucinated or fake legal cases to support the legal argument presented to the court. As the court noted, while sanctioning the offending lawyer who presented the false cases to the court, “[t]o be a lawyer is to be human, a tacit prerequisite to comply with Federal Rule of Civil Procedure Rule 11(b)(2).”3
The future is here. Generative Artificial Intelligence (GAI) is fully capable of generating legal briefs, pleadings, demand letters, and other legal correspondence.4 Just open ChatGPT and prompt it to write a demand letter involving some set of facts involving a casualty and ask it to make a demand for one million dollars. Open AI models like ChatGPT can write legal briefs, demand letters, and other legal correspondence, and legally trained GAI models can indeed write strong legal correspondence and legal briefs.
What is a legally trained GAI model and how does it work?
GAI works by using neural networks to learn patterns and structures within existing data. This allows GAI to generate new and original content based on the prompts or inputs it receives from users. In doing so, GAI effectively mimics the process of human creativity by creating something entirely new from learned information.
GAI models are trained on large sets of data using existing content. This helps the model understand patterns and relationships within that data. This training data typically covers a wide range of variations and examples within a specific domain. And so, for text data, like a legal brief, the model needs a lot of examples of legal briefs, and perhaps pleadings and legal correspondence, too.
Once a model is trained, it can generate new content by sampling from the learned patterns and creating outputs that are similar to the data used in its training but with variations. The model is then “fine-tuned” by being given “feedback” on the outputs it presents in response to the inputs it receives. It then uses this “feedback” to improve its performance by providing more accurate and relevant outputs in the future. In other words, the more training data and feedback the model receives, the better the outputs.
A legally trained model that has been trained on large data sets involving the law, such as legal briefs and legal correspondence, can generate accurate and relevant briefs and letters based on the prompts it receives. Thus, a legally trained GAI model can do things like:
Summarize complex legal cases.
Analyze contracts.
Identify key legal arguments.
Predict outcomes based on similar cases.
Generate efficient first drafts of legal documents.
In a world where lawyers are overworked and have too much going on in their professional lives, legally trained GAI models can make lawyers more efficient by creating first drafts of letters and briefs.
The limitations of using GAI models
It is important to understand that a GAI model is only as good as the training data and feedback it receives. If the training data contains errors, the model is effectively trained to recreate those errors when generating new content. Similarly, if the training data has biases, the outputs of the GAI model are likely to mimic those biases. If biases and errors are not weeded out through the feedback process, they can seriously compromise the outputs generated by the model. Similarly, if the user prompts are not precisely written and/or if the user is not well-trained on how to prompt the model, the results will likely not be what the user is seeking. This can undermine confidence in the GAI model. Therefore, training on how to use the GAI model effectively is critical to its usefulness.
The primary problems that lawyers have had with non-legally trained GAI models are when facts or legal cases have been hallucinated, which effectively creates “false” content in the outputs, even though it might appear true to the user.5 This generally occurs due to limitations in the training data provided to the model. In hallucinating, the model effectively makes assumptions based on the patterns it has learned from the data, even though those patterns do not apply to the context of the situation. Therefore, the false outputs are simply inaccurate assumptions, which the model does not understand as inaccurate. The hallucination may statistically fit the prompt, but lack the “real world” grounding or “common sense” that a person would use to reject this response. Stated differently, GAI models hallucinate because they lack the “soul” necessary to differentiate truth from fiction.
So, beyond understanding the GAI models hallucinate, where do the pitfalls lie for lawyers who use GAI models? They lie in three main areas: (1) a failure to understand GAI’s limitations; (2) a failure to supervise the use of GAI; and (3) data security and confidentiality concerns.
The failure to understand GAI’s limitations
A lack of understanding regarding GAI’s limitations is the primary theme in many of the reported cases involving lawyers receiving sanctions when using GAI to create legal briefs that contain false facts or cases. The use of GAI requires oversight by the attorney employing it. Even legally trained GAI models require human oversight to confirm that the generated content is accurate. At best, the output must be considered a first draft, to be reviewed and corrected before it is shared with a client, opposing counsel, or a court.
Another limitation of GAI is that the output will generally only be as strong as the prompts that generate it. To that end, it is critical that attorneys using GAI be trained on how to properly prompt the model to get the results sought. For untrained lawyers using open AI models, there is a high risk that the generated content will not be what the lawyer seeks. More importantly, an untrained lawyer may not even realize that the output contains fallacies. While GAI can make the lawyer more efficient, most lawyers using it are not interested in accepting poor work product as the cost of this greater efficiency. And certainly, false content or poor work product may lead to future legal malpractice cases for attorneys who use GAI but fail to account for or understand its limitations.
The failure to supervise
Lawyers have a professional responsibility to supervise those who work for them. If lawyers permit the use of GAI within a law firm, there must be supervision of that usage. For the same reasons that lawyers must be vigilant in their own use of GAI, they must similarly train and supervise those in their employ on the use of GAI as well.
Further, there are many legally trained GAI models available in the marketplace. If a lawyer and their firm decide to use a particular model, it is incumbent upon the lawyer to ask questions and learn about the limitations of the selected model, and train and supervise the use of the model based on those limitations.
Legal malpractice claims frequently arise when lawyers or their staff are not properly trained, resulting in errors that impact the lawyer’s work product. Like any new technology, supervision over the use of GAI is therefore critical to avoiding liability for lawyers and law firms.
The failure to protect client information
Lawyers have a professional responsibility to protect the information and secrets of their clients. When using an open AI model like ChatGPT, any information shared with the model is used by the model as training data. As such, if client information is shared with an open AI model, it is clearly being shared with the public. Even if the user attempts to be vague in the data being shared, if enough information is shared, it is possible that the model may fill informational gaps with correct assumptions and effectively correctly presume that the information is about your client, even if you have not told this to the model. In this way, it may appear that the lawyer has revealed information about a client, even if that is not actually the case.
In addition, cybersecurity is critical when using AI models, as the same security issues that impact any material containing links to the internet are present with those models. Lawyers must account for these cybersecurity risks as the standard of care adjusts to the realities of the use of AI by lawyers and requires them to protect client information in the face of those risks.
The use of closed, legally trained GAI models is an attempt to address these risks. But, at the end of the day, the lawyers who use them must take steps to ensure that vendors are following through on their promise to protect client data.
Protection of client information and secrets remains fundamental to the services offered by lawyers to their clients. And certainly, if a client’s information does become public, this presents a potentially significant risk for lawyer liability.
1 Capek, Karel, R.U.R. (Rossum’s Universal Robots): A Fantastic Melodrama in Three Acts and an Epilogue 17 (Paul Selver and Nigel Playfair trans., Samuel French, Inc. 1923).
2 2025 U.S. Dist. LEXIS 36454, *1 (E.D.Pa. March 13, 2025)
3 Id.
4 But not necessarily legal research, which has led to the problematic usage of ChatGPT by attorneys.
5 The first reported case was Mata v. Avianca, Inc., 678 F.Supp.3d 443 (S.D.N.Y. 2023). Since the model, there have been more than a dozen additional reported cases of lawyers relying on hallucinated case cites and being sanctioned under Rule 11 of the F.R.Civ.P.
When Satire Meets Statute: The Onion’s VPPA Class Action
Video Privacy Protection Act (VPPA) class action lawsuits have been on the rise, and the owner of the The Onion, a popular satire site, finds itself the subject of a recent one. On May 16, 2025, a plaintiff-initiated litigation against Global Tetrahedron, LLC, the owner of The Onion, alleges that the defendant installed the Meta Pixel on its website, with host videos for streaming, without user knowledge.
The plaintiff alleges that, unbeknownst to consumers, the Meta Pixel tracks users’ video consumption habits “to build profiles on consumers and deliver targeted advertisements to them.” According to the complaint, the Meta Pixel is configured to collect HTTP headers, which contain IP addresses, information about the user’s web browser, page location, and document referrer (the URL of the previous document or page that loaded the current one). Since the Meta Pixel is reportedly attached to a user’s browser, “if the user accesses Facebook.com through their Safari browser, then moves to theonion.com after leaving Facebook, the Meta Pixel will continue to track that user’s activity on that browser.” The complaint also alleges that Meta Pixel collects a Meta-specific value called the c-user cookie, which is a unique user ID for users logged into Facebook. By combining the points of data collection, the complaint asserts, the Onion transmits personally identifiable information to Meta.
In a novel approach, the complaint uses screenshots of the plaintiff’s ChatGPT conversation to demonstrate how ChatGPT can help an ordinary user decipher what information is allegedly being disclosed to Meta through the Onion website. According to the screenshots, when the plaintiff asked ChatGPT how to check if a website was disclosing their browsing activity to Meta, the plaintiff was directed to use developer tools to inspect the page’s network traffic. Each internet browser has an integrated developer tool, which allows developers to analyze network traffic, measure performance, and make temporary changes to a page. Any website user can open the developer tool, as ChatGPT directed the plaintiff to do.
Following ChatGPT’s instructions, the plaintiff reportedly opened the developer tool page for the Onion website. Then, the plaintiff uploaded a screenshot of the Onion’s developer tool onto ChatGPT. ChatGPT analyzed the request in the screenshot and broke down the parameters contained within, including Pixel ID, Page Views, URL, and Facebook cookie ID. Many VPPA complaints in recent months have described the technical processes behind tracking technologies, but by using ChatGPT in this complaint, the plaintiff underscores how such large language model tools can help an average website user decipher seemingly complex technical concepts and better understand the data flows from tracking technologies.
The case reflects a broader trend in VPPA litigation, in which plaintiffs are challenging the use of third-party tracking technologies on sites that offer any form of video content. As VPPA litigation evolves, this case could peel back another layer of risk for publishers across industries providing video streaming content.
Bidders Beware! Design-Builders Are at Risk Not Only for Defective Design Documents, But Possibly for Defective Bidding Documents, Too
Historically, the Boards of Contract Appeals and Courts have reviewed design-builders’ reliance on government-provided conceptual drawings or bridging documents in support of constructive change claims under a reasonableness standard (see M. A. Mortensen Company, ASBCA No. 39978, 93-3 BCA ¶ 26,189). However, in two recent cases, the Spearin doctrine – under which the government warrants that government-provided “design specifications,” if followed, will produce a satisfactory result (see United States v. Spearin, 248 U.S. 132, 136 (1918)) – has been applied by the boards and courts to analyze constructive change claims. Specifically, the conceptual drawings or bridging documents were reviewed to determine if they constituted design specifications that the government would warrant were adequate under Spearin. As set forth below, this alternative approach has ended with mixed results and may inadvertently make recovery from the government more difficult.
Sheffield Korte Joint Venture
In Sheffield Korte Joint Venture, ASBCA No. 62972, 23-1 BCA ¶ 38,417, aff’d, 2025 WL 1466934 (Fed. Cir. May 22, 2025),Sheffield (the design-builder) was awarded a contract with the United States Army Corps of Engineers to design and construct a new Army Reserve Center located near Waldorf, Charles County, Maryland. As part of the design, Sheffield was required to design and construct a stormwater management system to support the new center. The bid documents included conceptual drawings that depicted a centralized stormwater management system (versus a decentralized system). A centralized system is defined as one that collects stormwater in a single feature like a pond, whereas a decentralized system uses multiple, small-scale features to control stormwater and is intended to replicate natural hydrology.
The bid documents also indicated that the depicted stormwater management system was only an approximation, and that the contractor was ultimately responsible for determining the actual size and location of the system. Sheffield based its bid price for this scope of work on the conceptual drawings, which depicted a centralized stormwater management system.
Once performance of the design commenced, it became apparent to Sheffield that a centralized stormwater management system was not feasible under applicable state and local permitting requirements. Instead, Sheffield was required to design and construct a substantially more expensive decentralized stormwater management system. Thereafter, Sheffield submitted a certified claim to the government for its increased costs, which was subsequently denied by the government on the grounds that the Permits and Responsibility Clause, FAR 52.236-7, precluded entitlement.
Rather than argue its reliance on the conceptual drawings depicting a centralized stormwater management system was reasonable for bidding purposes, Sheffield based its claim for recovery under the Spearin doctrine (i.e., the government was responsible for the additional costs of construction since the conceptual drawings depicted a system that would not work for the project). Ultimately, the Armed Services Board of Contract Appeals (ASBCA) (and the Federal Circuit on appeal) denied Sheffield’s claim on the basis that the conceptual drawings were not “design specifications” for the warranty of constructability to apply under Spearin. In denying recovery, both forums relied on Sheffield’s significant discretion to design and build the stormwater management system in accordance with local regulations pursuant to FAR 52.236-7 and the fact that the bidding documents did not mandate a centralized stormwater management system. Importantly, there was no discussion of the implied warranty of the adequacy of the conceptual drawings for providing information for purposes of bidding as determined in the Mortensen case.
Balfour Beatty Construction LLC
In Balfour Beatty Construction LLC, CBCA 6750, 2023 WL 428747 (March 31, 2023), aff’d, 2025 WL 798865 (Fed. Cir. Mar. 13, 2025),the Civilian Board of Contract Appeals (CBCA) similarly considered to what extent a 30% bridging document provided to bidders should be considered design or performance specifications under a Spearin analysis for a number of claims submitted by the design-builder. In this case, the CBCA expressly found that Mortenson was not controlling and distinguishable because, in the board’s view, the bridging documents did not contain any warranty of accuracy for bidding purposes.
One particularly noteworthy claim addressed by the CBCA related to the thickness required for a mat slab. The CBCA found that the bridging documents at issue did not constitute design specifications as to the thickness of the mat slab because the bridging documents merely provided a minimum thickness, and the CBCA felt that Balfour Beatty should have validated the actual thickness that would be required. That ruling by the CBCA was appealed and overturned by the Federal Circuit. According to the Federal Circuit, a statement in the bridging documents indicating that the contractor should “match existing building foundations” was sufficiently definite to constitute a design specification, and, therefore, an implied warranty with respect to the mat thickness applied, which entitled the contractor to recover for the deviation from the specified thickness. So, while the CBCA refused to find any warranty by the bridging documents, the Federal Circuit concluded an implied warranty existed under Spearin.
Key Takeaways
The Sheffield Korte and Balfour Beatty cases demonstrate the challenges to design-builders presented by the application of the Spearin doctrine to adjudicate constructive changes based on faulty conceptual drawings or bridging documents. More importantly, these cases indicate a potential shift in Board and Federal Circuit jurisprudence away from the reasonableness standard articulated in Mortenson (see also Metcalf Construction Company, Inc. v. United States, 742 F.3d 984, 996 (Fed. Cir. 2014)).
The Sheffield Korte and Balfour Beatty cases place a burden on bidders of design-build projects to analyze conceptual drawings or bridging documents provided by the government for accuracy, especially if those documents are relied upon for bidding. Indeed, design-builders may not be able to recover additional costs if those documents are found to be defective absent an additional finding that the documents constitute “design specifications.” Whether the document constitutes “design specifications” can be highly technical, time-consuming, and unreasonably expensive for the bidders at bid time.
These recent decisions may also inadvertently increase the costs of design-build projects to the government. Wary design-builders may include higher cost contingencies in their bid price to account for the possibility of constructive change claims being denied because conceptual drawings or bridging documents do not constitute “design specifications.” As a corollary, this recent shift to a Spearin analysis on conceptual drawings and bridging documents may increase the burden on the government to respond to Requests for Information during the bidding stage as bidders seek certainty on mandatory versus discretionary design requirements.
Going forward, design-builders pursuing claims under similar circumstances should consider focusing the government’s attention on the fact that there is a material difference between design-build and design-bid-build contracting regarding the assumption of design risk and the application of the Spearin doctrine. In a design-bid-build delivery system, the Spearin doctrine applies where the government warrants that the fully designed plans and specifications are adequate to meet the government’s needs. In the design-build context, the Spearin doctrine should only apply where the government provides a fully developed design specification that the design-builder must follow for the construction of the project. The Spearin doctrine should not apply to conceptual drawings or bridging documents where the primary purpose of those documents is to inform the bidders of the scope of the project and assist them in assembling the price of completing it.
In summary, for a design-build project, there is an implied warranty that the conceptual drawings and bridging documents are adequate for the purposes of submitting a proposal as concluded by the ASBCA in Mortensen. Design-builders should focus on this warranty when making claims for constructive changes. Design-builders should not rely upon the application of the Spearin doctrine for constructive change claims stemming from defective conceptual drawings or bridging documents. Rather, consistent with the ruling in Mortensen, the focus of the analysis should be on fundamental fairness and reasonableness standards when determining whether a design-builder reasonably relied upon conceptual drawings or bridging documents in order for the government to obtain the most competitive price. In that circumstance, the government should assume the risk of providing inaccurate bidding information to the design-builder.
It is not clear whether the decisions in Sheffield Korte or Balfour Beatty signal a shift away from Mortenson, but, as described above, such a shift could prove problematic for a number of reasons. Regardless, in the future, design-builders pursuing the government for defective conceptual drawing and bridging documents would be wise to consider reverting to the Mortensen analysis to support their claims and avoiding reliance on the Spearin doctrine.
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HHS Rescinds 2022 EMTALA Guidance on State Law Preemption in Emergency Reproductive Healthcare
On May 29, 2025, the Department of Health and Human Services (“HHS”) rescinded its July 11, 2022 guidance (Ref. QSO-22-22-Hospitals) (the “2022 Guidance”) clarifying how the Emergency Medical Treatment and Labor Act of 1965 (“EMTALA”) should be interpreted in the wake of state policy and legislative responses to the landmark Supreme Court decision, Dobbs v. Jackson Women’s Health Organization (2022), overturning Roe V. Wade (1973) which legalized abortion in the United States.
Under EMTALA, all Medicare participating hospitals and their dedicated emergency departments are required to provide patients, regardless of their ability to pay or insurance status, with an appropriate medical screening, stabilizing treatment, and transfer, if necessary. The 2022 Guidance directed, among other things, that this law applies irrespective of any state laws or mandates that apply to specific procedures (including conditions for which stabilization may require abortion, such as ectopic pregnancy, severe preeclampsia, and complications arising from probable pregnancy loss). The 2022 Guidance further stated that “[a] physician’s professional and legal duty to provide stabilizing medical treatment to a patient who presents to the emergency department and is found to have an emergency medical condition preempts any directly conflicting state law or mandate that might otherwise prohibit such treatment.”
Today, the 2022 Guidance is no longer in effect, however the Centers for Medicare and Medicaid (“CMS”) affirmed in its June 3, 2025 Press Release that it “will continue to enforce EMTALA, which protects all individuals who present to a hospital emergency department seeking examination or treatment, including for identified emergency medical conditions that place the health of a pregnant woman or her unborn child in serious jeopardy.” CMS has been explicit that it is working to “rectify any perceived legal confusion and instability created by the former administration’s actions.” Nevertheless, Medicare participating hospitals and their dedicated emergency departments are left wondering: “what happens now when state law, federal law, and physician ethical duties to their patients are in direct conflict?”