Litigation / Trial Practice – Page 4

Equal Protection Not on the Menu This Time

In North End Chamber of Commerce (“NECC”) v. City of Boston, the NECC and several restaurants in the North End neighborhood of Boston (“Plaintiffs”) filed suit against the City of Boston (“City”), alleging that the City unlawfully curtailed and later banned on-street dining in the North End. The Court granted the City’s motion to dismiss Plaintiffs’ complaint (“Complaint”).
In response to the COVID-19 pandemic in 2020, the City implemented an outdoor-dining program authorizing restaurants in designated areas to offer dining on public streets. In 2022, the City imposed an “impact fee” of $7,500 on participating North End restaurants and a monthly fee of $480 for each parking space used by the restaurants’ outdoor patios. The City did not charge these fees to participating restaurants in any other Boston neighborhood. The City also limited the outdoor-dining season in the North End to five months, compared to the eight-to-nine months outside of the North End. The following year the City completely banned on-street dining in the North End but not elsewhere. Plaintiffs then filed the Complaint.
The City moved to dismiss, claiming the Complaint failed to state a claim upon which relief could be granted and that it violated Rule 8(a)(2) of the Federal Rules of Civil Procedure (“Rule 8”). The Court agreed with the City as to compliance with Rule 8. Rule 8 requires a plaintiff to write “a short and plain statement of the claim showing that the pleader is entitled to relief.” The Court concluded that the Complaint, which was over two hundred pages long and “omitted virtually no detail,” contained excessive assertions that were unnecessary to advance the causes of action. The Court warned that “unnecessary prolixity” is disfavored by the Court because it imposes a significant burden on both the Court and the responding party.
Plaintiffs also claimed that the NECC lacked associational standing to sue either directly or on behalf of its members. The Court disagreed, holding that the NECC had standing to sue for its equitable relief claim, but did not have standing to sue for monetary damages. The NECC was not entitled to compensation for the various injuries suffered by its members, and the member restaurants were necessary parties to assess each of their damages separately.
The Court next concluded that Plaintiffs’ equal protection claims failed. First, the Court reasoned that Plaintiffs failed to allege the sort of discrimination that would trigger strict scrutiny. Strict scrutiny is triggered if the action in question burdens a suspect class, has discriminatory intent with respect to racial or national origin, or impinges upon a fundamental right. The Court disagreed that the Constitution vested Plaintiffs with a fundamental right to on-street-dining. Nor did the City’s policies explicitly differentiate among individuals based on a suspect classification, such as race, ethnicity, or national origin. The Court also disagreed that the City acted with discriminatory intent where Plaintiffs failed to identify a “clear pattern” of conduct historically targeting the North End or “white, Italian Americans.” Nor was there evidence that the regulations had disproportionate impact on persons of Italian heritage. Plaintiffs therefore failed to plausibly allege the sort of discrimination that would trigger strict scrutiny.
The Court proceeded to apply rational-basis review, under which a classification will withstand a constitutional challenge so long as it is rationally related to a legitimate state interest and is neither arbitrary, unreasonable nor irrational. Here, to justify the fees imposed on Plaintiffs, the City considered the “unique impacts of outdoor dining on the quality of residential life,” such as “trash, rodents, traffic, and parking problems.” To justify the ban on on-street dining in the North End, the City cited the North End’s high density of restaurants and foot traffic, narrow streets and sidewalks, resident parking scarcity, and other related considerations. The City also pointed to the scheduled closures of the Sumner Tunnel and continued congestion around the North Washington Street Bridge construction project. The Court concluded that the City’s explanations for the policies sufficiently showed that the reasons underlying the policies were rationally related to legitimate government interests.
The Court also addressed Plaintiffs’ “class-of-one” claim, whereby an equal protection claim may in some circumstances be sustained when a plaintiff alleges that she has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference. The Court reasoned that neither the neighborhood itself nor the restaurants therein were similarly situated to those outside the North End because the North End is exceptionally dense and located adjacent to two major construction projects. The Court also held that Plaintiffs failed to plausibly plead that the City acted with bad faith or had malicious intent to injure them, and therefore concluded that the Complaint failed to plausibly plead a class-of-one claim.
Plaintiffs also asserted violations of procedural and substantive due process. As the Court explained, the former ensures that government will use fair procedures with respect to a constitutionally protected property interest, and the latter functions to protect individuals from particularly offensive actions by officials even when the government employs facially neutral procedures in carrying out those actions. The Court held that both claims failed because Plaintiffs plainly did not have a property interest in on-street-dining licenses.
Finally, Plaintiffs alleged that the impact and parking fees imposed on Plaintiffs for the outdoor-dining program constituted an unlawful tax. The Court disagreed. The fees were not an unlawful tax where: (1) they were charged in exchange for a benefit (a permit to authorize on-street dining that would otherwise be unlawful); (2) Plaintiffs paid the fee by choice, and had the option to avoid the charge by not participating in the program; and (3) the charges were collected to compensate the governmental for its expenses in providing the services rather than to raise revenue. For example, the impact fee paid for services that were related to the program, including rat baiting, power washing of sidewalks, and painting of street lane lines. The parking fees were paid directly to garages to provide parking for residents who lost it as a result of the outdoor-dining program. Plaintiffs therefore failed to show that the fees were unlawful taxes.
For all these reasons, the Court allowed the City’s Motion to Dismiss.

AG’s Power Holds, but Agency Shortcuts Don’t

In Att’y Gen. v. Town Milton, the court ruled that the Massachusetts Bay Transportation Authority (“MBTA”) Communities Act, G. L. c. 40A, § 3A (“Section 3A”), is constitutional, and that the Attorney General has the authority to sue to enforce it and obtain injunctive relief compelling compliance. However, because the Executive Office of Housing and Livable Communities (“HLC”) did not comply with the Administrative Procedure Act (“APA”) when promulgating the corresponding guidelines, the guidelines were unenforceable.
Section 3A was enacted to address the housing crisis in Massachusetts. It requires that cities and towns that benefit from having local access to MBTA services adopt zoning laws that provide for at least one district where multifamily housing is “as of right” located near their local MBTA facilities. The statute provides that noncompliant MBTA communities are ineligible for funds from certain state funding sources. Section 3A directs the HLC and three other State agencies to promulgate guidelines to determine if an MBTA community has complied with § 3A. HLC issued its final guidelines in August 2023, but did not file with the Secretary of the Commonwealth a notice of public hearing, a notice of proposed adoption or amendment of a regulation, or a small business impact statement within the meaning of the APA.
In February 2024, residents of the town of Milton (“Town”), an MBTA community, voted down a proposed zoning scheme to satisfy the requirements of Section 3A. The Attorney General then brought suit against the Town to enforce compliance with Section 3A. The Town denied violation of Section 3A and filed a counterclaim seeking declaratory relief. The Town asserted that Section 3A provides for an unconstitutional delegation of legislative authority because it improperly vests HLC with the power to make fundamental policy decisions. The Town further claimed that HLC’s guidelines were not promulgated in accordance with the APA. Lastly, the Town argued that the Attorney General lacks the power to enforce the act.
The Court granted declaratory relief in part and dismissed the Town’s remaining claims. First, the Court held that Section 3A was constitutional. The legislative delegation of authority to HLC to determine whether a community is in compliance with Section 3A did not violate the separation of powers doctrine.1 The Legislature did not improperly abandon its policy-making role where: the language of the statute made clear the Legislature’s policy goal, the parameters provided by § 3A were sufficient to guide the HLC, and § 3A sufficiently guarded against potential abuses of discretion by HLC.
Second, the Court held that the Attorney General is empowered to enforce Section 3A notwithstanding the lack of any reference to such power in the statute and notwithstanding the penalties already provided for in the statute. The Court explained that the Attorney General has broad authority to enforce the laws of the Commonwealth and act in the public interest, and that the enforcement power is not dependent upon whether a particular statute references such power. The Court rejected the Town’s argument that the Attorney General may not bring an enforcement action because Section 3A already includes consequences for noncompliance (ineligibility for certain funding sources). The Court found that the Legislature did not intend that the only consequence for an MBTA community for failing to comply with the act would be the loss of funding opportunities. The Court recognized that the Attorney General, as the chief law enforcement officer of the Commonwealth, has authority to seek injunctive relief compelling compliance with state statutes in the absence of some express statute to the contrary.
Lastly, the Court held that HLC’s guidelines as promulgated were unenforceable because HLC failed to comply with the APA. The APA requires State agencies to take certain steps when promulgating regulations in order to give notice and afford interested persons an opportunity to present data, views, or arguments. The Court explained that the purpose of the APA is to create uniformity in agency proceedings and to establish a set of minimum standards of fair procedure below which no agency should be allowed to fall. The Court noted that the APA leaves no room for substantial compliance with respect to promulgating rules and that strict compliance for agencies is compelled by the plain terms of the statute. The Court held that because HLC failed to file notice of a proposed regulation with the Secretary of the Commonwealth along with a small business impact statement, as required by the APA, HLC’s guidelines were legally ineffective and had to be repromulgated in accordance with G. L. c. 30A, § 3, before they could be enforced.
The Court remanded the case, directed the single justice to enter a declaratory judgment consistent with the Court’s opinion, and dismissed the remaining claims.

1The Court explained that to determine whether a legislative delegation of authority violates the separation of powers doctrine, Courts consider three factors: (1) did the Legislature delegate the making of fundamental policy decisions, rather than just the implementation of legislatively determined policy; (2) does the act provide adequate direction for implementation; and (3) does the act provide safeguards such that abuses of discretion can be controlled?

Twenty States Sue the Trump Administration for HHS Program Eliminations and Staff Layoffs

Nineteen states plus the District of Columbia filed a federal Complaint in U.S. District Court for the District of Rhode Island on May 5, 2025 alleging that the Trump Administration’s recent activities to downsize and restructure the Department of Health and Human Services (HHS) are unlawful under both the U.S. Constitution and the Administrative Procedure Act (APA). The coalition of states, led by New York, is asking the judicial branch for declaratory and injunctive relief “to prevent the unconstitutional and illegal dismantling of the Department.” In addition to New York and the District of Columbia, states joining the lawsuit comprise Arizona, California, Colorado, Connecticut, Delaware, Hawai’i, Illinois, Maine, Maryland, Michigan, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, and Wisconsin (together, the Plaintiff States). This is but one among multiple legal challenges to the ongoing programmatic and research cuts within HHS and its sub-agencies, such as the National Institutes of Health, Food and Drug Administration, and Centers for Medicare and Medicaid Services.
In their Complaint, the Plaintiff States emphasize that the department was both created by Congress via statutory enactments and that many of its mandates are congressionally directed, with significant federal appropriations allocated to HHS every year. They point out that “[i]ncapacitating one of the most sophisticated departments in the federal government implicates hundreds of statutes, regulations, and programs.” The plaintiffs allege, therefore, that the restructuring and reduction in force (RIF) actions taken by HHS Secretary Kennedy and the other named defendants, which ignore those statutory mandates and refuse the spend funds appropriated to HHS for designated purposes, violate the U.S. Constitution’s appropriations clause as well as separation of powers principles.
We have previously blogged about HHS’s recent restructuring and RIF actions, as well as the Trump administration’s plans for reducing the overall HHS discretionary budget. In its factual allegations, the Plaintiff States’ Complaint sets out a detailed timeline of actions taken by the Trump administration to dismantle the department, beginning on January 21, 2025 immediately after the presidential inauguration. It also points to the White House Office of Management and Budget (OMB) fiscal 2026 internal HHS budget document, dated April 10 and leaked on April 16 (which we discussed here), as evidence that the administration’s plan from day one of its tenure was to eviscerate the department.
The Plaintiff States further argue that the Trump administration’s actions in this area have been arbitrary and capricious under the APA’s legal standard “because the department’s stated reasons for the layoffs and reorganization – to promote ‘efficiency’ and ‘accountability’ – are pretext for Secretary Kennedy’s stated goal of attacking science and public health.” In support of this contention, the Plaintiff States summarize Secretary Kennedy’s long history of public statements criticizing HHS and various of its public health functions using vitriolic language and baseless claims about global conspiracies.
The Complaint also highlights specific examples of injuries that have already occurred to the Plaintiff States and their citizens as a result of the March 27, 2025 HHS reorganization announcement and the subsequent actions since then to terminate employees, programs, and offices. Among other things, it notes that “employees who remain at HHS have been prevented from collecting and reviewing new applications; designing, distributing, and implementing new policies and guidance; collecting and distributing scientific data; issuing obligated funds to the Plaintiff States and others; investigating for program integrity; and responding to any manner of public inquiry.” One specific example cited in the Complaint relates to the closure of infectious disease laboratories run by the Centers for Disease Control & Prevention (CDC). Without those specialized CDC testing labs, state public health laboratories throughout the country are being directed via CDC’s webpage to send their patient samples to New York State’s Wadsworth Center, which has “elite capabilities” and can test for rare and complex diseases “that cannot be done anywhere else in the country except for the CDC before April 1,” the Plaintiff States explain. However, they point out that the New York lab “was not built to replace the CDC and it simply could never fill that hole.” With a halt to so much testing by CDC, including for widespread public health needs such as foodborne pathogens and tuberculosis, our public health infrastructure is undoubtedly being damaged, and outbreaks will become more frequent. The terminations also are directly at odds with Congress’s legislative directives to CDC to protect the public health.
Throughout U.S. history to date (as we approach the country’s 249-year birthday this coming Independence Day), and as envisioned by the authors of our constitution, the three branches of the federal government are treated as “co-equals,” with due respect accorded to one another and the critical roles each one plays in the delicate balance that is our tri-partite system of federal governance. So, although the federal courts should be an effective way to curtail perceived lawlessness by the executive branch, the current administration has demonstrated a willingness to ignore injunctions and other judicial orders (for example, see here). We will monitor the outcome of this important legal challenge in the Rhode Island District Court, as well as any future appeals. However, it is very possible that the Plaintiff States will not get the relief they are requesting, even if the federal courts agree with them regarding the nature of the executive’s actions to dismantle much of HHS without prior notice to Congress or a chance to ensure that mandatory public health functions can continue.
This very real potential outcome of the federal court litigation strongly suggests that Congress must get involved to exert effective oversight and some form of a “check” on the executive branch if we are to retain many of our nation’s critical health and human services functions. These include critical HIV prevention, environmental health, and tobacco control functions that have been substantially damaged (although ending such programs is seemingly incompatible with much of Secretary Kennedy’s Make America Healthy Again agenda that seeks to reduce the burden of chronic diseases). Health care and life sciences stakeholders can contact their congressional representatives and can also submit comments to any open HHS or OMB docket that affects their interests, rather than relying solely on the outcome of judicial processes, given the extraordinary political times we are experiencing in 2025.

Withdrawal Liability: Third Circuit Paves New Path for Pension Funds to Collect from Affiliated Employers

Takeaways

The Third Circuit recently held in Laguna Dairy that, under certain circumstances, a settlement agreement over a withdrawal liability dispute can constitute a revised withdrawal liability assessment under ERISA.
Employers should be mindful that all trades or businesses under common control are treated as a single employer and are jointly and severally liable for withdrawal liability under ERISA.
Withdrawal liability under ERISA is an evolving area of law, and some courts are willing to broadly construe the statutory language in favor of multiemployer pension plans.

This Week in 340B: May 6 – 12, 2025

Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation. Get more details on these 340B cases and all other material 340B cases pending in federal and state courts with the 340B Litigation Tracker.
Issues at Stake: Contract Pharmacy; GPO Prohibition; Anti-Trust; Other

A group of commonly-owned drug manufacturers filed a complaint against the Tennessee attorney general to challenge a state law governing contract pharmacy arrangements.
In a case challenging a Nebraska state law governing contract pharmacy arrangements, a group of amici filed an amici curiae brief in support of the defendant’s motion to dismiss.
In a case challenging the Health Resources and Services Administration’s (HRSA) policy limiting the circumstances in which covered entities can use their group purchasing arrangements to purchase non-340B drugs, the defendant filed a cross motion for summary judgment and opposition to plaintiff’s motion for summary judgment.
In an appealed case challenging a Louisiana law governing contract pharmacy arrangements, the intervenor-defendant filed a motion for leave to file a sur-reply to appellant’s reply brief.
In an anti-trust class action case, the defendant filed a motion to dismiss plaintiff’s amended complaint.
In a case challenging a Missouri state law governing contract pharmacy arrangements, the defendants filed a supplemental brief in support of their motion to dismiss. In the same case, the plaintiffs filed a supplemental brief in opposition of the defendant’s motion to dismiss.
In a case by a covered entity against HRSA, HRSA filed a response to the covered entity’s supplemental brief in support of its motion for preliminary injunction, a group of drug manufacturers filed a motion for leave to file an amicus brief in support of HRSA, and the covered entity filed a supplemental brief requested by the court.

Takeaways from the CFPB’s Withdrawal of Guidance

Effective May 12, 2025, the Consumer Financial Protection Bureau (CFPB) formally revoked 67 different guidance documents by publishing a notice in the Federal Register. The CFPB’s action covers various guidance documents, interpretive rules, policy statements and advisory opinions across a range of laws and topics. The stated purpose of this move is threefold:

The CFPB’s new policy is to only issue guidance “where that guidance is necessary and would reduce compliance burdens.”
There is “no pressing need for interpretive guidance to remain in effect” because the CFPB is “reducing its enforcement activities” in light of the current administration’s “directives to deregulate and streamline bureaucracy.”
The CFPB’s “guidance is generally non-binding and generally does not create substantive rights,” and sometimes goes beyond the relevant statute or regulation it seeks to interpret.

The CFPB’s action has raised significant questions for financial institutions. For example, does the withdrawal of a particular guidance document mean that the current CFPB disagrees with the interpretation or position articulated in that document? Should an entity change course and take a different approach to complying with whatever the guidance addressed? And does the CFPB’s choice to keep a certain guidance document in force and not withdraw it mean that the current CFPB agrees with the interpretation or policy articulated in that document?
Unfortunately, there aren’t any answers to these questions at present. For starters, the CFPB does not explain why any particular guidance document is being withdrawn. Instead, the agency offers a number of potential explanations, such as inconsistency with the statutory text, violations of notice-and-comment rulemaking requirements, inconsistency with the agency’s current positions, or even just the agency’s “current policy to avoid issuing guidance except where necessary and where compliance burdens would be reduced rather than increased.”
The problem for industry is that the explanation for withdrawing each document matters. For example, if the CFPB withdrew one guidance document because it now deems the interpretation to be inconsistent with the statutory text, then regulated entities would have to consider changing how they interpret and comply with various parts of the law. On the other hand, if the CFPB withdrew a document as “unnecessary” (notwithstanding the fact that it advances a permissible interpretation), a regulated entity would not necessarily need to change their internal policies or procedures, as the current policy would remain compliant with federal law.
Unfortunately, financial services providers are left to analyze all of the now-withdrawn guidance documents and make their own determinations regarding which category each document may fall into. This is a significant compliance burden, to say the least.
While the CFPB’s move is jarring, the exercise of reviewing complex issues addressed through guidance or advisory opinions is something that financial services providers should have undertaken when the United States Supreme Court released the
Loper Bright Enterprises v. Raimondo decision. That case overturned the long-standing Chevron doctrine, which instructed courts to give deference to enforcing agencies’ interpretations of ambiguous statutes. Under Chevron, knowing how the CFPB interpreted certain issues was critical for covered entities to consider in their compliance efforts. Not only did it ensure a company met the agency’s expectations, but it also provided some level of cover if ever challenged in private litigation, as the CFPB’s interpretation was often likely to receive some deference.
In a post-Loper Bright world, reviewing courts are no longer supposed to defer to agency interpretations. Rather, they are now instructed to make their own determinations regarding the most reasonable interpretation of an ambiguous statute or regulation. Under this lens, the CFPB’s guidance provides much less value. It certainly does still provide insight into the agency’s expectations, which is valuable, especially in the context of enforcement actions, but it no longer has the same value when presented in court.
Since a reviewing court is supposed to ascertain the most reasonable interpretation of an ambiguous statute or regulation on its own, the CFPB’s interpretation now has little persuasive value. If the CFPB adopted an unreasonable interpretation in a guidance document, it would not matter in a post-Loper Bright world whether that document was in effect or withdrawn, as the court would not give deference in either case. In other words, the Loper Bright decision signaled that financial services providers would be best served to undertake their own analysis regarding the laws implicated by all of the CFPB’s guidance, regardless of whether it is withdrawn or remains in effect.
Given the diminished value of an agency interpretation in a post-Loper Bright world, in some ways the CFPB’s action to withdraw significant amounts of guidance is of limited effect. For now, while we undertake analysis of the issues implicated by the now-withdrawn guidance, we also wait for additional answers from the CFPB. Specifically, we hope that the CFPB will provide its rationale for why each guidance document was withdrawn. Did the CFPB consider the guidance to have adopted an inaccurate interpretation of the law, or did the CFPB determine that the guidance was unnecessary? Even though agency guidance is now less valuable than it once was, it is still helpful to know an agency’s views on complex legal and compliance issues.
Finally, we await to see if the CFPB’s withdrawal decisions are final. In its notice, the CFPB explains that its current action “is not necessarily final. The Bureau intends to continue reviewing all guidance documents to determine whether they should ultimately be retained. However, the Bureau has determined that the guidance identified . . . should not be enforced or otherwise relied upon by the Bureau while this review is ongoing.” In other words, we don’t even know whether the withdrawal is an interim measure while it continues to review things internally, or whether the withdrawal will be a final action. This only adds to the uncertainty and, unfortunately, we are forced to wait to see if the CFPB announces if and when the exercise is completed.
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The TCPA Landscape in 2025: Key Developments and Compliance Priorities

The Telephone Consumer Protection Act (TCPA) continues to be a major source of litigation risk for businesses engaged in outbound marketing. In the first quarter of 2025, litigation under the TCPA surged dramatically, with 507 class action lawsuits filed — more than double the volume compared to the same period in 2024. This steep rise reflects shifting enforcement patterns and a growing emphasis on consumer communications practices. Companies should be aware of several emerging trends and evolving interpretations that are shaping the compliance environment.
TCPA Class Action Trends
In the first quarter of 2025, 507 TCPA class actions were filed, representing a 112% increase compared to the same period in 2024. April filings also reflected continued growth, indicating a sustained trend.
Key statistics:

Approximately 80% of current TCPA lawsuits are class actions.
By contrast, only 2%-5% of lawsuits under other consumer protection statutes, such as the Fair Debt Collection Practices Act (FDCPA) or the Fair Credit Reporting Act (FCRA), are filed as class actions.

This trend highlights the unique procedural and financial exposure associated with TCPA compliance.
Time-of-Day Allegations on the Rise
There has been an uptick in lawsuits alleging that companies are contacting consumers outside of the TCPA’s permitted calling hours — before 8 a.m. or after 9 p.m. local time. In March 2025 alone, a South Florida firm filed over 100 lawsuits alleging violations of these timing restrictions, many of which involved text messages.
Under the TCPA, telephone solicitations are not permitted during restricted hours, unless:

The consumer has given prior express permission;
There is an established business relationship; or
The call is made by or on behalf of a tax-exempt nonprofit organization.

It is currently unclear whether these exemptions definitively apply to time-of-day violations. A petition filed with the FCC in March 2025 seeks clarification on whether prior express consent precludes liability for messages sent during restricted hours. The FCC accepted the petition and opened a public comment period that closed in April.
Drivers of Increased Litigation
Several factors appear to be contributing to the rise in TCPA filings:

An increase in plaintiff firm activity and case volume;
Ongoing confusion regarding the interpretation of revocation rules; and
Continued complaints regarding telemarketing practices, including unwanted robocalls and text messages.

These dynamics reflect a broader trend of regulatory and private enforcement in the consumer protection space.
Compliance Considerations
Businesses should take steps to ensure their outbound communication practices are aligned with current TCPA requirements. This includes:

Documenting consumer consent clearly at the point of lead capture;
Ensuring systems adhere to permissible calling and texting times;
Reviewing policies and procedures for revocation of consent; and
Seeking guidance from counsel with experience in consumer protection laws.

Conclusion
The volume and nature of TCPA litigation in 2025 underscore the need for proactive compliance. Companies should treat consumer communication compliance as a core operational issue. Regular policy reviews, up-to-date systems, and informed legal support are essential to mitigating risk in this evolving area of law.
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Toy Story: Insurance Lessons from Mattel Defect Case

A Delaware court recently held in Mattel, Inc. and Fisher Price, Inc. v. XL Insurance America, Inc., et al., that a series of product liability claims dating back to 2013 constituted a single “occurrence” under the toy manufacturer’s and distributor’s commercial general liability (CGL) policies.
The case stemmed from Mattel’s request for defense and indemnity coverage in response to claims that certain toys caused bodily injuries to infants. The CGL coverage tower, which included policies issued by multiple primary, excess, and umbrella insurers, spanned from 2011 to 2020.
The primary policies defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” They also included a Lot or Batch Clause Endorsement with a “Deemer Clause,” which deemed all injuries arising from a single “lot” of products as occurring whenever the injury in the first filed claim occurred. Under the endorsement, a “lot” was defined as “two or more discrete units of the same or substantially similar good or product” that shared a common harmful condition, defect, error or suspected deficiency.
The umbrella policies used a similar definition of “occurrence” and included an Occurrence Amendatory Endorsement. This endorsement aggregated distinct claims arising from the same alleged defect or hazard in substantially similar products into a single “occurrence.” However, unlike the Lot or Batch Clause Endorsement, the Occurrence Amendatory Endorsement did not include a “Deemer Clause.”
The toy manufacturer, along with one of its primary insurers, contended that the product liability claims should all be treated as a single “occurrence.” In contrast, another insurer in the coverage tower argued that the issue was premature, asserting that the court first needed to determine the proximate causation of the alleged injuries before addressing the number of “occurrences.”
The Delaware court ultimately held that the claims constituted a single “occurrence” under the applicable policies. It permitted allocation of the claims based on the year in which the injuries occurred. The court found that the claims arose from “the same or substantially the same ‘hazard’: the defective design of the [manufacturer’s] products, including the incline angle, posed a hazard to the health of infants.” It emphasized that the products were part of the same product line and shared common hazards, satisfying the policy’s definition of a single “occurrence.”
With respect to allocation, the court held that coverage under the excess and umbrella policies could only be triggered by a bodily injury that actually occurred during a particular policy’s year. Significantly, the Occurrence Amendatory Endorsement in the excess and umbrella policies did not contain a “Deemer Clause”—unlike the Lot or Batch Clause Endorsement in the primary policies—which would have treated all injuries arising from a single “lot” of products as occurring at the time of the first claimed injury. As a result, the court concluded that the claims must be allocated to the policy in effect at the time each individual bodily injury occurred, rather than being grouped under a single policy year.
This decision underscores the critical importance of carefully reviewing the definition of “occurrence” in liability policies, including any endorsements that modify or clarify its application. Given that the number and timing of occurrences often plays a central role in the availability and extent of coverage, policyholders should consult experienced coverage counsel to help interpret policy language and ensure they maximize potential recovery under all applicable layers of insurance.

Another Court Conflates Limited Liability Companies And Corporations

For the last several years, I have been commenting on the judicial confounding of limited liability companies and corporations. See What Egregious Error Have Courts Made Nearly 9,000 Times (And Counting)?,The Too Too Unpardonable Fault Of Conflating LLCs And Corporations, and LLCs And Corporations – Another Judicial Mash-Up. Recently, I came across yet another egregious mergence of the corporate and LLC forms:
Here, three Defendants, including Defendant Prime Administration, LLC, are incorporated in Delaware, and therefore the Court applies Delaware law in its alter ego analysis to determine whether veil-piercing is appropriate.

Leaser v. Prime Ascot, L.P., 2025 WL 1330565 (E.D. Cal. May 7, 2025) (emphasis added). Delaware LLCs are not incorporated, they are formed. See Del. Code Tit. 6, § 18-201. The failure to distinguish between the types of entities is not just confusing, it can lead courts to apply the wrong statutes. For example, the court in Anbang Group Holdings Co. Limited v. Zhou, 2023 WL 4955119 cited a statute applicable to LLCs in respect of a corporation.
Word choice is important with respect to the manner of creation is also important in theology. For example, the Nicene Creed states that Jesus was γεννηθέντα, οὐ ποιηθέντα (begotten not made).

Disparate Impact Liability Under Fire

On Wednesday, April 23, 2025, President Trump signed EO 14281, titled Restoring Equality of Opportunity and Meritocracy (EO), stating a new Trump Administration policy “to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible . . . .”
We, along with several of our colleagues, already explained this EO, but this shift in federal policy – barely noticed by most people amidst myriad controversies, memes, and crypto schemes, as well as a number of other executive orders – is important enough to warrant further consideration by anyone who manages workplaces and those of us who advise employers about civil rights laws. As a cover story in the Sunday, May 11, 2025 issue of the New York Times observed, the EO’s directive to curtail the use of disparate impact liability is part of a larger effort to “purge the consideration of diversity, equity and inclusion, or D.E.I., from the federal government and every facet of American life. . . .” and focuses on “the nation’s bedrock civil rights law.”
The Genesis of Disparate Impact Liability
In 1971, the Supreme Court of the United States (SCOTUS) recognized in Griggs v. Duke Power Co. that Title VII of the Civil Rights Act of 1964 “proscribes not only overt discrimination but also practices that are fair in form, but discriminatory in operation.” Thus, in the first case in which SCOTUS addressed such a Title VII claim on the merits, the Court approved disparate impact as a theory of liability under Title VII; i.e., that a plaintiff can establish a prima facie case of discrimination by showing that a facially neutral employment policy disproportionately excluded members of a protected class at a statistically relevant level.
Two years after the Supreme Court held in Wards Cove Packing Co. v. Atonio that employers defending a disparate impact claim need only “produce evidence of a legitimate business justification” for the policy in question, Congress amended Title VII with the Civil Rights Act of 1991 (CRA). The CRA requires defendants to prove that a neutral employment policy with a statistically significant adverse impact on a protected class was job related and consistent with business necessity, a more difficult standard to meet than the standard set in Wards Cove. See 42 U.S.C. § 2000(e)-2 (k), the statutory provision on “Burden of proof in disparate impact cases” that Congress created and President George H.W. Bush approved.
In 2009, in Ricci v. DeStefano, a divided SCOTUS addressed whether an employer that engages in “disparate treatment” can justify doing so to avoid “disparate impact” liability. The majority held that an employer may do so only if it can prove its reasoning under a “strong-basis-in evidence” standard.
Concurring with the majority, Justice Scalia amplified the argument that the disparate impact provisions in Title VII are at odds with the Constitution’s equal protection clause. This viewpoint has won favor in certain corners of legal scholarship. See, for example, a Harvard Journal of Law & Public Policy discussion of disparate impact by Pacific Legal Foundation Fellow Alison Slomin, and an article posted by the Federalist Society asking whether the disparate impact doctrine is unconstitutionally vague.
The Actual Impact of “Disparate Impact”
The EO takes such arguments even further, calling disparate-impact liability “a near insurmountable presumption of unlawful discrimination [that] exists where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed.” Case law, however, indicates that establishing this “near insurmountable presumption” is not so easy.
Title VII requires an employer to prove the business necessity for a policy in question only after a plaintiff has met the burden of proving that a disparate impact exists to a statistically significant degree. And — as Mark Twain said — “There are three kinds of lies: lies, damned lies and statistics.”
A good statistics expert for the defense can stop a disparate impact claim in its tracks by identifying statistical fallacies in a plaintiff’s alleged statistical proof of disparate impact. A plaintiff must also demonstrate that the policy in question caused the disparity, which is no easy task.
Further, a mere finding of disparate impact does not mean that the plaintiff wins the lawsuit. Rather, establishing the existence of a statistically significant disparate impact establishes only a prima facie case of discrimination, not liability under Title VII (or any other anti-discrimination statute).
If a disparate impact plaintiff establishes a prima facie case, the burden of persuasion then shifts to the defendant to prove that the policy is job related and consistent with business necessity. The defendant’s burden can be simplified to one inquiry: whether the policy concerns an essential job function. For example, is it an essential function of a lifeguard to be able to swim?
Indeed, scholars have argued that disparate impact liability has proven to be a fairly limited tool for plaintiffs claiming discrimination.
Seeking a “Colorblind” Meritocracy, But What About Other Protected Classes?
The EO asserts that disparate-impact liability “all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability” and concludes that disparate-impact liability is unconstitutional. The disparate impact theory, however, is not limited just to race. The EO does not mention that the disparate impact theory is available in other Title VII cases based on sex, national origin, color and religion. To a lesser extent, it can apply to cases brought under the Age Discrimination in Employment Act (ADEA) and the Americans with Disabilities Act (ADA), too. However, an employer’s burden to defend against an ADEA claim is only to establish a reasonable factor other than age. Further, because of the detailed factual showing required in ADA cases, disparate impact ADA claims are not often available.
The EO also declares that treating people as individuals “encourages meritocracy and a colorblind society” as opposed to “race- or sex-based favoritism.” Notably, while Title VII makes it illegal to discriminate against any individuals on the basis of a protected class, the first sentence of the EO states that equal treatment of all citizens is a bedrock principle of the United States.
Under Title VII, it is illegal for employers to discriminate against any individual based on race, color, religion, sex, or national origin. The Equal Employment Opportunity Commission (EEOC) issued Enforcement Guidance on National Origin Discrimination in 2016, along with a Q&A that notes that Title VII’s “protection against national origin discrimination extends to all employees and applicants for employment in the United States, regardless of their place of birth, authorization to work, citizenship, or immigration status.” When the EEOC has a quorum of Trump appointees, that Guidance may be reconsidered, although a change to the statute will still require an act of Congress.
What it All Means, in Practice
Title VII as amended (including the Civil Rights Act of 1991) is still the law of the land, and the laws of many states may permit or require that adverse impact analyses be performed in certain circumstances. It thus still makes good sense to continue utilizing adverse impact analyses as a risk mitigation tool, under the privileged guidance of counsel.
In addition, with the EO’s overt message on federal government enforcement policy with respect to Title VII (and, for that matter, Title VI), employers should be able to rely on the EO to stop a federal government investigation that centers on an employment practice or policy allegedly causing a disparate impact in violation of Title VII. For example, employers now should be able to convince the EEOC to dismiss a race charge of discrimination as to a facially neutral policy or practice attacked only under a disparate impact theory.
Moreover, while the EO does mention the word “age,” it does not mention “disability” and does not cite to either the ADEA, 29 U.S.C. § 621, et seq., or the ADA, 42 U.S.C. § 12101, et seq. It seems likely that, given the EO’s clear position as to the disparate impact theory of discrimination, this Administration will also not continue an investigation or litigation premised on a disparate impact theory in violation of these laws. Accordingly, employers may likewise be able to get the EEOC or the U.S. Department of Justice to stop investigations of such claims.
Many of the (thus far) 147 executive orders issued since January 20, 2025, have been challenged in court; as of May 7, 2025, at least 228 actions have been filed, many resulting in preliminary injunctions blocking all or parts of these actions. It is unclear whether this EO will also garner a lawsuit, or if Congress will propose legislation to amend Title VII, or if the Administration will try to persuade the Supreme Court to agree with its declaration regarding the constitutionality of disparate impact theory. There is much to keep an eye on.

Fourth Circuit Holds That Federal Arbitration Act Trumps Servicemembers Civil Relief Act

In Espin v. Citibank, N.A. 126 F.4th 1010 (4th Cir. 2025), plaintiffs were retired servicemembers who had accrued large balances on their Citibank credit cards during service. Pursuant to the Servicemembers Civil Relief Act (SCRA), which requires that issuers of credit cards cap interest payable by military members, Citibank assessed plaintiffs interest of 6 percent or less while on active duty. But upon their leaving service, Citibank began charging plaintiffs standard civilian rates, a practice that plaintiffs argued amounted to a “veteran penalty” in violation of the SCRA. Plaintiffs also asserted a cause of action under the Military Lending Act (MLA), in addition to other federal and state law claims.
Citibank moved in the district court to compel arbitration, asserting that the terms and conditions of plaintiffs’ credit cards included an agreement to arbitrate disputes and a class arbitration waiver. The district court denied Citibank’s motion, holding that the language in 50 U.S.C. § 4042(a)(3) sufficiently evidences congressional intent to “proscribe waivers of the right to pursue relief as a class in federal court.” Espin, 126 F.4th at 1015. Thus, plaintiffs could proceed in federal court notwithstanding their agreements to arbitrate.
On appeal, the central issue was whether § 4042(a)(3) contains “‘a clearly expressed congressional intention’ to override the FAA’s instruction to enforce arbitration agreements.” Id. at 1016 (quoting Epic Sys. Corp. v. Lewis, 584 U.S. 497, 510 (2018)). According to the Fourth Circuit, it does not. § 4042(a)(3) states that a person “aggrieved by a violation of this chapter may in a civil action…be a representative party on behalf of members of a class or be a member of a class, in accordance with the Federal Rules of Civil Procedure, notwithstanding any previous agreement to the contrary.” According to the court, this provision is permissive, allowing for an aggrieved person to bring a federal class action despite an agreement to the contrary. But the SCRA as a whole does not even mention arbitration and this silence cannot be read as a prohibition on resolution of SCRA claims in a non-federal forum or the enforcement of agreements to arbitrate. The court remarked that congress knows how to override the FAA and has done so under other statutory frameworks—§ 4042(a)(3)’s silence as to arbitration cannot be given the same effect as an explicit mandate. See CompuCredit Corp. v. Greenwood, 565 U.S. 95, 103–04 (2012) (collecting cases). The Fourth Circuit also observed that legislative history—while not dispositive—supports its findings. In both 2019 and 2021, proposed revisions to the SCRA that would have prohibited arbitration of claims absent mutual consent were proposed and not enacted.
In contrast to the SCRA, the court noted that the MLA does manifest a congressional intent to override the FAA. In so holding, the Fourth Circuit joined the Eleventh Circuit, which last year found that “the MLA plainly overrides the FAA.” Steines v. Westgate Palace, L.L.C., 113 F.4th 1335, 1344 (11th Cir. 2024). A summary of the Steines decision can be found in the Winter 2025 edition of The Brief.
Espin clarifies that plaintiffs bringing claims under the SCRA will, at least in the Fourth Circuit, be bound by executed arbitration agreements. This clarification reaffirms the Supreme Court’s consistent refusal to “conjure conflicts between the [Federal] Arbitration Act and other federal statutes,” Epic Sys. Corp., 584 U.S. at 516–17.

China’s State Administration for Market Regulation Releases Top 10 Typical Cases of Intellectual Property Law Enforcement for 2024

On April 29, 2025, China’s State Administration for Market Regulation (SAMR) released the Top 10 Typical Cases of Intellectual Property Law Administrative Enforcement for 2024 (2024年知识产权执法十大典型案件). Administrative enforcement is an additional route to enforce intellectual property rights and is often faster than civil litigation. While fines and seizure are available, damages are not. It is also possible that SAMR will refer cases to the procuratorate for criminal prosecution.
A translation of SAMR’s summary follows. The original text is available here (Chinese only).
1. Market supervision departments of nine provinces (autonomous regions and municipalities) jointly investigated and dealt with the case of infringement of the exclusive right to use the registered trademark “Jimi” by Jiangxi Caiying Technology Co., Ltd. and others
Chengdu JmGO Technology Co., Ltd. discovered during market sales that Jiangxi Caiying Technology Co., Ltd. (hereinafter referred to as “Caiying” Company) and its related companies used the “JmGO Nuts” trademark on similar products, suspected of infringing its exclusive right to the “JmGO” registered trademark, causing serious impact on product sales. The infringement involved dozens of entities in processing, warehousing, packaging, sales and other links, across multiple provinces.
After receiving clues about the case, the Law Enforcement Inspection Bureau of the State Administration for Market Regulation immediately convened law enforcement backbones from market supervision departments in nine provinces (autonomous regions and municipalities), including Jiangxi, Guangdong, Beijing, Shanghai, Zhejiang, Jiangsu, Henan, Guangxi, and Sichuan, to jointly study and formulate a thorough action plan. At the same time, it coordinated with e-commerce platforms such as JD.com, Pinduoduo, Taobao, and Douyin to retrieve the sales records of “Jimi Nuts” suspected of infringing goods and collect the evidence of infringement by the parties. On March 6, 2024, the market supervision departments of nine provinces (autonomous regions and municipalities) took unified action to conduct surprise inspections on all the entities involved in the case, and verified the illegal acts of all relevant companies in one fell swoop. The State Administration for Market Regulation sent personnel to Jiangxi and Guangdong to supervise and guide on the spot. Based on the illegal facts found out by the centralized action, the State Administration for Market Regulation designated the Yichun Municipal Market Supervision Bureau of Jiangxi Province to conduct a unified investigation and handling of “Caiying” Company and the related companies controlled by it.
Upon investigation, it was found that Xiao XX, the actual controller of “Caiying” company, registered a total of 10 companies, commissioned others to produce projectors, projection screens and other products, used trademarks such as “Jimi Nuts” on the products and their packaging, and opened 25 online stores for sale on e-commerce platforms such as JD.com, Pinduoduo, Taobao, and Douyin. The Yichun Municipal Market Supervision Bureau of Jiangxi Province made a penalty decision in accordance with the law, confiscated the illegal income of 3.1434 million RMB from 10 companies including “Caiying”, imposed a fine of 1.9287 million RMB, and the total fines and confiscations were 5.0721 million RMB. In this case, “Caiying” company reached a settlement agreement with the right holder, admitted the infringement and compensated for the loss of 4 million RMB. Other companies involved in this case (processing, warehousing and packaging companies, etc.) will be further investigated and handled by the local market supervision department.
2. Beijing Municipal Market Supervision Bureau investigates and punishes Beijing Youyou Education Consulting Co., Ltd. for infringing the exclusive right to use the registered trademark “LEGO”
In May 2024, the Beijing Municipal Market Supervision Bureau received a tip-off from Lego Co., Ltd., stating that Beijing Youyou Education Consulting Co., Ltd. had infringed on the exclusive right to use a registered trademark. After receiving the tip-off, the Beijing Municipal Market Supervision Bureau quickly launched an investigation. When law enforcement officers conducted an on-site inspection at the business premises of Beijing Youyou Education Consulting Co., Ltd., they found that the company’s main business was education and training, which was the same as the trademark verification service items held by Lego Co., Ltd. At the same time, the company used the “乐高”, “LEGO” and ”” trademark logos on the signs of its business premises, classroom doorplates in the store, promotional posters, front desk, etc., and was unable to provide legal license documents for the use of these trademarks. Law enforcement officers questioned and investigated the person in charge of the company, and the person confessed to the use of the relevant trademarks. At the same time, law enforcement officers conducted a detailed analysis of the company’s operating data and determined that the illegal business volume totaled 3.5138 million RMB.
The act of a party using a trademark identical to a registered trademark on the same kind of goods without the permission of the trademark registrant constitutes an infringement of the exclusive right to a registered trademark as stipulated in Article 57 of the Trademark Law of the People’s Republic of China, and the circumstances are serious and suspected of criminal offenses. The Beijing Municipal Market Supervision Bureau will transfer the case to the judicial authorities for handling in accordance with the law.
3. The Market Supervision Bureau of Xindu District, Xingtai City, Hebei Province investigated and dealt with the case of infringement of the exclusive right to use the registered trademark “Huawei”
In December 2023, the Xindu District Market Supervision Bureau of Xingtai City, Hebei Province received a complaint from a consumer that the screen and battery of the Huawei mobile phone they purchased on the Douyin live broadcast platform “Tangtang Youxuan Second-hand Mobile Phone” and “Mijing Youxuan Second-hand Mobile Phone” had problems. The Xingtai Municipal Market Supervision Bureau and the Xindu District Market Supervision Bureau immediately set up a special task force to launch an enforcement investigation.
The Douyin store involved in the case, “Tangtang Optimal Used Phones”, is actually registered under Kuamoutang Network Technology Co., Ltd., and its principal is Mu. The other Douyin store involved in the case, “Mijing Optimal Used Phones”, is actually registered under MiXX Electronic Technology Co., Ltd., and its principal is Xue. Both stores claimed that they sold official genuine mobile phones of the “Huawei” brand through Douyin live broadcast rooms. It was found that the items involved in the case were assembled by the parties themselves without the authorization of the rights holder, and were infringing goods.
On March 26, 2024, the Xingtai Municipal Market Supervision Bureau and the Xingtai Municipal Public Security Bureau dispatched a number of law enforcement officers and police officers at the municipal and county levels, and divided them into 4 evidence collection and arrest teams to carry out a roundup operation simultaneously. 11 people involved in the case were arrested on the spot, 2 mobile phone assembly factories and 2 live broadcast rooms were destroyed, and the mobile phones involved in the case (Mate series, Pura series) and related accessories worth more than 3 million RMB were seized. The amount involved in the online sales of the two stores was as high as 16.408 million RMB.
The party’s act of selling goods that infringe the exclusive right to use a registered trademark constitutes an act of infringing the exclusive right to use a registered trademark as stipulated in Article 57 of the Trademark Law of the People’s Republic of China. As the amount involved is large, it is suspected of constituting a crime, and the law enforcement department has transferred the case to the judicial authority for handling in accordance with the law.
4. Shanghai Municipal Market Supervision Bureau investigates and punishes five companies and individuals including Shanghai Jixu Food Co., Ltd. for infringing the exclusive right to use the “Liuhe” registered trademark
In March 2024, based on reports from rights holders, the Shanghai Municipal Market Supervision Bureau and Suzhou Market Supervision Department launched a joint law enforcement operation, seizing 18 tons of infringing frozen poultry, more than 1,500 counterfeit packages and multiple infringing printing templates, with a total amount involved of more than 5.2 million RMB.
After investigation, it was found that from November 2023 to March 2024, Shanghai Jixu Food Co., Ltd. and Yu XX conspired to entrust relevant enterprises in Changzhou to print packaging boxes containing the Liuhe trademark. Subsequently, Yu used the above-mentioned counterfeit packaging boxes to pack low-priced single frozen chicken breasts and other products. Jixu Company purchased more than 100,000 boxes of the above-mentioned counterfeit products from Yu and sold them to Tang XX. Tang then sold them to the outside through relevant online platforms. The total amount involved in the case of the above-mentioned parties is more than 3.4 million RMB.
It was also found that Shanghai Nuoping Industrial Co., Ltd. purchased more than 30,000 counterfeit Liuhe trademarked packaging boxes from a Suzhou company and Shanghai Gujun Packaging Materials Co., Ltd., and used the counterfeit packaging boxes to pack low-priced single frozen chicken breasts and other products, and sold them through relevant e-commerce platforms, involving more than 1.4 million RMB. Shanghai Gujun Company produced and sold more than 230,000 counterfeit packaging boxes without authorization, involving more than 400,000 RMB.
The actions of the above five companies and individuals violated Article 57 of the Trademark Law of the People’s Republic of China. As the amount involved was large, they were suspected of committing a crime. The case handling department transferred the relevant cases to the public security organs for handling in accordance with the law. At present, the above parties have been prosecuted.
5. The Market Supervision Bureau of Longwan District, Wenzhou City, Zhejiang Province investigated and dealt with the case of Wenzhou Zunxiang Technology Co., Ltd. selling goods that infringed the exclusive right of registered trademarks
The Market Supervision Bureau of Longwan District, Wenzhou City, Zhejiang Province, investigated and dealt with the illegal behavior of Wenzhou Zunxiang Technology Co., Ltd. in selling goods that infringed the exclusive rights of registered trademarks in accordance with the law. The amount involved was more than 10 million RMB. As the party’s behavior was suspected of constituting a crime, the case has been transferred to the public security organs for handling.
At the beginning of 2024, the Market Supervision Bureau of Longwan District, Wenzhou City received reports from many consumers, reporting that Wenzhou Zunxiang Technology Co., Ltd. attracted customers through low-priced mobile phones online, and fabricated “operator subsidies” offline to induce consumers to exchange for Apple Bluetooth headphones. The headphones provided by one of the consumers were identified by Apple, and the outer packaging, printing details and production process were significantly different from the genuine ones. In response, law enforcement officers immediately launched an investigation into the store, extracted a large amount of electronic data on the spot, accurately locked more than 200 false mobile phone sales records and exchange evidence, and completely eradicated the illegal chain of “low-price traffic-induced exchange-high-price fake sales”. Combined with logistics data traceability and geographic information visualization technology, a network map of counterfeiting and selling counterfeit products covering five provinces including Zhejiang, Fujian, Jiangxi, and Guangdong was drawn, and sales and storage locations were accurately located.
In response to the illegal activities, the Longwan District Market Supervision Bureau and the public security organs set up a special task force to carry out a unified cross-provincial crackdown operation, successfully destroying 5 stores selling counterfeit goods and 5 storage locations, and seized more than 1,000 counterfeit Apple Bluetooth headsets and more than 5,000 infringing mobile phone cases on the spot. 32 criminal suspects were arrested, and the total amount involved in the case was more than 10 million RMB.
6. Anhui Province Fuyang Municipal Market Supervision Bureau investigates and punishes Gu Moumou and others for infringing the exclusive rights of registered trademarks such as “Arc’teryx”
In December 2023, the Market Supervision Bureau of Fuyang City, Anhui Province received a case clue that Fuyang Pengfei Clothing Co., Ltd. was suspected of producing infringing clothing. Law enforcement officers immediately launched an investigation and found that the company’s legal representative Zhang XX, in order to increase sales and expand profits, produced a total of 7,323 “Arc’teryx” jackets that infringed on the exclusive rights of others’ registered trademarks under the arrangement of the client Gu XX, involving a total amount of more than 1.44 million RMB.
Because the illegal facts of the case have reached the standard for criminal prosecution, the Fuyang Municipal Market Supervision Bureau transferred the case to the public security organs for investigation on December 28, 2023. Subsequently, the public security and market supervision departments set up a special task force to carry out joint law enforcement. From January to April 2024, the task force went to Ningbo, Anqing, Bozhou, Chizhou, Lu’an, Cangzhou, Langfang and other places to conduct investigations and tracking, seized a large number of infringing clothing, and successfully destroyed more than 20 production, warehousing and sales dens. It was found that since September 2019, Gu, without the permission of the trademark registrant, customized fabrics and accessories according to various well-known brands of clothing, produced counterfeit logos, and commissioned clothing processing factories in many provinces and cities to process clothing that infringed trademark brands such as “Arc’teryx”, “The North Face”, “Adidas”, “Gucci”, “Lululemon”, “Amy”, and “Balenciaga”, and then hired employees to promote and sell them. The amount involved in the case reached more than 200 million RMB. In April 2024, the procuratorate filed a public prosecution against Gu and others for the crime of counterfeiting registered trademarks. So far, 6 people have been sentenced and 15 people have been approved for prosecution.
7. The Market Supervision Bureau of Xiangyang City, Hubei Province investigated and dealt with the case of Shen’s gang producing and selling trademark-infringing “specially supplied wine”
In July 2024, the Market Supervision Bureau of Xiangyang City, Hubei Province received a report from the public that there were illegal production and sales of “special supply wine.” The bureau quickly launched the investigation procedure and established a joint working group with the public security department to jointly handle the case. On July 24, the joint working group launched a surprise operation after careful deployment, and conducted surprise inspections on multiple suspected production and storage locations, successfully destroying 2 major production dens and 10 storage dens, and at the same time destroyed 3 criminal gangs that produced and sold counterfeit well-known brand wines. Law enforcement officers seized more than 1,000 pieces of Moutai liquor with words such as “Great Hall of the People”, “Beijing West Hotel”, “Beijing Military Region” and “State Council” labeled “specially supplied”, as well as counterfeit Moutai, Wuliangye, Guojiao 1573, Baiyunbian and other brand finished liquors; more than 1,000 kilograms of counterfeit raw material base liquor; 5 sets of filling equipment, air pumps, rivet guns and other production tools and more than 210,000 packaging materials. The amount involved in the case was as high as more than 80 million RMB. The sales network covered 15 provinces and cities across the country, and 26 criminal suspects were arrested.
The party involved in the case, Shen’s gang, forged and used the above-mentioned “special supply” trademark logo, misleading consumers into thinking that it was a high-end product customized for a specific institution or occasion. In fact, these so-called “special supply wines” are just ordinary liquors, which are sold at high prices by attaching false labels and counterfeiting well-known brand liquors, seriously infringing on consumers’ right to know and right to choose. The party’s behavior constitutes an illegal act of infringing on the exclusive right of others to use registered trademarks. Because the value of the goods involved is huge and it is suspected of constituting a crime, the case has been transferred to the judicial authorities for handling.
8. The Jieyang Municipal Market Supervision Bureau of Guangdong Province investigated and dealt with the case of Wang XX producing watches with counterfeit registered trademarks of “ROLEX”, “RADO” and “FOSSIL”
In December 2023, the Jieyang Municipal Market Supervision Bureau of Guangdong Province, based on the clues of the report, jointly with the public security organs, inspected a den suspected of producing counterfeit watches of well-known trademark brands. 3,470 finished watches marked with the “ROLEX” logo, 900 dials (semi-finished products), 3,000 straps (semi-finished products), and 300 finished watches marked with the “RADO” and “FOSSIL” logos were found on the spot. The Jieyang Municipal Market Supervision Bureau filed a case on the same day and took administrative compulsory measures to seize the above-mentioned items involved in the case in accordance with the law.
Upon investigation, it was found that the parties, Mr. and Mrs. Wang XX, had hired five workers to process watches with the “ROLEX”, “RADO” and “FOSSIL” logos for them since June 2023 without obtaining a license to use the registered trademarks such as “ROLEX”, “RADO” and “FOSSIL”. According to the identification opinion issued by the domestic legal institution authorized by the right holder, the finished watches marked with the “ROLEX”, “RADO” and “FOSSIL” logos produced by the parties were not produced by the right holder or with its permission.
The party produced watches with “ROLEX”, “RADO” and “FOSSIL” trademarks without the permission of the trademark registrant, which constituted an illegal act of infringement of the exclusive right to use a registered trademark as stipulated in Article 57 (1) of the Trademark Law of the People’s Republic of China, with a value of 116.9465 million yuan. The Jieyang Municipal Market Supervision Bureau transferred the case to the judicial authorities for handling in accordance with the law. At present, the seven suspects have been transferred to the procuratorate for prosecution in accordance with the law.
9. Chongqing Youyang County Market Supervision Bureau and the public security organs jointly investigated and dealt with the case of Chen et al. selling goods that infringed the exclusive rights of registered trademarks such as “LV”
In January 2024, law enforcement officers from the Market Supervision Bureau of Youyang Tujia and Miao Autonomous County, Chongqing City, discovered during an inspection that the Balenciaga, Dior, and LV brand products sold by a store with the sign “Shark Luxury Buyer Store” were suspected of counterfeiting other people’s registered trademarks. Because the party Chen could not provide the authorization basis for the goods sold, law enforcement officers immediately seized more than 490 suspected infringing goods in accordance with the law. After identification by the right holder, the goods sold by the party were all counterfeit registered trademarks of others, and the value of the goods reached more than 2.5 million RMB. His behavior constituted an illegal act as stipulated in Article 57 (3) of the Trademark Law of the People’s Republic of China. Because the amount involved was large and suspected of being a crime, the Youyang County Market Supervision Bureau transferred the case to the public security organs for investigation.
After investigation, it was found that since 2019, the suspects Zhou, Luo, Wen and others have set up processing factories in Guangdong to produce counterfeit brand clothing, bags, and footwear products, and wholesaled them to Chen and others through logistics delivery, and then sold them through e-commerce platforms, offline physical stores, and online social media. From April to May 2024, the market supervision department and the public security organs jointly dispatched more than 60 law enforcement personnel to Chongqing, Guangdong, Fujian, Hunan and other places to carry out case investigation and handling, destroying 5 counterfeiting “black factories” and 18 “black dens”, and seized more than 75,000 counterfeit clothing and bags, more than 20,000 semi-finished products, and more than 80 sets of counterfeiting equipment. The amount involved is as high as more than 300 million RMB. At present, 14 people have been transferred for prosecution, and the case is under further investigation.
10. The Market Supervision Bureau of Luzhou City, Sichuan Province investigated and dealt with the case of Luzhou Brothers Yijia Decoration Engineering Co., Ltd. infringing the exclusive right to use the registered trademark “Brothers Decoration”
In May 2024, Chongqing Municipal Market Supervision Bureau received a report from Chongqing Brothers Decoration Engineering Co., Ltd. (hereinafter referred to as the right holder), claiming that Luzhou Brothers Yijia Decoration Engineering Co., Ltd. (hereinafter referred to as the party) infringed its exclusive right to use the registered trademark No. 52642360 “Brothers Decoration”. As the party is located in Luzhou City, Sichuan Province, Chongqing Municipal Market Supervision Bureau and Sichuan Provincial Market Supervision Bureau held a joint law enforcement cooperation meeting within the framework of Sichuan-Chongqing cooperation to guide the handling of the case, and handed the case over to Luzhou Municipal Market Supervision Bureau for handling.
According to the investigation by the Luzhou Municipal Market Supervision Bureau, the party concerned was established on March 12, 2024 and engaged in interior decoration services. In April 2024, it commissioned an advertising company to replace the “Yi Ge Decoration” on the billboard on the facade of the building with “Brothers Decoration”; and replaced the “Thangka Decoration” above the entrance hall, on the floor distribution sign, and on the front wall of the elevator room with “Brothers Decoration”.
The “Brother Decoration” logo used by the party in advertisements, shop signs and contracts is exactly the same as the registered trademark No. 52642360 “Brother Decoration” in terms of language, text composition, font, arrangement order, etc., and is the same trademark. It was also found that the party signed 23 contracts with consumers, with a total contract amount of 2.74 million RMB. The party’s use of the same logo as the registered trademark of the right holder in advertisements, shop signs and contracts without permission constitutes an infringement of the exclusive right to a registered trademark as stipulated in Article 57 (1) of the Trademark Law of the People’s Republic of China. Because the party is suspected of committing a crime, the Luzhou Municipal Market Supervision Bureau has transferred the case to the public security organs for handling.