U.S. Supreme Court Hears Oral Argument in Reverse Sex Discrimination Case
On February 26, 2025, the United States Supreme Court entertained oral argument in Ames v. Ohio Department of Youth Services, a case that centered on whether a plaintiff who is a member of a majority group must meet a higher burden—namely, showing supporting “background circumstances”—in establishing a prima facie case of discrimination under Title VII.
Background
Plaintiff Ames, a heterosexual woman, began working at the Ohio Department of Youth Services (the “Department”) in 2004. In 2014, she was promoted to Administrator of the Prison Rape Elimination Act. In April 2019, Plaintiff applied for another promotion, but was not selected. Shortly thereafter, Plaintiff alleges that her supervisor suggested that Plaintiff retire. In May 2019, Plaintiff was demoted, which resulted in a significant pay cut, and the Department hired a 25-year-old gay man for the position. Later that year, a gay woman received the promotion Plaintiff had applied for. Plaintiff sued the Department alleging discrimination based on sexual orientation and sex under Title VII.
The U.S. District Court for the Southern District of Ohio granted summary judgment in favor of the Department, concluding Plaintiff failed to establish a prima facie case. The court invoked the “background circumstances” doctrine, which provides that members of a majority group must show “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority” to establish a prima facie case. The court also ruled that Plaintiff lacked evidence of pretext for her sex discrimination claim.
The Sixth Circuit affirmed. In his concurrence, Judge Kethledge criticized the background circumstances test, noting a circuit split that should be resolved by the Supreme Court. In addition to the Sixth Circuit, several circuits, including the Seventh, Eighth, and Tenth Circuits, follow the background circumstances test. The Supreme Court agreed to hear the case.
Oral Argument
Unexpectedly, on February 26, 2025, at oral argument, Justice Gorsuch observed that all advocates seemed to be “in radical agreement” with regard to the question presented: that as applied by the Sixth Circuit, the background circumstances doctrine is an improper bar to plaintiffs establishing a prima facie case. However, the advocates disagreed as to whether the Court should give guidance as to what is necessary to establish a prima facie case.
Justice Barrett asked whether abandoning the background circumstances requirement would “throw open” the door to Title VII cases. Petitioner’s counsel responded that the floodgates would not be flung wide open, as that doctrine applies at the summary judgment stage, and plaintiffs will have already needed to have surmounted several barriers, including filing a case with the EEOC and meeting the plausibility standard at the pleading stage.
It is also noteworthy that the Assistant to the EEOC Solicitor General, arguing as amicus curiae in support of reversal, added that the EEOC had already rejected the background circumstances rule, and applies the same evidentiary standard to all plaintiffs in discrimination cases under Title VII. Urging the Court to overturn the background circumstances rule, she argued that “any plaintiff that can produce evidence from which a jury could infer discrimination should go to trial.”
Last, after conceding that he was not arguing in support of using the background circumstances doctrine, Respondent’s counsel argued that the Court should still affirm the Sixth Circuit’s ruling because Petitioner had failed to establish that any adverse action against Ames was motivated by her sexual orientation.
Notably, in questioning the Assistant to the EEOC Solicitor General, Justice Alito suggested that the background circumstances test may have been “based on an intuition about the way in which most employers behave.” Justice Alito intimated that, while possibly “sound” in 1973, the year that McDonnell Douglas was decided, this intuition, presumably that members of a majority group are unlikely to be discriminated against by their employers, may “no longer [be] sound today.”
Implications
Justice Gorsuch’s statement that the advocates were in “radical agreement” that a heightened burden should not be applied to majority group plaintiffs is telling indeed. If this heightened burden is abandoned, there is meaningful potential for an increase in the filing of Title VII “reverse discrimination” cases. Notably, a number of reverse discrimination cases are already pending.
How the New US Antitrust Enforcement Priorities Are Shaping Up
We still have a limited sample—Andrew Ferguson has only been in the FTC Chair role a month, and Gail Slater, Trump’s nominee to head the DOJ Antitrust Division, is just nearing the end of her confirmation process. That said, each is starting to give indications about where enforcement policies and priorities may shift relative to the outgoing leadership at the antitrust agencies—a continued focus on “Big Tech” adding censorship as a competitive harm, more predictability to promote business certainty, and a case-by-case approach to labor market (e.g., non-compete) enforcement. Here’s what we know so far.
Andrew Ferguson – FTC Chair
Andrew Ferguson became FTC Chair immediately after inauguration on Jan. 20, 2025. He was able to assume the role without a confirmation because he was already a sitting Commissioner confirmed by Congress in the spring of 2024. Before joining the FTC, Ferguson served as a solicitor general of Virginia, chief counsel to Sen. Mitch McConnell, and Republican counsel for the Senate Judiciary Committee. He also worked in private practice after clerking for Judge Karen L. Henderson of the D.C. Circuit and U.S. Supreme Court Justice Clarence Thomas.
As Commissioner, Ferguson authored several strong dissents, critical of what he perceived as overstep by the prior FTC majority. On Feb. 20, Chair Ferguson gave a window into his priorities during an interview with Fox Business. From that several themes emerged.
Focus on Big Tech, Consolidation, & Censorship. During his interview, Chair Ferguson was critical of companies with “economic power” that enabled abuses in “social and political ways, like with censorship.” He said he will look to prevent those conditions and confront abuses of such power in the future. Along these lines, Chair Ferguson expressed opinions that Section 230 of the Communications Decency Act, which provides certain immunity to online platforms for third-party content or its removal, was originally intended to promote nascent business but is now used by large platforms to “mistreat ordinary Americans,” and the courts or Congress should address that. When it came to “Big Tech” specifically, he commented that pending FTC cases will continue and “all of Big Tech is going to remain under the microscope” as the authorities hold “Big Tech’s feet to the fire.”
Emphasis on Business Certainty—Especially in Merger Reviews. Chair Ferguson made clear that promoting a “vibrant, innovative economy” is a priority and he sees his part in that as providing clarity and certainty to the business community. Consistent with this statement, Ferguson also issued a memo to FTC Staff on Feb. 18 affirming that the joint FTC and DOJ Merger Guidelines issued in 2023 will continue to guide agency merger analysis. During his interview he stated that the guidelines are “not perfect” and they “push the envelope a bit.” However, he wants to hold off on any changes and base them on future working experience because the Guidelines are generally “consistent with older guidelines” and “case law” in his view. If revisions to the Guidelines are needed, he said they will be done in an “iterative transparent revision process” but he would not “rescind them wholesale.”
Protecting Labor But Still Against the 2024 Non-Compete Ban. Chair Ferguson reiterated his criticism of the FTC’s rule broadly banning non-compete agreements, the validity of which remains the subject of litigation in Ryan LLC v. Federal Trade Commission, No. 24-10951 (5th Cir. Jan. 2, 2025) and Properties of the Villages, Inc. v. Federal Trade Commission, No. 24-13101 (11th Cir. June 21, 2024). (Many commentators have opined they expect the administration to drop its defense of the FTC ban. But even once a third Republican Commissioner is confirmed, defense of the rule in the courts may continue to preserve questions about the FTC’s rulemaking authority for the Supreme Court.) Despite his opposition to the non-compete rule, however, Ferguson said that the FTC’s job is, in part, to “protect workers” because the antitrust laws “protect labor markets.” Favoring case-by-case enforcement, Ferguson emphasized he will be “focusing very intently on attacking anticompetitive conduct that hurts America’s workers” and will look across industries for no poach, no hire, and non-compete agreements that are unlawful under the Sherman Act.
Gail Slater – Nominee to Lead DOJ Antitrust Division
Gail Slater is the President’s nominee for assistant attorney general of the DOJ Antitrust Division. She most recently served as then-Senator JD Vance’s economic policy adviser, and during the last Trump administration she was an advisor on technology issues for the National Economic Council. Slater worked at the FTC for a decade and also worked in-house, including for an internet trade association. On Feb. 12, 2025, the Senate Judiciary Committee held a hearing on Slater’s nomination, giving a first window into what her approach at DOJ might entail.
Tech Focus – Though Current Cases Could be Narrowed. As her background suggests, technology will remain a focus for Slater. She testified that she “will bring a deep understanding of technology markets to the Department as the common thread in my private sector work was technology.” She views antitrust law as playing a key role in fostering innovation and economic freedom. However, she emphasized that enforcement should be a “scalpel” and “requires evidence of anticompetitive conduct and harm to consumers.” Regarding pending DOJ cases against major tech firms, she committed to reviewing the files but noted that “resources are of course a very important consideration in antitrust litigation and taking cases further . . . . It’s very complex civil litigation . . . and costly.”
AI: Traditional Analysis of Component Concentration But Open to More Merger Remedies Generally. Slater seemed undecided about AI technology’s impact on competition, but she did commit to looking at “concentration in the AI technology stack.” During her testimony she also noted there is a “critical need to prevent the monopolization of digital markets,” though in another statement she signaled that under her leadership the Division may be more open to settlements in merger cases when “effective and robust structural remedies can be implemented without excessively burdening the Antitrust Division’s resources.”
Censorship as a Monopolization & Collusion Issue. Like Chair Ferguson, Slater also touched on potential enforcement around censorship. She expressed concern that in highly concentrated markets “anybody’s viewpoint can be quickly throttled or suppressed.” However, Slater also suggested that group boycotts may also be pursued; she noted a recent House Judiciary Committee report describing a trade association’s alleged facilitation of national brands (representing an estimated 90% of domestic ad expenditures) selectively withholding advertising dollars from certain companies.
Non-Competes as a Potential Abuse of Monopoly Power. Slater said she wanted to “depoliticize” the harms from non-compete agreements. She said “this is a growing concern in many parts of the country. It prevents workers from switching jobs easily, which is particularly problematic in highly concentrated markets.”
As the antitrust landscape in the U.S. evolves under new leadership, businesses across industries should stay alert to shifting enforcement priorities and their potential implications.
“The Court’s Work in This Case Should Be Over”: IMC Responds to NCLC’s Effort to Intervene and Revive One-to-One Rule
As TCPAWorld.com readers already know, the NCLC and others attempted to join in the Eleventh Circuit Court of Appeals case involving the FCC’s one-to-one rule.
The NCLC wants the Court to reconsider the ruling striking down one-to-one and get ALL of the judges together on the Eleventh Circuit to rule on the issue.
Well today IMC fired back with a very nice brief explaining why there’s zero chance that should happen.
I am pleased to say they hit all the right notes here.
In particular NCLC’s failure to comply with the Hobbs Act timeframe for intervention feels pretty dang dispositive to Troutman.
The brief also points out that NCLC has already filed briefs in the case–so it has already had its say–plus it shouldn’t be allowed to stand in the shoes of the government (that’s just weird.) And hey look, they can have their say with the Commission as part of remand proceedings anyway– so if they want something done from a policy perspective they can do it there.
Now the last point may ring a bit hollow–just being real– but the other points are well made and dead on. Hopefully the court shuts the door on this pretty frivolous intervention effort.
In fact, in light of this filing I think R.E.A.C.H. will likely NOT be seeking to intervene after all– but need to discuss with the board to make sure.
We’ll keep an eye on this.
Full brief here: Brief Opposing NCLC
CEQ Sounds the Death Knell for Existing NEPA Regulations
The rapid changes relating to NEPA-implementing regulations accelerated this week, as the White House Council on Environmental Quality (CEQ) published an interim final rule (IFR) removing its NEPA regulations from the Code of Federal Regulations.
Effective April 11, 2025, CEQ’s IFR removes all iterations of its NEPA regulations, including 40 CFR parts 1500, 1501, 1502, 1503, 1504, 1505, 1506, 1507, and 1508, which federal agencies and developers alike have relied on in permitting projects since the 1970s.
This seismic shift in the implementation of NEPA—an area of the law that remained relatively stable for nearly a half century—comes on the heels of the D.C. Circuit Court of Appeal’s denial of the requests (by both petitioners and respondents) for rehearing en banc of that court’s opinion in Marin Audubon.
As we described in our November 2024 client alert, the panel majority in Marin Audubon concluded that the CEQ lacks authority to issue binding NEPA regulations. The D.C. Circuit declined to review the panel’s opinion, but, in a concurring opinion, seven out of 12 D.C. Circuit judges described the discussion regarding CEQ’s regulatory authority as dicta.
The IFR also follows on other important judicial developments. In early February 2025, the District Court for the District of North Dakota, in Iowa v. Council on Environmental Quality, issued an opinion in which it vacated the Biden Administration’s 2024 Phase 2 NEPA rules.
The court explained that its judgment would revert the CEQ regulations to an earlier version, namely, the version promulgated by the first Trump administration in 2020 as amended by the Biden administration’s 2021 Phase 1 NEPA rules. Although the court did not finally resolve the issue, it further opined that “it is very likely that if the CEQ has no authority to promulgate the 2024 Rule, it had no authority for the 2020 Rule or the 1978 Rule and the last valid guidelines from CEQ were those set out under President Nixon.”
Citing these decisions and President Trump’s Executive Order (EO) 14154, Unleashing American Energy—which revoked President Carter’s EO 11991 that served as the basis for CEQ’s NEPA regulations—the IFR has now made it clear that CEQ’s NEPA regulations will be rescinded in full.
What does this mean for your project?
In conjunction with its IFR, CEQ released a memo to the heads of federal departments and agencies directing them to:
Revise or establish new NEPA regulations within the next year consistent with EO 14154
Not delay pending NEPA analyses while those NEPA procedures are being updated
Most importantly, “consider voluntarily relying on [the soon-to-be-rescinded] regulations in completing ongoing NEPA reviews or defending against challenges to reviews completed while those regulations were in effect.”
CEQ also encouraged agencies to use the 2020 NEPA regulations as an “initial framework” for developing revisions to their own NEPA regulations, and provided suggested guidelines for those regulations.
As the implications for project proponents and litigants unfold, we are closely monitoring not only the enforceability of CEQ’s rescinded regulations, but also the agency-specific procedures that will replace them.
Clear rules foster timely and cost-efficient environmental reviews. Project proponents should consider active participation in the rulemakings that we will see across multiple federal agencies over the next 12 months to ensure adoption of legally defensible NEPA-implementing regulations that streamline and accelerate the permitting process.
Enforcing Foreign Judgments in England and Wales: How to Avoid Stumbling Over Jurisdictional Hurdles
Enforcing foreign judgments in England and Wales is not always straightforward, especially for those countries where there is no reciprocal enforcement regime. However, the recent case of Shovlin v Careless and Others [2024] EWHC 324 (KB) clarifies the legal concepts underpinning this area and provides practical guidance for litigants hoping to successfully enforce US judgments in England and Wales.
Shovlin v Careless and Ors
The High Court’s decision in Shovlin v Careless and Ors concerned enforcement in England of a default judgment granted against defendant companies by the Superior Court of the State of California. The case explores the procedure for enforcing foreign judgments in England and Wales and the concept of voluntary submission in relation to jurisdiction.
The California proceedings were initiated in 2013 and concerned alleged fraud and defamation. The underlying dispute arose from events that mainly took place in 2008 between the claimant and the first to fifth defendants – English companies in well-known price comparison website business Money Expert Group. The claimant requested that judgment be given in default, as the defendants had failed to file a defence. At a “prove up hearing” to assess damages in 2019, the defendants’ lawyer made a “special appearance”, arguing that the case should be dismissed as they had not complied with the five-year rule. Under California law, civil proceedings should be brought to trial within five years of the action being commenced.
However, the California court was not persuaded by the defendants and ultimately granted default judgment in the claimant’s favour for $10,066,353 (the US Judgment). Following this, in October 2021, the claimant, a UK citizen who had resided in the United States for years, issued proceedings in the courts of England and Wales to enforce the judgment debt at common law.
How are foreign judgments enforced in England and Wales as a matter of common law?
The common law regime is the default regime for countries where there is no applicable treaty, statute or convention providing for enforcement. To be enforceable at common law, a judgment must be:
Final and conclusive in the court which pronounced it.
For a sum of money, but not for a fine, penalty or for taxes. Non-monetary relief is therefore not capable of enforcement through the common law regime.
On the merits of the claim. In accordance with criteria laid down by Lord Brandon in The Sennar No 2 [1985] 1 WLR 490, a decision on the merits must establish certain facts as proved (or not in dispute), state what the applicable principles of law are and find a conclusion regarding the effect of the principles on the facts of the case in hand.
Have been established as the appropriate jurisdiction. The foreign court must have established proper jurisdiction over the defendant in accordance with English private international law. Broadly, this means that the foreign court must have jurisdiction on a territorial or consensual basis. The original court will be deemed to have had territorial jurisdiction if the debtor was present in the foreign country when the proceedings were commenced, and consensual jurisdiction if the debtor agreed to the relevant jurisdiction, voluntarily appeared in the proceedings, or otherwise submitted to the foreign jurisdiction.
Defences to enforcement include that the judgment was obtained by fraud; the judgment is contrary to English public policy; the defendant did not have a fair opportunity to be heard; and the judgment is inconsistent with a prior judgment on the same subject matter and between the same parties.
The Enforcement Proceedings
In Shovlin, the claimant sought to enforce the US Judgment at common law (there being no relevant treaty or statute providing for enforcement of a US Judgment). It was common ground that the US Judgment was a final and conclusive judgment on the merits for a definite sum of money. The critical issue for determination before the High Court was whether the defendants had voluntarily submitted to the California court’s jurisdiction by making a special appearance at the prove up hearing. The claimant argued that the defendants’ appearance and participation could constitute an implied submission to the California court’s jurisdiction. The defendants maintained that they had only made the special appearance to contest jurisdiction and had therefore not made a general appearance which could imply submission to the jurisdiction.
Rejecting the claimant’s arguments, the High Court concluded that the defendants had not voluntarily submitted to the California court’s jurisdiction. As a result, the Court dismissed the case and ruled that the California judgment could not be enforced in England. The Court concluded that submission to the jurisdiction required the unambiguous waiving of objection to the California court’s jurisdiction and in this case the defendants’ attendance at the prove up hearing did not constitute such a waiver. Instead, the defendants had maintained their position that they did not recognise the California court’s jurisdiction to hear and determine the claim and had not unequivocally represented that objection was not being taken to that jurisdiction.
Key Takeaways
The Shovlin decision demonstrates that enforcing foreign judgments in England and Wales does not come without its challenges and not every foreign judgment is enforceable. It is necessary to scrutinise the foreign judgment, and certain underlying facts, at an early stage to ensure the requirements for enforcement can be met.
When considering whether jurisdiction was established in the foreign proceedings, the presence or submission of the defendant is often determinative. As highlighted by the decision in Shovlin, this can include appearing in the foreign court without contesting jurisdiction. If an appearance is necessary, then it should be made clear that jurisdiction is disputed in order to preserve this position at a later stage.
However, submission to a certain jurisdiction can also include agreeing to the jurisdiction in a contract. Therefore, it is important to check any contractual provisions relating to jurisdiction. If a particular court is specified, which is different from the foreign court that gave the judgment being enforced, then that judgment may not be enforceable.
Whilst it doesn’t appear to have been a significant in Shovlin, whether a defendant is given proper notice of any foreign proceedings can also impact the decision to permit enforcement in England. If a defendant is not given proper notice and has not had a fair opportunity to present their case, then it’s unlikely that any subsequent judgment from the foreign court will be enforceable.
Accordingly, if foreign proceedings are initiated with a view to enforcing any subsequent judgment abroad, litigants should consider, at the outset with their legal advisors including those in the jurisdiction where enforcement will be sought, the requirements that the judgment should meet for it to be successfully exported.
Lawyers Sanctioned for Citing AI Generated Fake Cases
In another “hard lesson learned” case, on Monday, February 24, 2025, a federal district court sanctioned three lawyers from the national law firm Morgan & Morgan for citing artificial intelligence (AI)-generated fake cases in motions in limine. Of the nine cases cited in the motions, eight were non-existent.
Although two of the lawyers were not involved in drafting the motions, all three e-signed the motions before they were filed. The lawyer who drafted the motions admitted, after the defense counsel raised issues to the court concerning the cited cases, that they used MX2.law to add case law to the motions. MX2.law is “an in-house database launched by” Morgan & Morgan. The lawyer admitted to the court that it was their first time using AI in this way. Unfortunately, they failed to verify the accuracy of the AI platform’s output before filing the motions.
To Morgan & Morgan’s credit, they withdrew the motions, were forthcoming to the court, reimbursed the defendant for attorney’s fees, and implemented “policies, safeguards, and training to prevent another [such]occurrence in the future.”
The court sanctioned all three lawyers. The attorney who drafted the motions and failed to verify the output was sanctioned $3,000 and the other two who e-filed the motions were sanctioned $1,000 each. A hard lesson learned, although by now all attorneys should be aware of the risks of using generative AI tools for assistance with writing pleadings. This is not the first hard lesson learned by an attorney who cited fake cases in a court filing. Check the output of any AI-generated material, whether it is in a court filing or not. In the words of the sanctioning court: “As attorneys transition to the world of AI, the duty to check their sources and make a reasonable inquiry into existing law remains unchanged.”
Trap and Trace Litigation: Why is this a Trend for Plaintiffs’ Attorneys?
Beware of demand letters from plaintiffs’ attorneys for allegations of illegal use of pen registers, trap and trace pixels, and search bar pixels—why? This “trap and trace” litigation is a growing trend for plaintiffs’ attorneys because they can leverage existing wiretap laws (particularly in California under the California Invasion of Privacy Act (CIPA)) to argue that common online tracking technologies like cookies, pixels, and website analytics tools essentially function as trap and trace devices, allowing them to file complaints against companies for collecting user data without proper consent, even though these technologies were originally designed for traditional phone lines, not the internet, opening up a large pool of potential plaintiffs and potentially significant damages.
Section 638.51 of CIPA is the crux of these trap and trace claims. This provision addresses the unauthorized interception of electronic communications and prohibits the installation or use of a pen register or a trap and trace device without first obtaining a court order. Section 638.50(b) defines a pen register as a device or process that records or decodes “dialing, routing, addressing, or signaling information” (DRAS) transmitted by an instrument or facility from which a wire or electronic communication is sent, but does not include the contents of the communication itself. Section 638.50(c) defines a trap and trace device as a device or process that captures incoming electronic impulses to identify the originating number or other dialing information, essentially revealing the source of a wire or electronic communication but not the communication’s content.
Recent decisions in the United States District Courts for the Southern, Central, and Northern Districts of California have encouraged many of these claims (or at least, have sparked a surge in pre-litigation settlement demands from plaintiffs’ attorneys for alleged CIPA violations related to a business’ use of common website technologies).
A violation of the CIPA wiretapping provision (section 631(a)) requires the plaintiff to show a real-time interception of a “communication,” which is often difficult for a plaintiff to prove. However, pen registers and trap and trace devices do NOT require real-time interception but are limited to the collection of DRAS.
When you think of pen registers and trap and trace devices, you probably think of devices law enforcement uses to record all outgoing and incoming telephone numbers from specific telephone numbers. However, the court’s ruling in Greenley v. Kochava, 684 F. Supp. 3d 1024 (S.D. Cal. 2023) gave rise to a different type of trap and trace claim related to website tracking technology.
In Greenley, the plaintiff claimed that Kochava (a company that offers real-time data solutions specializing in omnichannel measurement and attribution for marketers) installed an illegal pen register; of course, Kochava insisted that its software did not constitute a pen register. The court in the Southern District of California held that a software development kit used to collect user data from mobile apps could be considered a pen register under the Communications Act, meaning that the company collecting the data could be liable for violating privacy laws by collecting this information without proper consent, as the court interpreted the definition of pen register to include software processes that identify and track users through data collection and correlation, not just physical devices.
The court specifically stated that “software that identifies consumers, gathers data, and correlates that data through unique ‘fingerprinting’ is a process that falls within CIPA’s pen register definition.”
Under this interpretation, almost any device that communicates using the Internet Protocol, like cell phones and websites, could potentially be considered a pen register, significantly expanding the scope of surveillance technology.
In Moody v. C2 Education Systems Inc., No. 2:24-CV-04249-RGK-SK, 2024 WL 356167 (C.D. Cal. July 25, 2024), the plaintiff alleged that C2 Education Systems (an online tutoring program) violated CIPA by installing the TikTok marketing pixel and collecting the plaintiff’s information without prior consent. C2 disagreed and argued it was the website’s user and that C2 gave TikTok consent to install pixel technology on the website. CIPA has an exception for using pen registers and trap and trace devices “if the consent of the user of that service has been obtained.” While the court did find C2’s position persuasive, it did not “foreclose the possibility that Plaintiff is the relevant user under California law.” The court held that the plaintiff’s allegations about the pixel’s data collection capabilities were plausible enough to proceed with the case.
Additionally, in Shah v. Fandom, Inc., No. 24-CV-01062-RFL, 2024 WL 4539577 (N.D. Cal. Oct. 21, 2024), the court held that the definition of pen register specifies the type of data a pen register collects as “dialing, routing, addressing, or signaling information transmitted by an instrument or facility from which a wire or electronic communication is transmitted.” However, the court also determined that CIPA is ambiguous about the collection tool, which is only described as “a device or process.” The court held that the plaintiffs sufficiently alleged that the website tracking technology could “at least” be a “process” because the software identifies the consumer, gathers data, and correlates that data. This broadened the definition of pen register beyond law enforcement’s common use of such devices.
While these cases are unsettled, their advancement past the pleading stage will likely lead to increased filings and demands related to website tracking technologies such as pen registers. Now is the time to assess your business’ website and address these emerging and increasing risks to deflect trap and trace litigation.
DOGE Blocked from Access to Department of Treasury Payment Systems
On February 21, 2025, a federal district court judge from the Southern District of New York issued a preliminary injunction against the Department of Government Efficiency’s (DOGE), access to Treasury Department payment systems, stating access was provided in a “chaotic and haphazard manner.” The order resulted from a suit filed by 19 state Attorneys General against DOGE for unauthorized access to Americans’ data. It prevents anyone affiliated with DOGE from accessing federal payment systems until further order.
According to the 64-page opinion, the judge was critical of the “‘rushed’ process by DOGE to access Bureau of Fiscal Service’s payment systems, which stores the names, Social Security numbers, birth dates, birth places, home addresses and telephone numbers, email addresses, and bank account information of Americans who have transacted with the federal government.”
The District Court also noted that “[t]he record is silent as to what vetting or security clearance process they went through prior to their appointment” and reported being “troubled by the fact that Elez [a DOGE associate] was apparently granted full access to [Bureau of Fiscal Service] systems rather than read-only access, writing that that process was ‘rushed and undertaken under political pressure.’” We have made a similar observation.
The Court requested that the Treasury Department provide a report by March 24, 2025: (1) certifying that the DOGE associates have been vetted, have obtained proper security clearances, and have been properly trained; and (2) setting forth the mitigation measures which have been taken to minimize threats associated with the access, including the reporting chains for DOGE within the Treasury Department.
The ruling stated that “[t]he process by which the Treasury DOGE Team was appointed, brought on board, and provided with access to [Bureau of the Fiscal Service] payment systems could have been implemented in a measured, reasonable, and thoughtful way. To date, based on the record currently before the Court, it does not appear that this has been the case.”
CAUGHT WITH THEIR HAND IN THE COOKIE JAR?: CNN’s Privacy Lawsuit is Served Fresh and the Court is Taking a Bite
Greetings CIPAWorld!
Well folks, it looks like CNN is about to get a course in the ABC’s of CIPA! If you’ve ever wondered what happens behind the scenes when you visit a news website, a recent court case might make you think twice before clicking on your next headline. A federal judge in New York just rejected CNN’s Motion to Dismiss a class action lawsuit, putting the media giant on the defensive in what’s shaping up to be a significant showdown over digital privacy rights. CNN might be in the business of breaking news, but now they’re possibly breaking privacy laws too—allegedly, of course. It sounds like they need Troutman Amin on the speed dial. The case can potentially expose how the invisible machinery of web tracking operates—and whether it violates California privacy law.
Remember our CIPA queen, Queenie, who first broke the news on this case back in January 2024? She predicted this wave of pen register litigation after the Greenley v. Kochava ruling opened the floodgates. Well, her crystal ball was spot-on once again!
What started as a lesser-known facet of CIPA has become the next major battleground in privacy litigation. For those keeping score at home, Queenie’s batting a thousand on predicting CIPA litigation trends—from chat box cases to web session recording and now these pen register claims. If I were a betting person, I’d put my money on whatever she predicts next.
For a refresher on Queenie’s original deep dive into this case and its significance, check out her blog post here: CNN BREAKING NEWS: CNN Targeted In Massive CIPA Case Involving A NEW Theory Under Section 638.51!
So let’s get into the update. In Lesh v. CNN, Inc., No. 24 Civ. 03132 (VM), 2025 U.S. Dist. LEXIS 30743 (S.D.N.Y. Feb. 20, 2025), pits a seemingly routine website visit against a state privacy law initially designed for telephone surveillance. Plaintiff, an ordinary visitor to CNN.com, found herself the lead plaintiff in a lawsuit alleging that CNN secretly installed tracking software on her browser without consent. But this isn’t just about one person’s browsing habits—it’s about whether companies can legally monitor users in ways most people never realize.
Of course, we are dealing with a CIPA claim here. Specifically, Section 638.51 prohibits installing or using what’s called a “pen register” without a court order. For those new to CIPA litigation, let’s break it down. I think it’s important to first break down the basics for aspiring future lawyers in this space or just for your own general knowledge to brush up on.
Originally, pen registers were devices used to record telephone numbers dialed from a specific phone line without capturing the actual conversations. Think of those old spy movies where agents track which numbers a suspect is calling. However, Judge Victor Marrero didn’t let the outdated terminology limit his interpretation. He ruled that how CNN’s trackers collect and transmit user data might qualify as a modern equivalent of a pen register. In other words, what once applied to landlines may now apply to websites silently gathering data behind the scenes.
Next, let’s talk about what CNN’s website actually does when you visit it (at least allegedly, according to the court documents). When your browser sends a request to CNN’s server, the server doesn’t just send back news articles. It also allegedly sends instructions that result in the installation of trackers from third-party companies like PubMatic, Magnite, and Antiview. These trackers, developed by third-party software companies that sell technology to help businesses place advertisements on their websites, then collect users’ IP addresses—a unique identifier that reveals their approximate location—and store cookies on their browsers to recognize them on future visits. The Court noted that these trackers don’t just passively log visits—they actively gather and transmit data about users, allegedly without their explicit consent.
What’s particularly clever about Judge Marrero’s analysis is how he breathes new life into an old statute. He rejected CNN’s argument that CIPA only applies to telephones, reasoning that “the plain text of Section 638.50 clearly does not limit the application of pen registers to telephones.” Lesh, 2025 U.S. Dist. LEXIS 30743, at *11. He continued, “[T]he Court cannot ignore the expansive language in the California Legislature’s chosen definition [of pen register],” which is “specific as to the type of data [collected],” but “vague and inclusive as to the form of the collection tool.” Lesh, 2025 U.S. Dist. LEXIS 30743, at *11-12 (quoting Greenley v. Kochava, Inc., 684 F. Supp. 3d 1024, 1050 (S.D. Cal. 2023)).
In other words, the law wasn’t designed to protect telephones—it was designed to protect information. And if a website tracker is secretly capturing addressing information, the court says that’s fair game for regulation under CIPA. Judge Marrero’s reasoning builds on the framework established in Greenley, where another court applied CIPA to modern digital tracking tools, rejecting the idea that pen registers are limited to phone lines.
It is refreshing to see courts adapting old laws to new technologies rather than throwing up their hands and waiting for legislatures to catch up. Judge Marrero found that IP addresses qualify as “addressing information” under the statute, citing the Ninth Circuit’s observation that “IP addresses constitute addressing information and do not necessarily reveal any more about the underlying contents of the communication than do phone numbers.” In re Zynga Litig., 750 F.3d 1098, 1108 (9th Cir. 2014).
This decision aligns with a broader legal trend recognizing that digital tracking implicates privacy rights. In Carpenter v. United States, 585 U.S. 296, 138 (2018), the Supreme Court held that historical cell site data collection constitutes a search under the Fourth Amendment. Similarly, the Lesh ruling suggests that collecting and transmitting IP addresses without consent could be an unlawful invasion of privacy under CIPA.
CNN also attempted to argue that collecting an IP address does not violate privacy rights, citing Fourth Amendment case law. Specifically, CNN relied on cases like United States v. Ulbricht, 858 F.3d 71, 96 (2d Cir. 2017), which held that individuals do not have a reasonable expectation of privacy in their IP addresses under the Fourth Amendment. However, the Court swiftly rejected this argument, noting that CIPA imposes broader privacy protections than the constitutional floor set by the Fourth Amendment. As Judge Marrero explained, the fact that the Fourth Amendment does not recognize an expectation of privacy in IP addresses does not mean that California law cannot provide greater protections. The Court emphasized that CIPA ‘extends beyond constitutional constraints’ and is an independent statutory safeguard against unauthorized tracking. This means that even if the government could collect IP addresses without violating the Constitution, private companies might still run afoul of CIPA when doing the same thing.
What is more, CNN asserted that it was entitled to an exception in the law for situations where “the consent of the user of that service has been obtained.” But Judge Marrero wasn’t buying it, noting that it would be “illogical to allow CNN’s consent to the installation of Trackers to bar claims from users like Lesh who did not give their consent.” Lesh, 2025 U.S. Dist. LEXIS 30743, at *13. Clearly, CNN cannot simply consent to its data collection practices and then claim immunity from privacy violations.
The Court also analyzed whether CNN’s Terms of Use were enforceable under a clickwrap or browsewrap framework. CNN argued that Lesh had agreed to its Terms of Use, which supposedly disclosed the use of trackers. To prove it, they submitted screenshots from the Wayback Machine (an internet archive). But the Court refused to consider these screenshots, finding they weren’t properly authenticated. Even beyond the evidentiary issue, the Court found that CNN’s agreement wasn’t a traditional “clickwrap” contract—where users affirmatively click “I agree” before using the site. Instead, the Court characterized it as a “hybrid clickwrap-browsewrap” agreement, meaning users were presented with a pop-up but were not required to take affirmative action beyond dismissing it. Courts have repeatedly rejected these types of passive consent mechanisms when determining enforceability. See Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1176 (9th Cir. 2014) (rejecting website terms where “users were not required to affirmatively agree”).
What strikes me about this case is how it exposes the fiction of consent in our modern digital age. How many of us have actually read those terms of service pop-ups that appear when we visit websites? Be honest—when was the last time you did more than glance at one before clicking “X” to make it go away?
This decision joins other recent cases like Vishal Shah v. Fandom, Inc., No. 24-cv-01062-RFL, 2024 U.S. Dist. LEXIS 193032 (N.D. Cal. Oct. 21, 2024) and Mirmalek v. L.A. Times Commc’ns L.L.C., No. 24-cv-01797-CRB, 2024 U.S. Dist. LEXIS 227378 (N.D. Cal. Dec. 12, 2024), which have similarly found that website trackers collecting IP addresses may violate CIPA.
In both cases, Courts held that these tracking tools gather ‘addressing information’ and function similarly to pen registers, a key issue in Lesh. This interpretation of CIPA could force a significant shift in how websites operate, as it directly contradicts the assumption that IP tracking is legally harmless.
If this interpretation holds up, it could force a massive shift in how websites collect data. Nearly every major website uses similar tracking technologies to gather visitor information, often for advertising purposes. Are they all potentially violating California law? The implications of this case extend far beyond CNN—any website using third-party trackers may now face legal scrutiny.
For now, CNN must answer Lesh’s Complaint within 21 days of the Court’s order.
The internet has evolved faster than our laws, and companies may have exploited that gap. But if this case is any indication, the courts are finally starting to close it.
As always,
Keep it legal, keep it smart, and stay ahead of the game.
Talk soon!
A Regulatory Haze of Uncertainty Continues as the Clock Ticks Toward Phase One of FDA’s LDT Final Rule
Clinical laboratories still face uncertainty and the difficult decision of whether to start the work needed to comply with the with Phase 1 expectations under FDA’s Laboratory Developed Tests Final Rule (the “LDT Final Rule”), which remain set to go into effect on May 6, 2025.
To be sure, the shift in priorities of the new administration has kept the health care industry on its toes for the last few weeks, especially as the leadership and messaging of the Department of Health and Human Services (“HHS”) has started to come into sharper focus. The theme of ‘deregulation’, particularly when it comes to the activities of the Food and Drug Administration (“FDA”), has sparked interest and discussion among stakeholders in the life sciences industry – including clinical laboratories that are weighing how to approach the upcoming May 6 deadline for compliance.
We discussed the details of the LDT Final Rule in a previous Insight, explaining that as of the May 6, 2025 Phase 1 deadline FDA will expect all laboratories that manufacture LDTs to comply with medical device reporting (“MDR”) requirements, correction and removal reporting requirements, and quality system (“QS”) requirements regarding complaint files.
As is often the case with a major regulatory landscape change, the LDT Final Rule has been subject to scrutiny and legal challenges since its publication in May 2024. Perhaps the most watched of these is the ongoing litigation in which the American Clinical Laboratories Association (“ACLA”) and the Association for Molecular Pathology (“AMP”) have challenged the FDA’s authority to regulate LDTs by way of the LDT Final Rule. The presiding federal district court just heard arguments on the parties cross-motions for summary judgment, and noted a decision on those motions would be issued soon, likely before the Phase 1 deadline. The outcome will have significant implications for labs in the U.S.
In addition to the ongoing litigation, there is a growing possibility that FDA could be instructed, whether by Congress or by leadership at HHS, to retract the LDT Final Rule or delay the implementation of Phase 1. Of note, during the previous Trump administration there was resistance to FDA’s authority to regulate LDTs, in that HHS publicly required continued enforcement discretion for LDTs during the beginning of the COVID-19 pandemic. Now, with the touted theme of deregulation and public calls by trade associations like ACLA to mitigate the impact of the LDT Final Rule, there is a chance that HHS under the new Trump administration could take a similar approach. All of this is coupled with currently mounting pressure on all federal agencies to reduce spending and regulatory oversight, which may make it increasingly difficult for FDA to enforce the rule as originally written.
Nonetheless, unless there is a definitive ruling that the LDT Final Rule is retracted, or that its implementation is delayed, laboratories developing LDTs remain subject to the Final Rule’s Phase 1 requirements at this time. Arguably, even if the outcome results in removal, delay, or a change to the LDT Final Rule, the political cycle could flip again with reinvigorated efforts to bring more regulation around LDTs, whether through Congress or again through the rulemaking process.
EBG will continue to monitor these developments closely, as well as the forthcoming court ruling, and any potential administrative actions that could significantly reshape the regulatory landscape for LDTs.
Corporate Transparency Act Update – March 21, 2025 Filing Deadline
The Corporate Transparency Act (together with its implementing regulations, “CTA”) is a federal law that became effective at the beginning of 2024. The CTA imposes new reporting duties on most companies and their owners. You can learn more about the CTA here: FinCEN BOI Webpage. You can find our prior briefings on the CTA here: HWH CTA Client Briefing December 2023, here: HWH CTA Client Briefing November 2024, here: HWH CTA Client Briefing December 18, 2024, and here: HWH CTA Client Briefing December 27, 2024.
As a result of a February 18, 2025 decision by the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., beneficial ownership information (BOI) reporting requirements under the CTA are once again back in effect. However, FinCEN has generally extended the reporting deadline until March 21, 2025 for the vast majority of companies.
FinCEN also announced that, in keeping with the Treasury Department’s commitment to reducing regulatory burden on businesses, FinCEN expects to provide an update before such date of any further modification of this deadline, while prioritizing reporting for those entities that pose the most significant national security risks. Finally, FinCEN announced that it intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.
FinCEN indicated that reporting companies that are able to rely on a hurricane-related extension to file their initial BOI report (as discussed in our HWH CTA Client Briefing November 2024) should follow the deadline permitted by such extension rather than the March deadline.
Florida Court Rules That the Florida Constitution Requires Employers to Accommodate Off-Duty Medical Marijuana Use
A Florida state court recently held that an employer violated the Florida Civil Rights Act by failing to accommodate an employee’s off-duty, off-site medical marijuana use to treat his disabilities.
The court granted summary judgment in favor of the former employee, whom the employer had placed on unpaid administrative leave after he tested positive for marijuana during a random drug screening.
Quick Hits
A Florida state court ruled that employers must accommodate off-site medical marijuana use, granting summary judgment in favor of a former employee who had been placed on unpaid administrative leave after testing positive for marijuana.
Although the use of marijuana is still prohibited under federal law, the employee, an emergency medical technician, was licensed by the state of Florida, and his CBA allowed employees to report the use of prescription medications authorized under both federal or state law upon testing positive on a drug test.
Florida employers may want to review their drug-free workplace policies for language regarding marijuana usage and consider removing policy language indicating that they will not accommodate the off-duty use of medical marijuana.
Background
Angelo Giambrone was employed by Hillsborough County, Florida, as an emergency medical technician (EMT) for the county’s fire department. During a random drug screening, Giambrone tested positive for marijuana. Following the positive test, Giambrone presented his employer with a valid medical marijuana card. According to the lawsuit, Giambrone takes medical marijuana for anxiety, PTSD, and insomnia.
According to the lawsuit, Giambrone v. Hillsborough County, the county placed Giambrone on unpaid administrative leave because it refused to accommodate Giambrone’s use of medical marijuana. The sole reason for Giambrone’s suspension was the positive random drug test. There was no evidence that Giambrone used marijuana at work, possessed marijuana on work premises or during work hours, showed up to work impaired, or had any complaints or suspicion of impairment while on the job. The county also reported him to the EMT licensing board, which eventually dropped its investigation into Giambrone based on his status as a medical marijuana cardholder.
Giambrone filed a lawsuit in Florida state court, alleging disability discrimination for failing to accommodate his use of medical marijuana under the Florida Civil Rights Act. He alleged wrongful termination and breach of contract for failure to accept his state-issued medical marijuana card as a justification for a positive drug test. In opposition, the county argued that a medical marijuana card does not exempt Giambrone from complying with federal law and the county’s drug-free workplace policy.
In granting Giambrone’s motion for summary judgment, Circuit Court Judge Melissa M. Polo concluded that the Florida State Constitution requires employers to accommodate the off-site use of medical marijuana. However, Judge Polo reminded employers in her opinion that the Florida Constitution does not have a duty to accommodate on-site use of medical marijuana.
Judge Polo was not persuaded by the county’s argument that it did not have a duty to accommodate medical marijuana because marijuana is still illegal under federal law. This was in part because Giambrone’s EMT license was controlled by the state of Florida. Judge Polo further distinguished a case cited by the county, Ortiz v. Department of Corrections, where the Florida State Department of Corrections was not required to accommodate a correctional officer’s medical marijuana use because it directly conflicted with a federal firearm possession law, a condition not at play in Giambrone’s case. Furthermore, the opinion noted that language in Giambrone’s collective bargaining agreement allowed employees to report the use of prescription medications authorized under both federal or state law upon testing positive on a drug test. The county has appealed the decision.
Key Takeaways
In light of this decision, Florida employers may want to consider entering into an interactive disability accommodation process with job applicants or employees who are medical marijuana cardholders. However, Florida employers can rest easy knowing they still do not need to allow their employees to show up to work under the influence of medical marijuana, or possess marijuana on company property. The opinion serves as a good reminder to Florida employers to handle medical marijuana issues carefully and to consider focusing on reasonable suspicion testing and training.