How Honest is Honest Enough in Your Job Application? (UK)
In 2019 a Mr Easton applied for a role with the Home Office to work in the Border Force. As part of that process he was required to fill in (without guidance) a blank box headed “Employment History” which he completed with details of prior roles held and the years in which each had begun and ended. While that information was true as far as it went, Easton’s taking that approach had the side-effect of obscuring that in 2016 he had been dismissed for gross misconduct and then been unemployed for three months, both matters which he accepted in cross examination in the Tribunal that the Home Office could well regard as relevant.
As indeed it did, for on its subsequent discovery of Easton’s 2016 dismissal, the Home Office sacked him in 2020 for his alleged lack of honesty in omitting from the application form the details necessary for it to identify any gaps in his employment.
Easton brought a welter of claims against the Home Office including unfair dismissal, victimisation, retaliation for whistle-blowing, and discrimination on grounds of both age and disability. By the time he reached the Employment Appeal Tribunal earlier this month, all his other claims had been abandoned or rejected and the question under appeal had been whittled down to a single issue, though phrased in a number of different ways – (i) did the Home Office have reasonable grounds to believe that his presentation of his employment history had been a deliberate and dishonest attempt to obscure the fact and nature of his 2016 dismissal and the jobless three months? Or, put differently, (ii) had the Home Office adequately considered the possibility that Easton had completed the application form in what he genuinely believed to be an appropriate manner, bearing in mind the absence of instructions on the form as to the detail required? And overall (iii) how could the Home Office reasonably believe him to have answered the question dishonestly simply by virtue of his not providing information it had not asked for?
No-one here suggested that CVs and job application forms attract the same “utmost good faith” obligations as some insurance forms, i.e. any duty to disclose potentially relevant circumstances even if not specifically requested. So from there, the EAT moved to the question of what the form did actually ask for, or rather, what Easton should have realised it was asking for.
Despite getting rave reviews from the EAT for his advocacy skills, Easton fared less well in terms of his actual evidence, parts of which were found to have been eloquently argued but basically untrue. In particular, he advanced simultaneously a number of different and fundamentally incompatible rationales for not adding the give-away details on the form. These included IT failure, the question not being asked, his belief that the Home Office already knew about the dismissal, its being irrelevant to the recruitment anyway, and his having mentioned it at interview, which the Employment Tribunal had found that he didn’t. In the end, once Easton admitted that he had been told by the Home Office pre-application that neither the 2016 dismissal nor the subsequent period of unemployment would necessarily be fatal to his appointment but would be considered case-by-case, he was effectively doomed. He had to have understood from that point that the Home Office would want to know about such incidents, and that that was the purpose of the “Job History” box. His then completing the application form in such a way as to conceal them was enough to allow the Home Office a reasonable basis on which to conclude on a balance of probabilities that that omission was deliberate. As a result, the ET’s original decision that he had been fairly dismissed was upheld.
This case turns on its own facts to some extent, but we can still take some useful pointers from it:
Job candidates are under no general obligation to volunteer information which is not requested.
So if as employer you are looking for details relevant to your assessment of that individual’s suitability for your role, be specific. The EAT said that “the suggestion that it needs to be spelled out to applicants that they should provide sufficiently precise dates to permit the vacancy-holder to understand any gaps has a slight air of unreality about it”, but ignore that – if you want the date of a job change, not just the year, then say so. If you want to know about gaps in employment records, or why your candidate left his last job, or whether he has any unspent convictions, say so.
If the application form comes back without the specific information requested, revert to the candidate and request it again. That kills off the otherwise inevitable argument that if as employer you so badly needed some information that you later sack the employee for not providing it, you shouldn’t have let them start in the first place.
Similarly, if the candidate does provide the requested information and that generates important further questions, ask them before they arrive (particularly in regulated sectors). If the job history reveals a three month gap, for example, was that spent looking for a job, on a pilgrimage, in Broadmoor?
To expand on that, the Home Office’s application form required Easton to tick a box to acknowledge that his application might be rejected or that he could be disciplined if he withheld “relevant details”. That tick was found relevant but not conclusive, since it left the question of what is a “relevant detail” to the job applicant. Here Easton was found to have known that earlier dismissals and periods out of work were seen as relevant, but that would not be the case every time.
But please do keep an eye on the information you seek, since pressing a candidate for details of relevant medical conditions or disabilities can get you into significant trouble if you ask too early, and the application is then refused. In addition, ETs will be very wary about dismissals for purported dishonesty in not disclosing mental health conditions on joining and then having the cheek to seek adjustments later – they may well be sympathetic to a claimant who argues that their condition was under control at the time of the appointment and so did not justify any mention, and/or that they feared not even getting a chance to prove themselves in the job if they told the truth. It may arguably be a form of dishonesty not to disclose such a condition, but there are few good arguments open to the employer for not recruiting them as a result. It might have been entirely legitimate for the Home Office not to have appointed Easton if there had been something in his earlier dismissal or time out of work which particularly bothered it, but it will be a brave employer indeed which argues that had it known of a candidate’s health condition, and despite their passing all the other entry conditions, it would not have hired them. You wince even just thinking about the reception that would get in Tribunal.
Blockchain+ Bi-Weekly; Highlights of the Last Two Weeks in Web3 Law: February 27, 2025
Three of the SEC’s key enforcement actions—all extensively covered in BitBlog and widely seen as emblematic of the agency’s adversarial stance toward the industry—are reportedly being halted or dismissed. The SEC has agreed in principle to drop its case against Coinbase without any penalties or required changes in business. The SEC also agreed in principle to drop its case against Uniswap for operating an unlicensed securities exchange. Both parties in SEC v. Binance have jointly requested a 60-day litigation stay. Meanwhile, highlighting that the challenges facing this emerging industry are not confined to the United States and its regulation, an international digital asset exchange suffered the largest known hack of its ETH wallets, reigniting concerns over the security of digital asset platforms. Additionally, there are ongoing and potential personnel changes within the U.S. government, particularly in the CFTC and Department of Commerce, with new leadership thus far demonstrating and advocating for positions that are supportive of the industry.
These developments and a few other brief notes are discussed below.
SEC v. Coinbase Dismissal Pending Commission Approval: February 21, 2025
Background: The SEC staff have agreed in principle to dismiss its action against Coinbase where the SEC had alleged that it was operating as an unregistered securities exchange, broker and clearing agency, along with unregistered offering charges against its staking-as-a-service program. Given that two of the three current commissioners have publicly opposed the agency’s actions against digital asset companies, the commission is likely to approve the dismissal recommendation, effectively bringing the matter to an end. This decision would also eliminate the pending interlocutory appeal before the Second Circuit, which was set to review certain rulings from the Motion to Dismiss stage.
Analysis: It is unusual to see a dismissal such as this one announced before final approval, but the timing may be strategic. With only three commissioners currently in place, the likely dissenting vote, Commissioner Crenshaw, could effectively block commission action to formally dismiss the case. One has to imagine that the portions of the cases against Binance and Kraken that have similar causes of action with similar legal theories are also likely to be dismissed. Another key question is whether other exchanges that delisted tokens alleged to be securities in response to these lawsuits, will reconsider and reintroduce them to their trading platforms. The outcome of these cases could significantly impact how digital asset exchanges approach compliance and token offerings moving forward.
Bybit Exchange Suffers Largest Known Exchange Hack in History: February 21, 2025
Background: Bybit (a digital asset exchange based in Dubai that is not available to U.S. users) announced it suffered unauthorized access to various ETH wallets, resulting in roughly $1.4 billion being stolen from the platform. To put into perspective, in 2024 $2.2 billion is estimated to be the combined amount stolen from all platforms for the year, meaning 2025 will likely dwarf that number. The hack is currently believed to be the work of the North Korean hacking organization the Lazarus Group, which was also behind the similar Phemex hack earlier this year. Bybit announced it still has the funds to cover customer withdrawals, and operations remain active.
Analysis: While the roughly 850,000 Bitcoin stolen in the infamous Mt. Gox hack is worth more in today’s dollars, this is likely the largest cryptocurrency hack in dollars at the time of the hack and one of the largest, if not the largest, heists of all time. It also makes the hackers one of the largest owners of ETH, as the over 400,000 ETH stolen is more than double the amount held by the Ethereum Foundation itself.
Brian Quintenz Tapped to Lead CFTC: February 11, 2025
Background: It is being fairly widely reported that President Trump plans to nominate a16z’s Brian Quintenz to lead the CFTC. Quintenz previously served as a commissioner at the CFTC from 2017 to 2021. He is currently the Global Head of Policy at venture firm a16z’s crypto investment arm, and if he is confirmed, he will replace the current acting Chair, Pham. He is the first potential CFTC chair to announce his nomination on Farcaster, the digital asset native social network.
Analysis: If you read his prior statements on digital assets and DeFi, it is clear why the digital asset legal community is largely supportive of this pick. He is also no stranger to prediction markets, which are likely to be a hot topic for regulation in the upcoming years. He recently wrote about being excited about governments putting bonds onChain.
SEC v. Binance Joint Stay of Litigation Requested: February 11, 2025
Background: The parties in SEC v. Binance are requesting a 60-day pause in the litigation, citing the reason as “new SEC Acting Chairman Mark T. Uyeda launched a crypto task force dedicated to helping the SEC develop a regulatory framework for crypto assets. The work of this task force may impact and facilitate the potential resolution of this case.” Since the Court in Binance agreed to the stay request and with SEC v. Coinbase currently stayed pending an interlocutory appeal decision from the Second Circuit (and likely soon to be dismissed, as discussed below), that just leaves SEC v. Payward (i.e., Kraken) in the exchange cases ongoing post-election.
Analysis: The stay request is document 296 in the case’s court file if that is any indication of how fiercely litigated the SEC v. Binance case has been over the past roughly 1.5 years. Considering on the same day, the SEC asked the Court to ignore certain allegations from their Amended Complaint in reaching a determination on the pending Motion to Dismiss indicates there was possibly an order from on-high to enter a holding pattern in all digital asset litigation with approaching deadlines. But no way to know until the dust settles if that was the case.
Briefly Noted:
Uniswap Labs Says SEC Probe Has Been Closed: Consistent with the Coinbase dismissal but different due to Uniswap’s decentralized nature, Uniswap Labs, the tech company behind the decentralized Uniswap protocol, announced that the SEC has also dropped its investigation for purportedly running an unregistered securities exchange, among other things. There is still the open question of whether decentralization really matters for bringing this type of claim and, if so, how much it matters.
SEC Dismisses Dealer Rule Appeal: The SEC has decided to not go forward with their appeal of two challenges to the proposed expansion of the term “dealer” under applicable securities laws. Well done by the Blockchain Association and the Crypto Freedom Alliance of Texas, among others. The expanded definition had the potential to capture all kinds of traditional finance activities that historically had never been regulated, such as proprietary high frequency trading.
SEC Launches Cyber Fraud Unit: The SEC has formed a Cyber and Emerging Technologies Unit, which will go after, in part, “fraud involving blockchain technology and crypto assets.” This makes sense to focus on fraud and consumer harm vs. trying to fight digital asset businesses that are trying to be good actors in an unclear regulatory environment.
SEC Crypto Task Force Meeting Logs: The SEC is posting meeting logs of its crypto task force meetings, which is really cool. So much of crypto has been built on open source and community development that making these task force submissions and meetings transparent just fits. There is also a list of questions that the SEC is seeking public input on answering. Please reach out to any of the listed authors if you are a company that wishes assistance in submitting such responses.
Nasdaq Proposes Rule for Trading Digital Assets: The Nasdaq exchange is proposing a rule change to permit the listing and trading of digital asset-based investment interests.
Secretary of Commerce Confirmed: Howard Lutnick, formerly of Cantor Fitzgerald, has been confirmed as the new Secretary of Commerce. He has said a ton of positive things about crypto in the past, so another ally in a high-ranking position is always good.
Nation-State Rug: The President of Argentina tweeted out about a memecoin, $LIBRA, which reached a market cap of almost $4 billion before insiders cashed out, making over a hundred million in the process and tanking the price of the token. Great thread explaining it all here. The fallout from the Argentina memecoin rug $LIBRA is ongoing, and it can be expected this will have significant repercussions down the line depending on the role of seemingly trusted service providers in the schemes.
SEC Commissioner Says Memecoins Not the SEC’s Concern: The very term “memecoin” implies that investors are not relying on the efforts of others to generate profits—a key factor in determining whether an asset qualifies as a security under U.S. law. If that weren’t already clear, SEC Commissioner Hester Peirce, who also heads the Crypto Task Force, recently reinforced this point, stating that the SEC’s jurisdiction is limited to securities. She emphasized that the regulation of many memecoins likely falls under other federal agencies, such as the CFTC, FTC, and others that oversee financial instruments that are not stock-like securities. This statement, while not actionable precedent, reflects an ongoing debate over the appropriate regulatory framework for digital assets and highlights the need for greater clarity in interagency enforcement efforts.
House Financial Services Subcommittee Holds Digital Asset Hearing: The House Financial Services Subcommittee recently held a hearing titled A Golden Age of Digital Assets: Charting a Path Forward. With legislators pushing an aggressive schedule to advance various digital asset bills, a rapid succession of hearings on these issues is expected. This hearing signals continued momentum in shaping the regulatory framework for digital assets and highlights the urgency among lawmakers to address key policy questions surrounding the industry. With the aggressive schedule put forward by many legislators to get various digital asset bills done, there is going to be an equally fast paced group of hearings on these issues.
Conclusion:
As personnel changes continue within the U.S. government and crypto-related industries, we can expect ongoing developments on the litigation front, further shaping the regulatory landscape for digital assets. The SEC’s decision to dismiss its case against Coinbase, along with other high-profile enforcement actions, signals a potential shift in regulatory strategy. Meanwhile, the recent Bybit Exchange hack, though not directly affecting U.S. users, underscores the urgent need for safe exchanges to ensure the secure access and custody of digital assets, as well as the need for more clarity involving self-custodial solutions. Alongside anti-money laundering and fraud detection and prevention, these issues will remain central to regulatory efforts in the evolving crypto ecosystem.
RUDE AWAKENING: Wellness Company Allegedly Sends 5:00 A.M. Texts To Consumers Without Consent
Hey TCPAWorld!
Imagine. It’s 5:00 a.m. The world is still. The kettle whistles before the aroma of freshly brewed coffee seizes the air. Your peace is impenetrable–or so you think. Then, an intrusion takes shape in the form of chimes and vibrations. Your phone bombarded with telephone solicitations from a source you never provided prior express permission to. This is the harm that 47 C.F.R. § 64.1200(c)(1) seeks to prevent by prohibiting callers from issuing telephone solicitations prior to 8 a.m.
In a complaint filed against Skinny Fit, LLC, a health and wellness company, the plaintiff claims to have suffered this very harm. Specifically, in SAVAGE v. SKINNY FIT, LLC, No. 8:25-CV-00376 (C.D. Cal. Feb. 25, 2025), Savage (“Plaintiff”) alleges that Skinny Fit, LLC, (“Defendant”) violated 47 C.F.R. § 64.1200(c)(1) by initiating at least two telephone solicitations to Plaintiff’s phone before 8 a.m. (local time at the called party’s location). The first message Plaintiff claimed to have received at 5:01 a.m. reads as follows:
SkinnyFit: Want to reveal your most flawless side? Try your match for free: https://kvo7.io/yzJPN7 Text STOP to opt-out
Id. at ¶ 14. Then, on the following day at 5:03 a.m., Plaintiff claims to have received another message:
SkinnyFit: Psst psst. Don’t wait until our best-selling Super Youth Orange Pineapple is out of stock… Did I mention you get to try it FREE for 21 days? Make your move now: https://.kvo7.io/cdTTNK
Plaintiff seeks to represent the following class:
Proposed Class. All persons in the United States who from four years prior to the filing of this action through the date of class certification (1) Defendant, or anyone on Defendant’s behalf, (2) placed more than one marketing text message within any 12-month period; (3) where such marketing text messages were initiated before the hour of 8 a.m. or after 9 p.m. (local time at the called party’s location).
Id. at ¶ 23.
It remains to be seen whether Skinny Fit, LLC, actually violated 47 C.F.R. § 64.1200(c)(1). That being said, this complaint serves as a cautionary tale: Avoid sending solicitations before 8 a.m. or after 9 p.m. (local time at the called party’s location), especially if you have not obtained prior express written consent. To stay compliant, it is essential to implement reliable systems to determine the recipient’s local time before sending any such solicitations.
One more thing. Starting April 11, 2025, the new revocation rule takes effect, which will require businesses to process revocation requests within a reasonable timeframe– no later than 10 business days. The team at Troutman Amin, LLP put together a concise and valuable one-sheet to help stakeholders understand the impact of the new rule. Download it here: Compliance Alert (TCPA Revocation Rule).
Stay tuned for more TCPA insights!
(UK) Office-Holder Remuneration Applications – The Importance of Details
When it comes to applications by office-holders for approval of their remuneration, the message in the case of Poxon and another v Wejo Ltd (in administration) [2025] EWHC 135 (Ch) was, the detail matters.
Background
Having failed to obtain approval from the creditors in respect of both their pre and post administration costs, the joint administrators of Wejo invited the court to fix the basis of their post-administration remuneration and expenses by reference to time properly spent by them and their staff in attending to the administration of the company pursuant to r. 18.23 of the IR 2016 and approve their unpaid pre-administration costs as an expense of the administration pursuant to r. 3.52(5) of the IR 2016 (the Application).
Certain creditors of Wejo intervened to oppose the Application on the grounds that the joint administrators’ evidence in support was insufficient to enable to court to properly consider the Application.
However, the joint administrators sought to argue that r. 18.23 was concerned with fixing the “basis” of remuneration only, and the court need not be concerned to scrutinise the fees estimate delivered to creditors pursuant to r. 18.16(4)(a) (the Fees Estimate) – if the creditors had concerns regarding the amount of remuneration sought, their remedy was under r. 18.34.
Accordingly, the issues raised by the case where:
the extent to which, if at all, the court should scrutinise the quantum of the Fees Estimate, when it is asked to determine the basis of remuneration on an application brought pursuant to r. 18.23; and
the level of detail required more generally on applications bought pursuant to r. 3.52 and r. 18.26.
Outcome
Unfortunately for the joint administrators of Wejo, the judge was not prepared to fix the basis for remuneration (or to approve pre-administration fees) because the information provided by the administrators about the work done did not enable him to form a sensible view on the reasonableness of the fees, especially as the Fees Estimate now represented work already carried out.
One might be forgiven for thinking that when seeking to fix the basis of remuneration, there is a distinction between that, and the level of remuneration, given the wording in r.18.23 provides for the court to “fix the basis”, not the amount. But the two are linked.
The insolvency practice direction, which the judge turned to in this case, sets out guiding principles for remuneration applications – the objective being to ensure the amount and/or basis of the remuneration to be fixed by the court is fair.
The basis upon which the fees were to be drawn could not therefore be determined without scrutiny of the Fee Estimate. The judge wanted to see more information to support the time spent by reference to the work done.
The judge also disagreed with the joint administrators’ submission that a creditor’s ability to challenge the amount of remuneration pursuant to r. 18.34, extended to remuneration fixed by the court under r. 18.23.
As such, the Application was adjourned to allow the administrators to provide further information.
Key take-aways for Office-Holders
It is clear from Wejo that where the court is being asked to fix the basis of remuneration by reference to time properly spent that:
The onus is on the office holder to justify their fees.
The court will need to understand why the work has been undertaken and be satisfied that it is both reasonable and commensurate with the fees incurred.
In doing this the court will scrutinise the remuneration that an office-holder is seeking to recover by reference to their fees estimate and will require an office holder to follow the guiding principles in the practice direction. In particular the requirements of paragraph 21 of the Practice Direction: Insolvency Proceedings [2020] BCC 698.
The costs of preparing such an application can often be quite steep, due to the level of information that the court requires, and as this case demonstrates, expects.
Although office holders have 18 months from the date of their appointment, to make an application to fix the basis of their remuneration, there might be something to be said for making an application to court to fix the basis of remuneration early – the more work that has been done, the more information the court will require.
Sour Grapes: Attorney’s Oral Agreement Might Be Okay if Fair, Just, and Fully Advised
The US Court of Appeals for the Ninth Circuit found that a district court erred in declaring on summary judgment that an attorney had no ownership interest in a winery because the alleged agreement was made orally. The Ninth Circuit explained that there were triable issues of fact as to whether the attorney could rebut the presumption against oral agreements by showing that the transaction was fair and just and that the client was fully advised. Schrader Cellars, LLC v. Roach, Case Nos. 23-15862; -15990 (9th Cir. Feb. 21, 2025) (Smith, Bennett, Johnstone, JJ.)
Fred Schrader is the former owner of Schrader Cellars (Cellars). Robert Roach is a Texas attorney who claims to have entered into an oral agreement with Schrader regarding the creation of another company, RBS LLC, which Roach asserts has an ownership interest in Cellars. After Schrader sold Cellars in 2017, Roach sued Schrader in Texas state court, claiming that the sale was improper. In 2021, Cellars filed a lawsuit in the US District Court for the Northern District of California, seeking, among other things, a declaration that Roach did not have any ownership interest in Cellars. Roach asserted various counterclaims.
The district court granted summary judgment on Cellars’ request for declaratory relief and dismissed Roach’s counterclaims. The case proceeded to trial on Cellars’ remaining claim for breach of fiduciary duty. The district court instructed the jury that, as a matter of law, Roach had breached his fiduciary duties to Cellars, so the jury decided only the issue of harm. The jury found that Roach’s breach of fiduciary duty had harmed Cellars during the limitations period but did not award damages because of the “litigation privilege defense.” Roach appealed the summary judgment order.
The Ninth Circuit found that the district court erred in granting Cellars summary judgment. Roach argued that the district court erred in declaring that he had no ownership interest in Cellars via the purported RBS agreement. At summary judgment, Cellars argued that even if Roach’s version of the RBS oral agreement existed, Roach could not enforce it because it violated California Rules of Professional Responsibility, which require written advisories and disclosures. Relying on this provision, the district court concluded that even if an oral argument existed, it was unenforceable, and Roach therefore could not have any ownership interest in Cellars. The district court noted that although “[a]n attorney may rebut the presumption of undue influence by showing that ‘the dealing was fair and just,’ and ‘the client was fully advised[,]’ . . . Roach has made no such effort to rebut this presumption.”
The Ninth Circuit found that the district court erred because there were triable issues of fact concerning whether Roach rebutted the presumption regarding the alleged breach of his client duties. The Court explained that not only did Roach expressly argue fairness before the district court, but the basic facts of the case (when viewed in the light most favorable to Roach) demonstrated that the transaction was fair and just and that Schrader was fully advised. The Court explained that Roach had testified that:
RBS was Schrader’s idea
Schrader solicited a cash investment from Roach
Schrader required Roach to operate without a written agreement
Schrader dictated the terms of the oral RBS agreement.
The Ninth Circuit also noted that while Cellars is successful now, at the time Schrader sought Roach’s investment, Cellars was performing poorly. The Court found that this evidence sufficiently established there was at least a triable issue of fact on whether the alleged agreement was void under California ethical rules.
Guidance for Franchisors: Lessons from N.A.R., Inc. v. Eastern Outdoor Furnishings
A recent New Jersey appellate court decision provides valuable guidance for franchisors and their in-house legal teams on structuring and protecting franchise relationships. The court affirmed that a terminated retailer of custom outdoor kitchens was not in a franchise relationship with a manufacturer of outdoor grills and that the New Jersey Franchise Practices Act (NJFPA) did not apply to the retailer’s termination. This case underscores the importance of clearly defining franchise relationships through written agreements to avoid unintended legal consequences.
Background of the Case
In N.A.R., Inc. v. Eastern Outdoor Furnishings, 2025 WL 287497 (N.J. Super. Ct. App. Div. Jan. 24, 2025), Eastern Outdoor Furnishings, a retailer of custom outdoor kitchens, had been selling AMD Direct’s outdoor grills since 2010 under a wholesale distributorship arrangement. In 2019, AMD terminated Eastern Outdoor’s distributorship in favor of a competitor. At the time, Eastern Outdoor had AMD grills in its possession that it had ordered but not yet paid for.
A collection agency, N.A.R., Inc., acting as an assignee of the purported debt, sued Eastern Outdoor to recover payment. In response, Eastern Outdoor filed a third-party complaint against AMD, alleging that the termination violated its franchise rights under the NJFPA. AMD moved for summary judgment, seeking dismissal of the franchise-related claims.
Key Legal Issue: Was There a Franchise Relationship?
The central legal question was whether Eastern Outdoor could establish a franchise relationship under the NJFPA, which requires proof of:
A written agreement granting the use of a trade name, trademark, service mark, or related characteristics.
A community of interest in the marketing of goods or services.
The trial court granted summary judgment in favor of AMD, ruling that Eastern Outdoor could not prove the existence of a written agreement meeting the first element of the NJFPA test. Eastern Outdoor appealed this decision.
Appellate Court’s Analysis and Affirmation
The appellate court upheld the trial court’s decision, concluding that Eastern Outdoor failed to demonstrate a written agreement establishing a franchise. Key takeaways from the appellate court’s ruling include:
A Franchise Agreement Must Be Evidenced in Writing: Eastern Outdoor argued that the NJFPA does not require a formal contract, asserting that a series of writings could constitute a franchise agreement. While the appellate court acknowledged that multiple documents could collectively establish a franchise, they must explicitly grant a license to use a trade name, trademark, or related characteristics.
Insufficient Evidence of a Granted License: Eastern Outdoor submitted various documents to support its claim, including:
Invoices.
An email referring to AMD and Eastern Outdoor as “trusted partners.”
AMD’s website listings identifying Eastern Outdoor as a distributor or Director of Sales.
Marketing materials, such as AMD catalogs labeled “Summerset…by Eastern Outdoor.”
A letter referencing the “distributor arrangement.”
Despite these materials, the appellate court found that they merely reflected the history of the business relationship and did not constitute a written grant of a trademark license.
Trademark Use Alone Does Not Establish a Franchise: Eastern Outdoor had used AMD’s branding and logos in selling its products, but AMD never explicitly granted Eastern Outdoor a license to do so in writing. The absence of this written license was a decisive factor in the court’s ruling.
Key Takeaways for Franchisors and Legal Departments
This case highlights several critical lessons for franchisors and their in-house legal teams:
Ensure a Clearly Defined Franchise Agreement: If a company intends to create a franchise relationship, a formal, written agreement granting trademark or trade name rights is essential to comply with franchise laws like the NJFPA.
Avoid Unintentional Franchise Designations: Manufacturers and suppliers should carefully structure distributor relationships to prevent claims of franchise status. If franchise laws do not apply, agreements should explicitly state that no franchise relationship exists.
Trademark Licensing Must Be Explicit: Even if a distributor uses branding and marketing materials, courts require clear, written evidence that a franchisor has explicitly granted such rights.
Monitor Business Descriptions and Communications: Informal references to “partners,” “distributors,” or sales directors on websites, emails, and marketing materials can be used as evidence in legal disputes. Franchisors should ensure that all representations align with the intended business relationship.
Understand State-Specific Franchise Laws: The NJFPA, like other state franchise laws, has specific requirements that differ from federal franchise regulations. Franchisors must ensure compliance with state laws in jurisdictions where they operate.
Conclusion
The N.A.R., Inc. v. Eastern Outdoor Furnishings decision reinforces the necessity for franchisors to properly document and define their relationships with retailers and distributors. In-house legal teams should take proactive steps to draft clear agreements, explicitly grant (or withhold) trademark rights, and carefully manage how business relationships are portrayed. By doing so, franchisors can mitigate legal risks and prevent unintended franchise claims under state laws like the NJFPA.
The Why Behind the HHS Proposed Security Rule Updates
In this week’s installment of our blog series on the U.S. Department of Health and Human Services’ (HHS) HIPAA Security Rule updates in its January 6 Notice of Proposed Rulemaking (NPRM), we are exploring the justifications for the proposed updates to the Security Rule. Last week’s post on the updates related to Vulnerability Management, Incident Response & Contingency Plans can be found here.
Background
Throughout this series, we have discussed updates to various aspects of the Security Rule and explored how HHS seeks to implement new security requirements and implementation specifications for regulated entities. This week, we discuss the justifications behind HHS’s move and the challenges entities face in complying with the existing rule.
Justifications
HHS discussed multiple reasons for this Security Rule update, and a few are discussed below:
Importance of Strong Security Posture of Regulated Entities – The preamble to the NPRM posits that the increase in use of certified electronic health records (80% of physicians’ offices and 96% of hospitals as of 2021) fundamentally shifted the landscape of healthcare delivery. As a result, the security posture of regulated entities must be updated to accommodate such advancement. As treatment is increasingly provided electronically, the additional volume of sensitive patient information to protect continues to grow.
Increase Cybersecurity Incident Risks – HHS cites the heightened risk to patient safety during cybersecurity incidents and ransomware attacks as a key reason for these updates. The current state of the healthcare delivery system is propelled by deep digital connectivity as prompted by the HITECH and 21st Century Cures Act. If this system is connected but insecure, the connectivity could compromise patient safety, subjecting patients to unnecessary risk and forcing them to bear unaffordable personal costs. During a cybersecurity incident, patients’ health, and potentially their lives, may be at risk where such an incident creates impediments to the provision of healthcare. Serious consequences can result from interference with the operations of a critical medical device or obstructions to the administrative or clinical operations of a regulated entity, such as preventing the scheduling of appointments or viewing of an individual’s health history.
The Healthcare Industry Could Benefit from Centralized Security Standards Due to Inconsistent Implementation of Current Voluntary Standards – Despite the proliferation of voluntary cybersecurity standards, industry guidelines, and best practices, HHS found that many regulated entities have been slow to strengthen their security measures to protect ePHI and their information systems. HHS also noted that recent case law, including University of Texas M.D. Anderson Cancer Center v. HHS, has not accurately set forth the steps regulated entities must take to adequately protect the confidentiality, integrity, and availability of ePHI, as required by the statute. In that case, the Fifth Circuit vacated HIPAA penalties against MD Anderson, ruling that HHS acted arbitrarily and capriciously under the Administrative Procedure Act. The court found that MD Anderson met its obligations by implementing an encryption mechanism for ePHI. HHS disagrees with whether the encryption mechanism was sufficient and asserted its authority under HIPAA to mandate strengthened security standards for ePHI. This ruling and lack of adoption of the voluntary cybersecurity standards by regulated entities has led to inconsistencies in the implementation of the Security Rule at regulated entities and providing clearer and mandatory standards were noted justifications for these revisions.
Takeaways
In 2021, Congress amended the HITECH Act, requiring HHS to assess whether an entity followed recognized cybersecurity practices in line with HHS guidance over the prior 12 months to qualify for HIPAA penalty reductions. In response to this requirement, HHS could have taken the approach of acknowledging recognized frameworks that offer robust safeguards to clarify expectations, enhance the overall security posture of covered entities, and reduce compliance gaps. While HHS refers to NIST frameworks in discussions on security, it has not formally recognized any specific frameworks to qualify for this so called “safe harbor” incentive. Instead, HHS uses this NPRM to embark on a more prescriptive approach to the substantive rule based on its evaluation of various frameworks.
HHS maintains that these Security Rule updates still allow for flexibility and scalability in its implementation. However, the revisions would limit the flexibility and raise the standards for protection beyond what was deemed acceptable in the past Security Rule iterations. Given that the Security Rule’s standard of “reasonable and appropriate” safeguards must account for cost, size, complexity, and capabilities, the more prescriptive proposals in the NPRM and lack of addressable requirements present a heavy burden — especially on smaller providers.
Whether these Security Rule revisions become finalized in the current form, a revised form, or at all remains an open item for the healthcare industry. Notably, the NPRM was published under the Xavier Becerra administration at HHS and prior to the confirmation of Robert F. Kennedy, Jr. as the new secretary of HHS. The current administration has not provided comment on its plans related to this NPRM, but we will continue to watch this as the March 7, 2025, deadline for public comment is inching closer.
Stay tuned to this series as our next and final blogpost on the NPRM will consider how HHS views the application of artificial intelligence and other emerging technologies under the HHS Security Rule.
Please visit the HIPAA Security Rule NPRM and the HHS Fact Sheet for additional resources.
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Abu Dhabi Court of Cassation Confirms Exclusivity of Grounds for Set Aside of Arbitral Awards
Introduction
In a decision that became public recently, the Abu Dhabi Court of Cassation (Court of Cassation) in Case No. 1115 of 2024 (issued on 25 November 2024) confirmed the exclusivity of the grounds to set aside arbitral awards contained in Article 53 of the United Arab Emirates (UAE) Federal Arbitration Law No. 6 of 2018 (Arbitration Law). Those grounds do not include reconsideration of the arbitral tribunal’s evaluation of the evidence.
Background
An award debtor (claimant in the arbitration) filed application No. 16 of 2024 in the Abu Dhabi Court of Appeal (Court of Appeal) seeking to set aside an arbitral award issued in an arbitration under the rules of the Abu Dhabi Commercial and Conciliation Centre (since reorganized and renamed as the Abu Dhabi International Arbitration Centre). The basis for the application was that the arbitral tribunal adopted a different method in assessing the award debtor’s claims to that adopted in assessing the award creditor’s claims (counter claimant in the arbitration), and the burden-of-proof requirements applied to the award debtor were more onerous than those applied to the award creditor. In its judgment issued on 16 October 2024, the Court of Appeal dismissed the application.
The award debtor filed an appeal to the Court of Cassation, relying upon the same arguments raised before the Court of Appeal.
Judgment of the Court of Cassation
The Court of Cassation upheld the Court of Appeal’s judgment. It confirmed that it is established that the court hearing an application to set aside an arbitral award shall not be allowed to reconsider the merits of the arbitration case or to supervise the application and interpretation of the law by the arbitral tribunal. The Court of Cassation held that the assessment of evidence in an arbitration proceeding is within the purview of the arbitral tribunal. It is not admissible as a ground for setting aside an arbitral award, as it is not a procedural defect listed in the grounds for setting aside an arbitration award in Article 53 of the Arbitration Law. The Court of Cassation further noted that the validity of arbitral awards in terms of reasoning is not to be measured by the same standards as state court judgments. The Court of Cassation held that the award debtor had not established that it was denied the opportunity to present its case by the arbitral tribunal or that there had been any breach of the principles of due process.
Comment
The Court of Cassation’s judgment reaffirms the UAE courts’ supportive position of arbitration, emphasizing the exclusivity of the statutory grounds for setting aside arbitral awards and that those grounds shall be interpreted narrowly.
This Week in 340B: February 18 – 24, 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.
Issues at Stake: Contract Pharmacy; HRSA Audit Process; Rebate Model; Other
In one Health Resources and Services Administration (HRSA) audit process case, the government filed a memorandum in support of the government’s motion to dismiss.
In a case by a drug manufacture challenging a state law, the government filed a motion for judgment on the pleadings and the parties filed a joint motion for an amended protective order.In a Freedom of Information Act (FOIA) case, the government filed a response to a motion to strike the government’s motion for summary judgment.In a suit by a 340B covered entity against HRSA, the covered entity filed a notice of voluntary dismissal without prejudice.
In an appealed case challenging a proposed state law governing contract pharmacy arrangements, the appellees filed their opening brief.
A 340B covered entity filed a complaint against HRSA to challenge HRSA’s decision to allow a manufacturer’s audit.
In five cases against HRSA alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
In four such cases, drug manufacturers filed a joint opposition to a motion to intervene and the intervenors filed a reply in support of their motion to intervene.
In one such case, the intervenors filed a reply in support of their motion to intervene.
In one such case, the plaintiff filed a motion for summary judgment.
Nadine Tejadilla also contributed to this article.
Is It Defamatory to Call Your Contractor a Crook and a Con Man?
Not according to a decision from a federal court in Ohio. The case involves a landscaping project at a hillside home in Cincinnati. The property overlooks the Ohio River, but like many projects that become cases, it ended up in the ditch. Dissatisfied with the progress of the work, the owner told her neighbors that the contractor was a “crook” and a “con man” who had photoshopped pictures of the work he had done. The case inevitably wound up in litigation with both sides suing the other for breaking their respective promises. In addition to breach of contract damages for unpaid work, the contractor also sought unspecified damages for defamation.
On summary judgment, the court reviewed the elements of a defamation claim under Ohio law and concluded that many of the owner’s insults did not constitute actionable defamation. For example, the court held that referring to the contractor as a crook and a con man was not defamatory but instead constituted the expression of an opinion. As to the statement that the contractor had photoshopped evidence, the court concluded that this was not a protected opinion but rather a statement of verifiable fact that could potentially constitute defamation. The court therefore allowed this portion of the contractor’s defamation claim to proceed to the jury.
The court’s analysis contains a helpful summary of defamation law, which construction lawyers don’t come across every day. Here is the meat of that summary:
Defamation is a false publication that injures a person’s reputation, exposes the person to public hatred, contempt, ridicule, shame, or disgrace, or affects the person adversely in his or her trade or business…. If allegedly defamatory words are susceptible to two meanings, one defamatory and one innocent, the defamatory meaning should be rejected, and the innocent meaning adopted.
The elements of defamation are (1) a false and defamatory statement, (2) unprivileged publication to a third party, (3) a requisite amount of fault on the part of the publisher, and (4) actionability or special harm caused by the statement. Truth is a complete defense to a claim for defamation.…
Whether an allegedly defamatory statement is protected opinion or actionable assertion of fact is a question of law for the district court. Consideration of the totality of circumstances to ascertain whether a statement is opinion or fact involves at least four factors. First is the specific language used, second is whether the statement is verifiable, third is the general context of the statement and fourth is the broader context in which the statement appeared….
Courts examining similar situations of name-calling are split as to whether such statements are defamatory or protected opinion. The majority position seems to be that such name-calling is not defamatory.
A copy of the court’s 42-page opinion addressing these and other claims and counterclaims can be found here.
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New Challenges Loom for OSHA and OSHRC Amid Quorum Issues, Potential ALJ Removals, and Recent Supreme Court Jurisprudence
“The Times They Are a-Changin’” isn’t just a Bob Dylan song title—it is also a fairly accurate description of what has been happening in the arena of the Occupational Safety and Health Administration (OSHA) and the Occupational Safety and Health Review Commission (OSHRC) since early 2023.
Quick Hits
OSHRC, an independent federal agency that resolves disputes between employers and OSHA, has lacked a quorum on its three-person panel since April 2023, leaving pending cases unresolved. The current term of the Review Commission’s only member expires on April 27, 2025.
The Supreme Court’s Loper Bright Enterprises v. Raimondo and SEC v. Jarkesy decisions regarding administrative agencies’ statutory interpretations and adjudication processes may impact OSHA enforcement and OSHRC adjudicative procedures.
The Office of the Solicitor General recently announced that it would no longer defend certain protections for administrative law judges. This position could create opportunities for employers to challenge the authority of OSHRC ALJs.
Background on OSHRC
OSHRC is an independent agency that reviews and resolves disputes between employers and OSHA. OSHRC was created by Section 12 of the Occupational Safety and Health Act of 1970 (OSH Act). It is a three-person panel that requires two members to have a quorum. Without a quorum, OSHRC cannot act, though a quorum is not required to select a case for review.
OSHRC’s members are appointed by the president, subject to the advice and consent of the U.S. Senate. A contest of a citation is heard by one of OSHRC’s administrative law judges (ALJs). The ALJ’s decision becomes final within thirty days unless an OSHRC commissioner designates the case to be heard at the Commission level. If the case is not so designated, the employer can seek further review in one of the federal courts of appeal.
Since April 2023, OSHRC has not had a quorum, and as a result, the thirty cases pending review have remained in limbo—some for as long as four years. Until it has a quorum, those cases will remain in their current status without adjudication. The term for the one remaining member of OSHRC, Cynthia L. Attwood, expires on April 27, 2025.
Recent Supreme Court Jurisprudence Related to Administrative Agency Authority
At the end of the Supreme Court of the United States’ 2023–2024 term, the Court issued decisions in Loper Bright Enterprises v. Raimondo and SEC v. Jarkesy that significantly altered the landscape associated with administrative actions, including OSHA citations and subsequent litigation.
Loper Bright reversed decades of so-called Chevron deference to federal administrative agencies’ interpretations of ambiguous statutes, and Loper Bright’s reasoning can reasonably be expected to form the basis for challenges to OSHA’s application of Section 5(a)(1) of the OSH Act, also known as the General Duty Clause, among other applications. Jarkesy related to the constitutionality of the process for adjudication of administrative matters by the SEC and is proving to be the basis of a number of challenges to various administrative adjudicative bodies function, including the manner in which OSHA citations are adjudicated. One such example is Judge Sim Lake’s order enjoining the adjudication of citations by OSHRC ALJs.
The DOJ Weighs In on ALJs
In what appears to be an opening for even further challenges, on February 20, 2025, the U.S Department of Justice’s (DOJ) Office of the Solicitor General issued correspondence to Senator Charles E. Grassley (R-IA) concerning multilayer restrictions on the removal of administrative judges.
In that correspondence, Acting Solicitor General Sarah M. Harris stated that “the Department of Justice has concluded that the multiple layers of removal restrictions for administrative law judges (ALJs) in 5 U.S.C. 1202(d) and 7521(a) violate the Constitution, that the Department will no longer defend them in court, and that the Department has taken that position in ongoing litigation” (referencing a matter pending in the Third Circuit Court of Appeals).
The letter continued, stating:
In Free Enterprise Fund v. PCAOB, 561 U.S. 477 (2010), the Supreme Court determined that granting “multilayer protection from removal” to executive officers “is contrary to Article II’s vesting of the executive power in the President.” Id. at 484. The President may not “be restricted in his ability to remove a principal [executive] officer, who is in turn restricted in his ability to remove an inferior [executive] officer.” Ibid.
A federal statute provides that a federal agency may remove an ALJ “only for good cause established and determined by the Merit Systems Protection Board on the record after opportunity for hearing before the Board.” 5 U.S.C. 7521(a). Another statute provides that a member of the Board “may be removed by the President only for inefficiency, neglect of duty, or malfeasance in office.” 5 U.S.C. 1202(d). Consistent with the Supreme Court’s decision in Free Enterprise Fund, the Department has determined that those statutory provisions violate Article II by restricting the President’s ability to remove principal executive officers, who are in turn restricted in their ability to remove inferior executive officers.
Looking Ahead
Clearly, the new position espoused by the Office of the Solicitor General creates new opportunities for employers facing OSHA citations to challenge the process by which those citations are adjudicated. Most narrowly interpreted, this changed position offers employers an opportunity to challenge the ALJs appointed to hear their cases as being unconstitutional due to the multiple layers of protection afforded them. On a broader scale, this new position might give employers the opportunity to challenge the entirety of the OSH Act, or at least Section 12.
Whatever path employers take, it seems a near certainty that OSHA and employers will face a whole new world in the near future when it comes to their interactions and any issued or pending citations.
The Arbitration Act 2025 Finally Becomes Law
Practitioners and stakeholders in the arbitration community have welcomed the long-awaited Arbitration Act 2025, which has now received Royal Assent, marking the most significant update to English arbitration law in nearly three decades. This milestone concludes a years-long process initiated by the Law Commission’s 2023 recommendations and underscores the UK government’s commitment to maintaining London as an arbitration hub.
The Legislative Journey
The Conservative government originally introduced a version of the bill in late 2023. As we noted in 2024, the bill’s passage was derailed by the snap general election in May of that year. The new Labour government, under Prime Minister Sir Keir Starmer, revived the reforms, with Lord Ponsonby sponsoring the bill in the House of Lords.
Following its passage through the Lords in November 2024 and the House of Commons earlier this month, the bill received Royal Assent, cementing it as law. The Act applies to any English-seated arbitrations commenced from today onward.
Key Reforms: Targeted and Pragmatic Changes
The Act introduces incremental refinements to the Arbitration Act 1996, among the most notable reforms are:
1. Governing Law of Arbitration Agreements
A new default rule states that arbitration agreements will be governed by the law of the seat, unless the parties expressly agree otherwise. This reform aims to resolve ambiguity stemming from Enka v Chubb (2020) (as previously explained in more detail) and aligns with global best practices.
In simple terms this change will resolve an issue which we have encountered in practice, where the governing law of the underlying contract is not of a pro-arbitration jurisdiction, no express choice of law governing the arbitration agreement has been made, but the seat of the arbitration is in England and Wales. Now, there is no chance of such an arrangement leading to problems invoking arbitration.
One of the few amendments made during the bill’s parliamentary journey, which we commented on at the time, is a carve-out for investor-state arbitration agreements. That amendment has survived into the final legislation. Investment treaty arbitrations will not be subject to the default governing law rule.
2. Arbitrators’ Duty of Disclosure
A second substantive change, reflecting the UK Supreme Court’s decision in Halliburton v Chubb, arbitrators now have a statutory duty to disclose any circumstances that might reasonably give rise to justifiable doubts about their impartiality. This codification enhances transparency and builds confidence in the integrity of the arbitral process.
3. Expanded Arbitrator Immunity
The Act extends arbitrators’ immunity to resignations, provided they are not unreasonable. This change aims to prevent tactical challenges and encourage arbitrators to act without fear of undue litigation risks.
4. Power to Summarily Dismiss Unmeritorious Claims
Arbitrators now have an explicit statutory power to summarily dismiss claims with no real prospect of success. Although tribunals had implicit authority to do so under the 1996 Act, enshrining it in law will encourage more frequent and effective use, improving efficiency.
5. Emergency Arbitration and Court Powers Over Third Parties
The Act clarifies that English courts have the power to make supportive orders in emergency arbitration proceedings and explicitly extends the scope of those orders to third parties, increasing the effectiveness of emergency relief mechanisms.
6. Streamlined Jurisdiction Challenges (Section 67 Reforms)
Parties challenging arbitral jurisdiction under Section 67 of the 1996 Act can no longer raise new grounds or submit fresh evidence unless necessary in the interests of justice. This change aims to prevent abusive litigation tactics and reduce court intervention in arbitration.
Proskauer’s view
The UK arbitration community has overwhelmingly welcomed the Act, emphasizing its pragmatic refinements rather than a radical overhaul. However, not all voices are entirely satisfied. Some commentators noted that it is a shame that the Act remains silent on confidentiality, despite prior discussions by the Law Commission on introducing an explicit duty of confidentiality in arbitration.
In our view, the Arbitration Act 2025 represents a measured, well-targeted update to English arbitration law. It has fine tuned the existing framework rather than overhauling it and has clarified issues that we have encountered for clients.
We will blog soon with a comparison of the UK changes as against the French proposal to reform its 14-year old arbitration act, which is expected to be issued by decree before the Summer 2025.