WHEN GOOGLE FOLLOWS YOU TO THE DMV: Where Consent Gets Lost in the Traffic
Happy CIPA Sunday! What feels like a routine online interaction with your state could be something else entirely. Imagine for a moment that you’re renewing your disability parking placard online. It’s another government form to fill out from the comfort of your home. You input your personal information, including sensitive details about your disability, and click submit. You don’t realize that an invisible digital hand may reach through your screen (figuratively speaking), quietly collecting your most sensitive personal information. Isn’t that a scary thought? This isn’t the plot of the new season of Black Mirror (or is it?); it’s the allegation at the center of Wilson v. Google L.L.C., No. 24-cv-03176-EKL, 2025 U.S. Dist. LEXIS 55629 (N.D. Cal. Mar. 25, 2025).
Here, Plaintiff was just trying to renew her disability parking placard through California’s “MyDMV” portal when she allegedly fell victim to what her lawsuit describes as Google’s secret data collection. According to the Opinion, Plaintiff provided the DMV with her personal information, including disability information,” only to later discover that Google secretly used Google Analytics and DoubleClick embedded on the DMV’s website when she renewed her disability parking placard to collect her personal information unlawfully. Like millions of Americans, Plaintiff trusted that her interaction with a government agency would remain private. This information, Plaintiff alleges, was then used to generate revenue for its advertising and marketing business. If proven true, Google essentially eavesdropped on what should have been a private interaction between a citizen and her state government.
The following legal issues reveal the complex landscape of privacy law in America. Pliantiff’s lawsuit hinges on two critical privacy laws. First, the Driver’s Privacy Protection Act (“DPPA”) is a federal law designed to prevent unauthorized disclosure of personal information from DMV records. Second, the California Invasion of Privacy Act (“CIPA”) protects against “the substantive intrusion that occurs when private communications are intercepted by someone who does not have the right to access them.” Campbell v. Facebook, Inc., 951 F.3d 1106, 1118 (9th Cir. 2020). Initially, these laws weren’t crafted with the advancement of digital technology in mind. However, they’re now legal shields designed for a different era and being tested against surveillance technologies. Together, these laws create a safety net meant to protect our personal information, but are they strong enough to catch Big Tech’s increasingly sophisticated data collection methods?
Google’s defense strategy is smart and calculated to exploit procedural technicalities rather than addressing the fundamental privacy questions at stake. Their first move was to argue that the California DMV was a “required party” under Fed. R. Civ. P. 19. They asserted the entire case should be dismissed since the DMV couldn’t be joined (due to sovereign immunity). It’s a clever technical legal argument that, had it succeeded, could have created a precedent for tech companies to evade privacy lawsuits involving government websites. Judge Eumi K. Lee wasn’t buying it, though. She rejected Google’s argument, finding that dismissing Plaintiff’s claims outright “would be draconian, particularly because Plaintiff seeks other relief too—including damages.” Wilson, 2025 U.S. Dist. LEXIS 55629, at *7. The Court rightfully distinguished the case from Downing v. Globe Direct L.L.C., 806 F. Supp. 2d 461 (D. Mass. 2011), noting that, unlike in Downing, where a vendor was explicitly contracted to include advertising, Plaintiff had alleged that Google encourages website operators—including the DMV—to use Google’s tools to obtain personal information that Google uses for its own advertising business.
Conversely, regarding Plaintiff’s DPPA claim, Google had more success. The Court focused on a technical but crucial question: Did Google obtain Plaintiff’s personal information from a motor vehicle record? The Ninth Circuit had previously ruled in Andrews v. Sirius XM Radio Inc. that the DPPA does not apply when “the initial source of personal information is a record in the possession of an individual, rather than a state DMV.” Andrews v. Sirius XM Radio Inc., 932 F.3d 1253, 1260 (9th Cir. 2019). With this in mind, Judge Lee determined that because “the personal information that was allegedly transmitted to Google came from Plaintiff, it was not from a motor vehicle record.” Wilson, 2025 U.S. Dist. LEXIS 55629, at *11. This distinction creates a troubling loophole in privacy protection. Your data is protected when it sits in a DMV database, but it loses that protection when you’re transmitting it to the DMV. This is a seemingly minor distinction. Whether data was pulled from a DMV database or intercepted while being entered by a user made all the difference for Plaintiff’s DPPA claim, which was dismissed with leave to amend.
Isn’t this getting spicy? But here’s where the plot thickens. While Plaintiff’s DPPA claim stumbled, her state law claim under CIPA survived Google’s dismissal motion. Google had asserted it couldn’t be liable under CIPA because it was merely acting as a “vendor” for the DMV—an extension of the government website rather than a third-party eavesdropper. This is a fantastic assertion by Google’s defense team. Think of it as Google claiming to be the DMV’s trusted assistant rather than an uninvited guest at a private conversation. However, Judge Lee rejected this defense, noting that Plaintiff had sufficiently alleged that “Google intercepted and used her personal information for its own advertising services” and thus “did not act solely as an extension of the DMV.” Id. at *13. The Court further found that Plaintiff had adequately alleged Google acted “willfully” by detailing how Google “specifically designed” its tracking tools to gather information and “intentionally encourages” website operators to use its tools in ways that circumvent users’ privacy settings. Id. at *14. That kind of intentionality matters when pleading willfulness under CIPA.
In Google’s defense, Google tried to shield itself behind its terms of service, which allegedly prohibited websites from sharing personally identifiable information with Google. But Judge Lee noted that assertion created “a question of fact” that couldn’t be resolved at the pleading stage. Id. at *15. With this observation, the Court relied on Smith v. Google LLC, explaining that while “Google argues that judicially noticeable policy documents suggest that Google did not actually want to receive personally identifiable information and expressly prohibited developers from transmitting such data, this presents a question of fact that the Court cannot resolve at this stage.” Id. (quoting Smith v. Google, L.L.C., 735 F. Supp. 3d 1188, 1198 (N.D. Cal. 2024)). As a result, the message is clear…fine print in terms of service won’t necessarily provide legal cover for actual data collection practices if it occurs.
This case feels like déjà vu for privacy advocates because we’ve seen this before. Similar allegations were raised against LinkedIn in Jackson v. LinkedIn Corp., 744 F. Supp. 3d 986 (N.D. Cal. 2024). The parallels between these two cases are vastly similar, involving allegations that tech giants are harvesting sensitive data from DMV websites. Google even tried to use these similarities against Plaintiff, characterizing her allegations as “entirely boilerplate” and “almost identical to the same allegations” asserted against LinkedIn in the Jackson case. Wilson, 2025 U.S. Dist. LEXIS 55629, at *15. However, the Court rejected this argument too, noting that the similarity between the complaints does not render Plaintiff’s allegations conclusory, especially given that both cases challenge similar alleged conduct by two different advertising companies. Google tried to compare Byars v. Hot Topic, Inc., 656 F. Supp. 3d 1051 (C.D. Cal. 2023), where the Court criticized “copy-and-paste” privacy complaints filed in bulk. However, Judge Lee pushed back, emphasizing that, unlike in Byars, Plaintiff’s Complaint here includes “at least 48 paragraphs of detailed allegations specific to Google” and cannot be dismissed as generic boilerplate. Wilson, 2025 U.S. Dist. LEXIS 55629, at *16.
So what’s the takeaway? When you enter personal information into a government site, like renewing your vehicle registration or applying for a disability placard, it feels like a private exchange. But behind the screen, third-party tools might be collecting your data. It sounds like Black Mirror, but it’s essentially happening. It’s as if you’re filling out a paper form at the DMV counter, only to discover that a marketing executive is peering over your shoulder, taking notes on your personal information. The legal distinction between information stored in a government database and information you’re actively entering may seem arbitrary from a privacy perspective. But it creates a significant gap in legal protection.
As the case progresses, Plaintiff has been granted leave to amend her DPPA claim, and her CIPA claim will proceed. This case reminds us that data privacy isn’t just about keeping private things—well… private—it’s about controlling who knows what about us and how that information is used. With every click and keystroke, who else might be watching as you type?
As always,
Keep it legal, keep it smart, and stay ahead of the game.
Talk soon!
D.C. Circuit Rules Trump Can Remove Independent Agency Members Without Cause
On March 28, 2025, the U.S. Court of Appeals for the District of Columbia Circuit ruled that President Donald Trump likely has the authority to remove National Labor Relations Board (NLRB) member Gwynne Wilcox and Merit Systems Protections Board (MSPB) member Cathy Harris without cause.
Quick Hits
The D.C. Circuit Court ruled that President Trump likely has the authority to remove NLRB member Gwynne Wilcox and MSPB member Cathy Harris without cause, staying previous reinstatement orders from lower courts.
The ruling leaves the NLRB and MSPB without enough members to hear cases.
The decision addresses significant constitutional questions regarding the president’s power to remove members of independent agencies, boards, and commissions and Congress’s authority to restrict removal.
In a split decision, the D.C. Circuit stayed two rulings by federal district courts in Washington, D.C., that had reinstated NLRB member Wilcox and MSPB member Harris to their respective independent agencies. President Trump had removed Wilcox and Harris, both democratic appointees, earlier this year, leading them to file legal challenges.
Writing separate concurring opinions, Circuit Judges Justin R. Walker and Karen LeCraft Henderson found that the government was likely to succeed on the merits that the president, as the head of the executive branch, has the authority to remove members of both the NLRB and MSPB because the agencies wield “substantial executive power.”
“The forcible reinstatement of a presidentially removed principal officer disenfranchises voters by hampering the President’s ability to govern during the four short years the people have assigned him the solemn duty of leading the executive branch,” Judge Walker wrote in his concurring opinion.
While Judge Henderson agreed “with many of the general principles in Judge Walker’s opinion about the contours of presidential power under Article II of the Constitution,” she concluded “the government’s likelihood of success on the merits [was] a slightly closer call.” Additionally, she emphasized that the government had clearly shown that it would face irreparable harm if the stays were not issued.
The stays prevent Wilcox and Harris from serving as members of the NLRB and MSPB, leaving each of their agencies without a quorum to hear cases. The NLRB is a five-member board created by the National Labor Relations Act that enforces labor law through representation and unfair labor practice cases. The MSPB is a three-member bipartisan board adjudicating personnel and merit systems issues involving federal employees.
Circuit Judge Patricia Millett, issued a separate dissenting opinion sharply criticizing the appeals court for granting the stays and stripping the agencies of their quora that the district court orders had maintained, “leav[ing] languishing hundreds of unresolved legal claims.”
The Wilcox and Harris cases have raised fundamental constitutional and separation of powers questions over the president’s authority to remove members of independent agencies, boards, and commissions and Congress’s authority to restrict removal. The Trump administration has argued that provisions limiting the president’s removal power are unconstitutional and infringe the president’s authority as the executive.
However, a 1935 decision by the Supreme Court of the United States, in Humphrey’s Executor v. United States, upheld restrictions on the president’s authority to remove officers of certain types of independent agencies—in that case, a commissioner of the Federal Trade Commission.
Next Steps
The D.C. Circuit’s ruling supports the president’s ability to remove the governing members of independent agencies without cause, allowing President Trump to move forward with efforts to reshape the NLRB and other agencies. However, the stays are not a final decision, and the litigation remains ongoing. Given the significant constitutional issues, the case could ultimately be resolved by the Supreme Court.
Beltway Buzz, March 28, 2025
The Beltway Buzz™ is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
FMCS Cuts Staff Dramatically. Following through on President Donald Trump’s executive order, “Continuing the Reduction of the Federal Bureaucracy,” which we recently examined here at the Buzz, this week, the administration all but shut down the Federal Mediation and Conciliation Service (FMCS). FMCS is an independent agency established by the U.S. Congress in the Taft-Hartley Act of 1947 “to prevent or minimize interruptions of the free flow of commerce growing out of labor disputes, to assist parties to labor disputes in industries affecting commerce to settle such disputes through conciliation and mediation.” FMCS will reportedly retain approximately 15 employees—down from the 220 employees it maintained in 2024.
Personnel News. There were significant developments this week on the agency personnel front as President Trump seeks to install his political appointees at executive branch agencies. For example:
NLRB. Today, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit, in a 2–1 decision, ruled that President Trump was permitted to remove Gwynne Wilcox, a President Biden–appointed member of the National Labor Relations Board (NLRB), whose five-year term expires on August 27, 2028. A lower-court judge had issued a decision preventing the president from removing Wilcox without cause, but today’s appellate court ruling lifts the injunction while the litigation proceeds. The case will likely reach the Supreme Court of the United States.
EEOC. President Trump nominated Andrea Lucas, currently the acting chair of the U.S. Equal Employment Opportunity Commission (EEOC), to another five-year term on the Commission. Lucas has served as a commissioner since 2020, and her current term will expire on July 1, 2025. The Commission currently consists of Lucas and Democratic Commissioner Kalpana Kotagal, with three vacancies.
OFCCP Director. President Trump appointed management-side attorney Catherine Eschbach to serve as the director of the Office of Federal Contract Compliance Programs (OFCCP). The position does not need Senate confirmation, so Eschbach will immediately replace Acting Director Michael Schloss. With the revocation of Executive Order (EO) 11246, OFCCP now only enforces affirmative action and discrimination laws related to veterans and workers with disabilities. According to some media reports, Eschbach will lead the effort at OFCCP to review already-submitted affirmative action plans for potential discrimination. Lauren B. Hicks and T. Scott Kelly have the details.
Workplace Safety Commissions. President Trump nominated Jonathan Snare to serve on the Occupational Safety and Health Review Commission. Snare was recently appointed deputy solicitor of labor and served in various positions within the DOL from 2003 to 2009. Additionally, the president nominated Marco Rajkovich Jr. to serve on the Federal Mine Safety and Health Review Commission (FMSHRC). Rajkovich chaired the FMSHRC during President Trump’s first term.
DOL Office of Disability Employment Policy. Julie Hocker has been nominated to serve as assistant secretary for disability employment policy at the DOL. Hocker previously served as commissioner of the Administration on Disabilities within the U.S. Department of Health and Human Services.
Republican Committee Chair Outlines Suggested Policy Priorities for New Secretary of Labor. Late last week, the Republican chairman of the House Committee on Education and the Workforce, Representative Tim Walberg (MI), sent a letter to Secretary of Labor Lori Chavez-DeRemer, outlining policy issues that the committee believes are ripe for action by the new secretary. The letter specifically recommends the withdrawal or rescission of several regulatory actions issued by the Biden administration, such as:
The Wage and Hour Division’s (WHD) final rules on overtime, independent contractors, tipped workers, and Davis-Bacon regulation, among others. Also singled out is the WHD’s proposed rule eliminating the subminimum wage for workers with disabilities (Rep. Walberg underscored the importance of withdrawal of this proposal in a separate letter sent this week).
The Occupational Safety and Health Administration’s (OSHA) final walkaround regulation and electronic injury and illness recordkeeping rule, as well as proposed rules relating to excessive heat in the workplace and emergency response.
Representative Walberg also encouraged “DOL to enforce its laws while providing robust compliance assistance to workers and businesses instead of continuing the enforcement-only approach taken by the Biden-Harris administration.” The administration’s first regulatory agenda will provide a roadmap of agency priorities when it is issued in June or July this summer.
House Committee Examines Opportunities to Amend FLSA. On March 25, 2025, the U.S. House of Representatives Committee on Education and the Workforce’s Subcommittee on Workforce Protections held a hearing entitled, “The Future of Wage Laws: Assessing the FLSA’s Effectiveness, Challenges, and Opportunities.” The hearing focused on ambiguous and outdated provisions in the Fair Labor Standards Act (FLSA) and how they could be updated for the modern economy and workforce. For example, legislators and witnesses discussed legislative options to simplify the calculation of an employee’s “regular rate” for purposes of calculating overtime pay as well as a familiar bill that would allow employees to choose paid time off or “comp time” instead of cash wages as compensation for working overtime hours. Witnesses also advocated for passage of both the Modern Worker Empowerment Act and Modern Worker Security Act, as well as the readoption of the Payroll Audit Independent Determination (PAID) program, a pilot program the DOL launched during the first Trump administration that allowed employers to self-report federal minimum wage and overtime violations, but terminated in January 2021, soon after former President Joe Biden came into office.
CHNV Parole Programs Terminated. On March 25, 2025, the U.S. Department of Homeland Security (DHS) published a notice terminating the parole programs for individuals from Cuba, Haiti, Nicaragua, and Venezuela (“CHNV parole programs”), “unless the Secretary [of Homeland Security] makes an individual determination to the contrary.” Individuals whose parole is terminated must leave the United States by April 24, 2025. According to the notice, the DHS estimates that 532,000 people have entered the country through these parole programs. Among other reasons for terminating the parole programs, the DHS concluded that they “exacerbated challenges associated with interior enforcement of the immigration laws.” Individuals from these countries who have Temporary Protected Status, as well as individuals residing in the United States pursuant to parole programs relating to Ukraine and Afghanistan, are not impacted by the notice. Evan B. Gordon, Daniel J. Ruemenapp, and Hera S. Arsen have the details.
One Person, One Vote. On March 26, 1962, the Supreme Court of the United States issued its pivotal decision in Baker v. Carr, which changed the process by which our political representatives are chosen. The issue concerned the drawing of legislative districts in Tennessee. At the time of the initial legal challenge, the population of urban districts had dramatically increased compared to rural districts. Plaintiff Charles Baker argued that by not redrawing or reapportioning the districts, Tennessee violated the Equal Protection clause of the U.S. Constitution because citizens in rural districts were overrepresented compared to those in the more populated urban districts. The case was initially dismissed as a “political question,” but the Supreme Court reversed, holding that apportionment of state legislatures is a justiciable matter. The decision in Baker v. Carr opened the door for a series of legislative malapportionment cases decided by the Supreme Court in the 1960s and formed the basis for the “one person, one vote” principle. But not everything about the case turned out great. The deliberations among the Supreme Court justices were so intense and exhausting that Justice Charles Evans Whittaker suffered a nervous breakdown and had to recuse himself from the case.
What are the Odds that FanDuelDraftKingsBet365 Can Save Tax-Exempt Bonds?
A document leaked earlier this year and attributed to the House Ways and Means Committee included the repeal of tax-exempt bonds[1] as a source of revenue to help defray the cost of extending the provisions of the Tax Cuts and Jobs Act that otherwise will expire at the end of 2025. Apoplexy ensued.
This consternation is fueled by the notion that Congress has the untrammeled authority to prevent states, and the political subdivisions thereof, from issuing obligations the interest on which is excluded from gross income for federal income tax purposes. This notion appears to ignore a line of precedent that culminated in making Bet365, DraftKings, FanDuel, et al. indistinguishably omnipresent.
Curious? Read on after the break.
The concern that Congress has the unfettered right to proscribe the issuance of all tax-exempt bonds emanates from the U.S. Supreme Court’s (the “Court”) decision in South Carolina v. Baker.[2] The Court held in that case that Congress violated neither the principles of intergovernmental tax immunity[3] nor the Tenth Amendment to the U.S. Constitution by enacting a prohibition against the issuance of tax-exempt bearer bonds.
The portion of the Court’s opinion pertaining to the Tenth Amendment cited Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985), for the proposition that the political process establishes the limitations under the Tenth Amendment on Congressional authority to regulate the activities of the states and their political subdivisions. Under this formulation of Tenth Amendment jurisprudence, the courts do not define spheres of Congressional conduct that pass or fail constitutional muster. The Court concluded that the political process functioned properly in this instance and did not fail to afford adequate protection under the Tenth Amendment to South Carolina.
The Court also rejected the contention that Congress had, in violation of the Tenth Amendment, commandeered the South Carolina legislature by prohibiting the issuance of tax-exempt bearer bonds and questioned whether the concept of anti-commandeering originally contained in FERC v. Mississippi, 456 U.S. 742 (1982), survived the Court’s decision in Garcia.
Aside from the portion that dealt with the Tenth Amendment, Justice Antonin Scalia joined the opinion of the Court, and Chief Justice William Rehnquist concurred in the Court’s judgment but did not join the Court’s opinion. In the view of Justices Rehnquist and Scalia, the Court should have upheld the prohibition against the issuance of tax-exempt bearer bonds because it had a de minimis effect on state and local governments, which would have ended the analysis under the Tenth Amendment. They asserted that the Court’s opinion regarding the Tenth Amendment mischaracterized the holding of Garcia and unnecessarily cast doubt on whether the Tenth Amendment prohibits Congress from dictating orders to the states and their political subdivisions.
Justice Sandra Day O’Connor dissented and stated that “the Tenth Amendment and principles of federalism inherent in the Constitution prohibit Congress from taxing or threatening to tax the interest paid on state and municipal bonds.” In Justice O’Connor’s view, the prohibition against the issuance of tax-exempt bearer bonds intruded on state sovereignty in contravention of the Tenth Amendment and the structure of the Constitution. This incursion would have negative effects on state and local governmental budgets and activities – effects she said that would only metastasize as Congress enacted further restrictions on the issuance of tax-exempt obligations, including, potentially, the elimination of such obligations.[4]
Four years later, when confronted anew with an anti-commandeering question in New York v. United States,[5] the Court demonstrated that it was receptive to the argument that the protection of state prerogatives under the Tenth Amendment is not limited to the political process. The Court held that Congress cannot compel a state government to take title to radioactive waste or, alternatively, assume liability for such waste generated within the state’s borders, because the Tenth Amendment forbids the issuance of orders by the federal government to the various state governments to carry out regulatory schemes adopted by the federal government.
In her opinion for the Court in New York, Justice O’Connor developed the themes articulated in her dissent in Baker. Namely, the Tenth Amendment was ratified to ensure that the federal government adhered to the federalist structure devised by the Constitution, a structure that contrasted starkly with the Articles of Confederation that the Constitution replaced. Under the Articles of Confederation, the federal government had limited, if any, power to govern the citizens of the various states. Instead, the Articles of Confederation constrained the federal government to acting upon the state governments, and state governments were the sole sovereign with respect to their citizens. Under this constraint, the federal government could not tax the citizens; it could only issue requisitions to the state governments to raise funds.
The federal government at that time did not possess the wherewithal to enforce the dictates and requisitions it had imposed upon the states. As a result, the United States was hardly a cohesive whole. The Constitution was ratified to create a more robust federal government and, thus, a truly unified United States. Under the Constitution, the federal government may use the powers conferred upon it to directly govern the citizens. Justice O’Connor observed that the Tenth Amendment guarantees adherence to the Constitutional structure, because it prohibits the federal government from issuing orders, dictates, and requisitions to the state governments, as the federal government could do under the Articles of Confederation.
The Court applied the foregoing rationale to hold in Printz v. United States[6] that the Tenth Amendment precludes the federal government from commandeering state officials to carry out a federal regulatory program. The Court once again followed this rationale when it held in Murphy v. National Collegiate Athletic Association[7] that, where Congress had not prohibited sports gambling throughout the United States, the Tenth Amendment barred Congress from preventing a state legislature from enacting laws that permit sports gambling within the state. As a result of Murphy, 39 states now allow sports gambling, and the FanDuelDraftKingsBet365 Borg has relentlessly endeavored to assimilate us.
This durable line of Tenth Amendment precedent should give one pause before concluding that Congress can completely repeal the ability of state and local governments to issue tax-exempt bonds. As noted above, a complete repeal of tax-exempt bonds is projected to generate $364 billion in revenue to the federal government over a 10-year period. Under New York, Printz, and Murphy, Congress clearly cannot issue a requisition to the states seeking remittance of $364 billion to help finance a federal income tax cut. The elimination of tax-exempt bonds is the economic equivalent of such a requisition by the federal government to the states and their political subdivisions. State and local governments will be required to pay bondholders higher, taxable interest rates on debt obligations that they issue.[8] If the projections noted above are accurate, $364 billion of this increased interest paid by state and local governments will be remitted by the bondholders to the federal government.[9]
Does the Tenth Amendment allow the federal government to impose an indirect requisition on state and local governments that the federal government cannot issue directly? Does the legal incidence of the tax on the bondholders suffice to avoid the anti-commandeering principle developed by New York, Printz, and Murphy? If it does, would the Court distinguish its holding in Baker on the basis that prohibiting the issuance of tax-exempt bearer bonds has a trivial effect on state and local governmental sovereignty, while a full elimination has a much more profound effect? If Congress eliminates tax-exempt bonds, will one or more states invoke the right of original jurisdiction[10] to present these questions directly to the U.S. Supreme Court?
With all this on the table, it might be a bad bet to conclude that Congress can parlay the elimination of tax-exempt bonds into a revenue offset to help pay for a federal tax cut.
[1] The document scored the repeal of tax-exempt bonds as raising $250 billion over 10 years and the repeal of “private activity bonds” as generating $114 billion over the same timeframe. The reference in that document to “private activity bonds” means “qualified bonds” under Section 141(e) of the Internal Revenue Code of 1986, as amended. Qualified bonds are private activity bonds that would, absent legislative enactment by Congress, constitute taxable bonds. Some common examples of qualified bonds include qualified 501(c)(3) bonds (which are frequently issued to finance educational, healthcare, and housing facilities owned or operated by 501(c)(3) organizations), exempt facility airport bonds (which are issued to finance improvements to terminals and other airport facilities in which private parties, such as airlines, hold leasehold interests or other special legal entitlements), and exempt facility qualified residential rental project bonds. For ease, references to “tax-exempt bonds” in this post are to both tax-exempt governmental use bonds and tax-exempt qualified bonds.
[2] 485 U.S. 505 (1988).
[3] In so holding, the Court overruled Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429 (1895). The Court in Pollock espoused the doctrine of intergovernmental tax immunity to conclude that the federal government lacks the authority under the U.S. Constitution to tax the interest on obligations issued by state or local governments.
[4] Justice O’Connor was quite prescient.
[5] 505 U.S. 144 (1992).
[6] 521 U.S. 898 (1997).
[7] 584 U.S. 453 (2018).
[8] The Public Finance Network estimates that the repeal of tax-exempt bonds will raise borrowing costs for state and local governments by $823.92 billion between 2026 and 2035, which will result in a state and local tax increase of $6,555 per each American household.
[9] It should be noted that taxing the interest paid on state and local debt does not, as some claim, result in an economic charge imposed on the wealthy. As an initial matter, retirees and others of more modest means hold a significant amount of currently outstanding tax-exempt bonds, because they want to allocate a portion of their savings to a secure investment. Assuming arguendo that tax-exempt bondholders tend to be wealthier, they will be compensated for the tax in the form of increased interest rates. They will suffer no economic detriment because their after-tax return on taxable state and local bonds will equal the return available on tax-exempt bonds. State and local governments will, however, need to raise taxes or limit governmental services so that they can pay the higher interest rates demanded on taxable obligations. Less wealthy constituents will bear the brunt of this. The less wealthy tend to be the recipients of more governmental services than the wealthy. Moreover, the less wealthy devote a larger share of their income to the payment of sales tax (the form of taxation on which state and local governments increasingly rely) than is the case with wealthier constituents. Consumption taxes, such as sales taxes, are by their nature regressive, because the less wealthy spend a greater percentage of their income than do the wealthy, who can save a larger share of their income. These savings are not subjected to a consumption tax.
[10] U.S. Const. Art. III, Sec. 2.
NLRB Firing Decision Stayed; Board to Stay Without a Quorum
On March 28, 2025, the United States District Court of Appeals for the D.C. Circuit stayed the District Court’s order reinstating former National Labor Relations Board (“NLRB” or “Board”) Member Gwynne A. Wilcox. The Board is again left without a quorum, which, under the National Labor Relations Act (“NLRA” or the “Act”), requires at least three members. See New Process Steel, L.P. v. NLRB, 560 U.S. 674 (2010).
As reported here, on March 6, 2025, a D.C. federal judge had reinstated Member Wilcox, finding that President Trump’s unprecedented firing violated Section 3(a) of the NLRA, which states that, “[a]ny member of the Board may be removed by the President, upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.” 29 U.S.C. 153(a).
The D.C. Circuit did not include a majority opinion with its order, which simply indicated that “the emergency motions for stay be granted.” Instead, the Court attached two concurring opinions (by Judge Justin Walker and Judge Karen Henderson, respectively) and one dissenting opinion (by Judge Patricia Millett).
The opinions focused on the constitutionality of Section 3(a)’s removal protections, grappling with Seila Law LLC v. Consumer Financial Protection Bureau, 591 U.S. 197 (2020), Collins v. Yellen, 594 U.S. 220 (2021), and Humphrey’s Executor v. United States, 295 U.S. 602 (1935), to determine whether the NLRB exercises sufficient “executive power,” such that it might not be covered by the Humphrey’s Executor exception to presidential removal. As referenced here, that decision affirmed Congress’ power to limit the president’s ability to remove officers of independent administrative agencies created by legislation.
As Judge Henderson indicated in her concurrence, the “continuing vitality” of Humphrey’s Executor might be in doubt after Seila and Collins, and the Trump administration will likely seek to overturn the decision through the Wilcox appeal. In the interim, and possibly until the Supreme Court rules on this issue, the Board will remain without a quorum. As reported here, while the NLRB indicated that it will function to the extent possible absent a quorum, employers can expect Board processes to move slowly and resolution of matters pending to be delayed.
We will continue to track the Wilcox litigation and its impact upon the NLRB.
D.C. Federal Court Judge Blocks Efforts to Dismantle the CFPB
On Friday, Judge Amy Jackson of the United States District Court for the District of Columbia granted a preliminary injunction sought by the National Treasury Employees Union, over efforts by Acting Director Russell Vought to shutter the agency. The union, which represents the Bureau’s employees, had sought an injunction that would have stopped Vought from eliminating jobs and contracts at the agency, and protect key CFPB functions from being shut down while the litigation was in progress.
In her opinion, Judge Jackson stated that the union had made a convincing case for emergency relief. She noted that the “defendants were fully engaged in a hurried effort to dismantle and disable the agency entirely – firing all probationary and term-limited employees without cause, cutting off funding, terminating contracts, closing all of the offices, and implementing a reduction in force that would cover everyone else.” She stated that “[t]hese actions were taken in complete disregard for the decision Congress made 15 years ago, which was spurred by the devastating financial crisis of 2008 and embodied in the United States Code, that the agency must exist and that it must perform specific functions to protect the borrowing public.” She concluded that if the defendants were not enjoined, “they will eliminate the agency before the Court has the opportunity to decide whether the law permits them to do it, and as the defendants’ own witness warned, the harm will be irreparable.”
The preliminary injunction bars Vought from deleting agency records, firing employees without cause or seeking to “achieve the outcome of a work stoppage.”
Putting It Into Practice: The decision is a major win for CFPB employees and their union. Many employees fired by the Acting Director were put back on the CFPB’s payroll earlier this month, under a temporary restraining order issued in a separate Maryland court case brought by the City of Baltimore (see our discussion here). Judge Jackson’s preliminary injunction seems to require the rehiring of the remainder. We will continue to monitor this case for new developments.
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Illinois Federal Judge Blocks DOL From Enforcing Termination, Certification Provisions in Trump DEI-Related EOs
On March 27, 2025, a federal judge for the U.S. District Court for the Northern District of Illinois temporarily blocked the U.S. Department of Labor (DOL) from enforcing portions of two provisions in President Donald Trump’s diversity, equity, and inclusion (DEI)-related executive orders (EO).
Quick Hits
A federal judge in Illinois issued a temporary restraining order blocking the DOL from enforcing certain provisions in two executive orders aimed at eliminating “illegal” DEI programs.
The judge found certain provisions are coercive and undefined, likely violating the First Amendment.
The ruling comes amid multiple ongoing legal challenges related to DEI initiatives.
U.S. District Judge Matthew F. Kennelly issued a temporary restraining order (TRO) prohibiting the DOL from enforcing a “termination provision” that requires federal agencies to terminate grants or contracts with organizations that promote DEI and a “certification provision” that requires grant recipients to certify under the False Claims Act (FCA) that they do not have DEI or diversity, equity, inclusion, and accessibility (DEIA) programs.
The judge found that the termination and certification provisions in President Trump’s EO 14151 and EO 14173 are likely to violate the First Amendment of the U.S. Constitution and cause irreparable harm to the plaintiff, the Chicago Women in Trades (CWIT), a nonprofit group that helps prepare women to earn jobs in the trades.
Judge Kennelly said that the termination provision was “coercive” and could suppress disfavored speech because its vagueness created a chilling effect on CWIT’s activities.
“Here, the government is not selectively funding some programs, but not others; it is indicating an entire area of programming that is disfavored as ‘immoral’ (as well as illegal) and threatening the termination of funding unless grantees bring their conduct into line with the government’s policy agenda,” Judge Kennelly wrote in the decision.
The judge further found the certification provision, which requires grant recipients to certify they do not operate any DEI programs that “violate any applicable Federal antidiscrimination laws,” is problematic because the EO does not clearly define what constitutes “illegal” DEI activities and because its references to “programs promoting DEI” targets constitutionally protected speech there is a likely a First Amendment violation.
Notably, the court limited its ruling on the termination provision only to the plaintiff, CWIT, rather than issuing a nationwide injunction. However, the certification provision does apply nationwide but only to those being issued by the DOL and not all federal agencies.
The ruling comes just less than two weeks after the U.S. Court of Appeals for the Fourth Circuit, in a similar lawsuit, granted the government’s request to stay a nationwide preliminary injunction that had blocked the termination and certification provisions and a provision directing the attorney general to enforce civil rights laws against DEI programs in the private sector.
Following the Fourth Circuit’s stay of the nationwide preliminary injunction, CWIT sought an immediate TRO in its lawsuit. The group argued the stay created renewed urgency to stop the DOL from cutting its federal funding unless it “cease[s] all diversity, equity, inclusion and accessibility activities” and “scrub[s] all diversity, equity, and inclusion initiatives and related language from its programming.”
In addition to the CWIT case and the Maryland case, which is led by the National Association of Diversity Officers in Higher Education, civil rights groups led by the National Urban League have filed another legal challenge in the U.S. District Court for the District of Columbia. The groups are also seeking to block several provisions of EO 14151 and EO 14173, in addition to EO 14168, which defines sex as binary for purposes of federal policy. The D.C. court held a hearing on the group’s motion for preliminary injunction on March 19, 2025.
Next Steps
The TRO in the CWIT case is limited to the DOL, but its reasoning suggests that the judge may issue a broader preliminary injunction. The DEI-related EOs have created uncertainty for employers over what types of programs the government will consider to be “illegal” DEI programs and sparked several legal challenges. Inconsistent rulings in the federal courts have added to the uncertainty, and the possibility remains that the cases or issue of whether the DEI-related EOs are constitutional could ultimately land before the Supreme Court of the United States. The outcome of the cases will have far-reaching implications for employers and the promotion of programs meant to foster diversity in the workforce.
Nondelegation and Environmental Law
Earlier this week, the Supreme Court held oral argument in Federal Communications Commission v. Consumers’ Research.1 The case addresses the Federal Communications Commission’s Universal Service Fund programs aimed at providing funding to connect certain customers with telecommunications services. The challengers contend that Congress ran afoul of the nondelegation doctrine in authorizing the FCC to setup the Universal Service Fund programs and that these programs are therefore unlawful.
Although that issue might appear far removed from issues of environmental law, the case could have significant ramifications and could curtail Congress’s ability to authorize federal administrative agencies to issue binding regulations. That curtailment could reach to congressional enactments that authorize the Environmental Protection Agency to promulgate regulations in a variety of areas, including several major environmental statutes like the Clean Air Act, the Clean Water Act, and the Safe Drinking Water Act, to name a few.
What is the Nondelegation Doctrine and Why is it Important?
The nondelegation doctrine holds that Congress may not delegate lawmaking (i.e., legislative) authority to executive branch agencies. As some observers have put it, however, the nondelegation doctrine had only one good year, in 1935, when the Supreme Court struck down two federal laws authorizing the executive to take certain actions that were considered legislative in nature. The cases were A.L.A. Schechter Poultry Corp. and Panama Refining Co.
Besides those two cases, the Supreme Court has not struck down any other federal laws on nondelegation grounds. This is because, after 1935, the Supreme Court adopted a relatively permissive test of whether a statute runs afoul of the nondelegation doctrine. The test, referred to as the “intelligible-principle” test, looks to whether Congress has provided the administrative agency with some “intelligible principle” to follow in promulgating regulations pursuant to a congressional enactment.
Applying the intelligible-principle test, the Supreme Court has repeatedly, and over approximately eight decades, upheld congressional delegations of rulemaking power to administrative agencies.
However, in 2019, a dissenting opinion written by Justice Gorsuch in Gundy v. United States, called on the Court to abandon the intelligible-principle test and instead move toward a test where the Agency is not able to make policy decisions and instead is left to a role where it only “fills up the details” or makes factual determinations. Notably, the Gundy dissent was joined by Justices Roberts and Thomas, and Justices Alito and Kavanaugh elsewhere expressed support for the Gundy dissent’s approach. Gundy was also decided before Justice Barrett joined the Court. This has Supreme Court watchers asking whether the Supreme Court might inject more stringency in the nondelegation test in an appropriate case.
Enter Consumers Research. This is the first Supreme Court case to squarely raise nondelegation issues since Gundy. The challengers to the Universal Service Fund program argue that Congress gave the FCC unchecked authority to raise funds to be directed toward the goal of providing universal service from telecommunications services providers. The FCC (and intervenors) respond that the program “passes . . . with flying colors” and fits comfortably within past nondelegation cases because of the numerous restrictions that the statute places on the FCC. If the Supreme Court were to shift course by establishing a more stringent nondelegation test, that could significantly constrain Congress’s ability to delegate rulemaking powers to administrative agencies. Importantly, a more stringent test for nondelegation challenges could also impact numerous existing federal laws. We discuss just a sample of environmental laws that could be affected in the following section.
What Could it Mean for Environmental Law, and You?
One of the most obvious areas where a more stringent delegation test could impact environmental law is in the setting of air and water quality standards.
For example, the Clean Air Act directs the EPA to set air quality standards that apply nationwide. The Clean Air Act provides relatively loose guidance on how the EPA should go about that task, directing the EPA to promulgate standards “requisite to protect the public health” while “allowing an adequate margin of safety.” The Supreme Court upheld that delegation in Whitman v. American Trucking Associations, Inc., but if the Supreme Court were to take a more stringent approach to nondelegation like that in the Gundy dissent, the EPA may not be able to make the decision of what air standard is “requisite to protect the public health” because that could be viewed as a key policy determination and more than “fill[ing] up the details.”
Likewise, in the Clean Water Act, the EPA is also directed to review water quality standards set by individual states, again taking into account a relatively broad instruction from Congress “to protect the public health or welfare, enhance the quality of water and serve the purposes of this chapter” while also considering the waters’ “use and value for public water supplies, propagation of fish and wildlife, recreational purposes, and agricultural, industrial, and other purposes, and . . . their use and value for navigation.” Again, a more stringent nondelegation test could find that these instructions leave the EPA with too much of a policy-making role.
Finally, in the Safe Drinking Water Act, the EPA is directed to set maximum contaminant level goals “at the level at which no known or anticipated adverse effects on the health of persons occur and which allows an adequate margin of safety.” This direction to set a standard is potentially less at risk because it requires more fact finding (i.e., determining “known or anticipated adverse effects on” health), but the requirement to determine an “adequate” safety margin might be deemed to be too close to policymaking.
Although nondelegation challenges to these types of environmental regulations have been raised in the past, they have failed at least in part because of the relaxed intelligible-principle test. The outcome in Consumers’ Research could change that. The Environmental Team at Womble Bond Dickinson are well-suited to evaluate these specific questions of law with you.
Counting Noses in Consumers’ Research
For now, it appears that the current nondelegation test will live to see another day. Only Justices Thomas, Alito, and Gorsuch seemed readily willing to make the test more stringent. The Justices appointed by Democratic presidents (Sotomayor, Kagan, and Jackson) are sure “no” votes. As for the three Justices typically left in the middle, Chief Justice Roberts was unusually quiet during argument, while both Justices Kavanaugh and Barrett pushed back on counsel for Consumers’ Research in numerous instances. Given that the Universal Service Fund program enjoys continuing and broad bipartisan support, this may not be the case where any of the middle three Justices are willing to take on the nondelegation issue, especially after the Court has already issued decisions that reign in administrative agency authority through the major-questions doctrine and by overruling the Chevron deference regime.
Regardless, the Supreme Court’s opinion, which should issue by July 2025, will likely reveal where the Court is headed on nondelegation issues and could signal that a more searching nondelegation test is on the horizon.
1 Brief disclaimer: Michael Miller worked on this case in the earlier stages of litigation before it was brought before the Supreme Court. This update does not share any views on the merits of the case.
PTAB Unveils Updated Practices for Proceedings
The USPTO’s Patent Trial and Appeal Board (PTAB) policy shifts demand and heightens strategic awareness. Clients are reminded that they must continue to align their PTAB and litigation efforts, leveraging timing, venue insights and tailored arguments to maximize their chances of success in this evolved landscape. These recent policy changes by the U.S. Patent and Trademark Office (USPTO) have significantly impacted discretionary denials and briefing procedures in PTAB cases.
Rescission of Prior Guidance on Discretionary Denials
On February 28, 2025, the USPTO rescinded the June 21, 2022, memorandum titled “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation.” This action restores the PTAB’s reliance on precedential decisions such as Apple Inc. v. Fintiv, Inc. and Sotera Wireless, Inc. v. Masimo Corp. for guidance on discretionary denials.
Updated Guidance from Chief Administrative Patent Judge Boalick
Following the rescission, on March 24, 2025, Chief Administrative Patent Judge Scott R. Boalick issued a memorandum providing further direction:
Application Scope: The rescission applies to cases where the PTAB has not issued an institution decision or where a request for rehearing or Director Review is pending. The PTAB will consider timely requests for additional briefing on the rescission’s application on a case-by-case basis.
Fintiv Analysis Adjustments: The PTAB will continue applying the Fintiv factors, with notable clarifications.
ITC Proceedings: The Board is more likely to deny institution if the International Trade Commission’s (ITC) projected final determination date precedes the PTAB’s deadline for a final written decision. Conversely, if the ITC’s determination date is after the PTAB’s deadline, discretionary denial is less likely.
Sotera Stipulations: A timely filed Sotera stipulation remains highly relevant but is not dispositive in the discretionary denial analysis.
Merits of the Petition: The strength of the inter partes review (IPR) challenge’s merits will be evaluated within the Fintiv analysis but will not be solely determinative.
PTAB’s New Interim Workload Management Processes and Potential Budget Implications
On March 26, 2025, the USPTO introduces short-term strategies for the PTAB to manage backlogs and optimize judicial resources so that the PTAB can continue its work of adjudicated ex parte patent appeals and inter partes review proceedings. These measures that take effect on April 1, are described as “temporary in nature” and will remain in place until at least October 1, 2025. Although the memo does not explicitly mention budget cuts, its emphasis on shifting certain pre-institution tasks to non-Administrative Patent Judge (APJ) staff and prioritizing cases may be reflectively of broader federal efficiency efforts. These changes could be the result of budget reductions for the USPTO resulting from efforts by the Department of Government Efficiency (DOGE), which has discussed trying to achieve a 10–15% cut to the workforce across all federal agencies.
Key Points:
Resource Reallocation: Pre-institution tasks (like petition reviews) will be handled more often by non APJ staff, reducing APJ involvement at early stages.
Potential Backlog Effects: With roughly 1,500+ annual inter partes and post-grant proceedings, fewer APJs or hiring freezes could exacerbate existing backlogs.
Limits inter partes review: Adds additional non-merits briefing to the inter partes review process that could limit the total number of inter partes review proceeding instituted.
Timeline: This six-month window aligns with the federal fiscal year reset on October 1, hinting that the USPTO might anticipate further changes (either potential relief or deeper cuts) at that time.
New Briefing Procedures for Discretionary Denials
To enhance efficiency and consistency, the USPTO has implemented interim processes for discretionary denial briefing:
Separate Briefing Schedule: Patent owners may file a brief outlining bases for discretionary denial within two months of the PTAB’s Notice of Filing Date Accorded to a petition. Petitioners can file an opposition brief within one month of the patent owner’s brief. Leave to file further briefing may be permitted for good cause.
Word Limits: Consistent with 37 C.F.R. § 42.24, discretionary denial briefs are limited to 14,000 words and reply briefs to 5,600 words.
Recent Guidance on PTAB Hearings
Effective March 14, 2025, PTAB judges conducting virtual hearings will appear from a PTAB hearing room at a USPTO office, absent special circumstances. Parties are encouraged to participate in person when possible but those who have scheduled virtual hearings may continue to appear virtually. The public is also encouraged to observe hearings in person but remote public access for virtual hearings remains available upon request.
Implications for Practice
Parallel Proceedings: Assess the timelines and statuses of parallel district court or ITC proceedings, as these factors significantly influence the PTAB’s discretionary decisions.
Sotera Stipulations: While still influential, Sotera stipulations should be part of a comprehensive strategy rather than a standalone solution to avoid discretionary denial.
Evidence Submission: Provide detailed evidence regarding the expected resolution timelines of parallel proceedings to strengthen arguments against discretionary denial.
Polsinelli will continue monitoring these developments and inform you of any significant changes. Please contact us with questions about how these interim measures may affect your PTAB proceedings.
Sources:
USPTO Rescinds Memorandum Addressing Discretionary Denial Procedures: https://www.uspto.gov/about-us/news-updates/uspto-rescinds-memorandum-addressing-discretionary-denial-procedures?utm_source=chatgpt.com
Guidance on USPTO’s Recission of “Interim Procedure for Discretionary Denials in AIA Post-Grant Proceedings with Parallel District Court Litigation”: https://www.uspto.gov/sites/default/files/documents/guidance_memo_on_interim_procedure_recission_20250324.pdf?utm_source=chatgpt.com
Interim Processes for PTAB Workload Management (March 26, 2025): https://www.uspto.gov/sites/default/files/documents/InterimProcesses-PTABWorkloadMgmt-20250326.pdf?utm_campaign=subscriptioncenter&utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=
Pennsylvania AG Alleges Mortgage Brokers Engaged in Illegal Referral Scheme
On January 17, the Pennsylvania Attorney General filed a civil enforcement action in the U.S. District Court for the Eastern District of Pennsylvania against a group of mortgage brokers and their manager, alleging that they operated an unlawful referral scheme in violation of the Real Estate Settlement Procedures Act (RESPA), the Consumer Financial Protection Act (CFPA), and Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.
According to the complaint, the defendants offered real estate professionals a mix of financial incentives—such as discounted shares in a joint venture mortgage company, event tickets, and luxury meals—in exchange for directing clients to affiliated mortgage brokerages. These referral arrangements were not disclosed to homebuyers.
The Attorney General alleges that the defendants:
Improperly transferred ownerships interests. Real estate agents were offered discounted, nonvoting shares in affiliated mortgage companies to incentivize referrals, in violation of RESPA and state consumer protection law kickback prohibitions.
Provided high-value entertainment. Agents allegedly received event tickets and luxury dinners in exchange for steering homebuyers, conduct the Attorney General contends violates RESPA and constitutes unfair and deceptive acts under the CFPA.
Disguised payments as legitimate business deals. The scheme was structured to appear as stock sales and profit distributions to conceal kickbacks, allegedly violating RESPA and both federal and state consumer protection statutes.
Failed to meet disclosure requirements. The defendants allegedly did not comply with the legal standards for affiliated business arrangements under RESPA, depriving consumers of material information and transparency.
The lawsuit seeks injunctive relief, restitution, civil penalties, and recovery of attorneys’ fees.
Putting It Into Practice: This state enforcement continues the trend of states ramping up regulation and enforcement of financial services companies (previously discussed here and here). As certain states continue to align themselves with the CFPB’s January recommendations encouraging states to adopt and apply the “abusive” standard under the CFPA (previously discussed here), we expect to see more states ramp up their consumer financial protection efforts.
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SEC Abandons Climate Disclosure Rule
As expected, the SEC under the Trump Administration has abandoned the climate disclosure rule promulgated by the Biden Administration. Specifically, as stated in a court filing today, “the Commission has determined that it wishes to withdraw its defense of the Rules.” Further, the SEC has also informed the court that “Commission counsel is no longer authorized to advance the arguments presented in the Commission’s response brief.”
This decision by the SEC was widely anticipated–and, indeed, had previously been telegraphed by the Republican appointees at the SEC. It is significant nonetheless, as this reversal by the SEC not only provides further evidence of a withdrawal from the climate policies propounded by the Biden Administration but renders the rule less likely to survive legal challenge–and even less likely to be the subject of enforcement action should the courts uphold the rule.
Still, this is not the end of the litigation over the SEC rule. A number of states had intervened in defense of the rule (AZ, CO, CT, DE, DC, HI, IL, MD, MA, MI, MN, NV, NM, NY, OR, RI, VT, WA), and these states can continue to present arguments on behalf of the climate disclosure regulation to the Eighth Circuit. However, the odds that the climate disclosure regulation survives legal challenge when the SEC itself has abandoned it appear quite low.
The SEC will stop defending corporate emissions reporting requirements in court after the agency under President Joe Biden fought for months to save the rules. Securities and Exchange Commission lawyers are “no longer authorized to advance” arguments the agency had made in support of the 2024 regulations that require companies to report their greenhouse gas emissions, the SEC said in a filing with the US Court of Appeals for the Eighth Circuit on Thursday.
news.bloomberglaw.com/…
A TALE OF TWO REJECTED MOTIONS: Court Denies Plaintiff’s Motion for Leave to Amend and Defendant’s Motion to Compel
Hey, TCPAWorld!
Be timely. Don’t skip procedural steps. And always bring receipts.
In SHANAHAN v. MFS SUPPLY LLC, No. 8:23CV475, 2025 WL 885265 (D. Neb. Mar. 21, 2025), both Terrence Shanahan (“Plaintiff”) and MFS Supply LLC, (“Defendant”) filed competing motions. Plaintiff filed a Motion for Leave to Modify the First Amended Class Action Complaint and Case Progression Order, aiming to revise the class definition based on new facts uncovered during discovery. Meanwhile, the Defendant filed a Motion to Compel, to Deem Admissions Admitted, and to Enlarge the Number of Interrogatories, requesting the Court to force Plaintiff to respond to discovery requests.
The Court denied both motions.
Background
On October 27, 2023, Plaintiff filed a class action complaint accusing Defendant of sending unsolicited telemarketing texts to consumers on the national Do Not Call Registry (DNC). Plaintiff claims he received two such texts promoting real estate lockboxes and asserts he never gave consent, with his number registered on the DNC since December 17, 2004.
Plaintiff seeks to represent the following class:
“All persons in the United States who: (1) from the last 4 years to present (2) Defendant texted more than once in a 12-month period (3) whose telephone numbers were registered on the Federal Do Not Call registry for more than 30 days at the time the texts were sent.” (Filing No. 1 at p. 4 ). Plaintiff’s Complaint contains one cause of action for violations of 47 U.S.C. § 227(c) by telemarketing to telephone numbers listed on the Federal Government’s National Do Not Call Registry.”
Id. at *2. Plaintiff asserts a single cause of action, alleging that the Defendant violated 47 U.S.C. § 227(c) by making telemarketing calls to phone numbers registered on the National Do Not Call Registry.
Defendant filed an answer broadly denying Plaintiff’s allegations and asserting multiple affirmative defenses, including statutory exclusions and claims that Plaintiff and the putative class consented—either expressly or implicitly—to receiving the messages, among others.
Following the parties’ Rule 26(f) Report, the Court set June 24, 2024, as the deadline for written discovery and July 8, 2024, as the deadline to file a motion to compel. The Case Progression Order required parties to first contact the magistrate judge and receive authorization from the Court before filing a motion to compel.
Discovery
On February 7, 2024, Defendant served discovery requests and later deposed Plaintiff on May 6, revealing new information allegedly not disclosed in prior cases, including that Plaintiff’s phone number was tied to his real estate license and business since 2006. Then on May 8, 2024, Defendant served a second set of discovery requests, which Plaintiff largely objected to as exceeding the interrogatory limit under Rule 33(a), being irrelevant, burdensome, vague, ambiguous, among other objections. After receiving Plaintiff’s responses, the parties engaged in an exchange that would entertain—or agitate—any litigator, and according to the Court, went something like this:
Defense counsel: “These are late.”
Plaintiff’s counsel: “No they’re not.”
Defense counsel: “The admissions were due on the 7th. You are late on the admissions. The remainder of the responses are woefully inadequate…”
Plaintiff’s counsel: “Thank you for your professional courtesy in waiting one day. The requests were all overly broad.”
Defense counsel: No response.
Id. at * 2-3.
Counsel informed the Court of a dispute over whether Plaintiff should be allowed to conduct class discovery, and shortly before the conference, Plaintiff moved to amend the Complaint. During the June 17, 2024, conference, the Court directed Plaintiff to file an amended motion after finding no good cause for missing the amendment deadline under Rule 16(b). Further, the Court declined to grant class discovery or allow a motion to compel, instead directing the parties to resolve the issues through further meet-and-confer efforts.
On June 26, 2024, Plaintiff filed an amended motion to amend the complaint, seeking to revise the class definition and establish standing based on information learned during Defendant’s deposition which revealed that Defendant had sent approximately 34,000 text messages to a nationwide list that included Plaintiff. Plaintiff sought to add the following allegations to his Complaint:
“Defendant obtained Plaintiff’s information when it downloaded a nationwide list of 17,000 (Seventeen Thousand) Berkshire Hathaway Ambassador real estate agents. Plaintiff was unaware and had no knowledge that Defendant obtained Plaintiff’s information. Defendant uploaded the list to Textedly, a text messaging platform, and sent out two text messages soliciting one of its popular products (lockboxes, which are locked boxes for keys that realtors share).
Plaintiff’s phone number ending in 1146 is Plaintiff’s only residential phone number, and Plaintiff does not have a ‘landline.’
Plaintiff’s phone number ending in 1146 is his personal cell phone.
Plaintiff owns a real estate business and maintains four separate phone numbers ending in 6224, 0737, 6430 and 0366 for operational purposes so that people do not call his personal cell phone for matters dealing with routine operation of the business.”
Id. at *3. Plaintiff also sought to amend the class definition as:
“All persons in the United States who: (1) are on the list of Berkshire Hathaway Realtors obtained by MFS Supply LLC; (2) whose telephone numbers were connected to cell phones; (3) registered on the Federal Do Not Call registry; (4) whose owners do not maintain any other residential telephone numbers; and (5) do have separate telephone number(s) for business purposes.”
Id. On July 8, 2024, Defendant filed a Motion to Compel, seeking additional interrogatories and to deem admissions admitted, alleging that Plaintiff’s counsel failed to provide documents, respond to interrogatories, or meet discovery deadlines.
Court’s Analysis of the Competing Motions
The Court starts with analyzing Plaintiff’s Motion to Amend his Complaint.
Under Rule 15(a), courts should freely grant leave to amend when justice requires, but if a scheduling deadline has passed, the party must first show good cause under Rule 16(b). Because Plaintiff filed his motion to amend more than three months after the March 15, 2024 deadline set in the Court’s scheduling order, he must first show good cause.
The primary measure of good cause is the movant’s diligence in trying to meet the deadline. Courts generally do not consider prejudice if the movant was not diligent, and absent newly discovered facts or changed circumstances, delay alone is insufficient to justify amendment. The Court found Plaintiff lacked good cause, finding that the facts were not newly discovered and could have been included earlier with diligence, nor did they alter the legal basis of Plaintiff’s claims which already addressed unsolicited texts sent despite being on the Do Not Call Registry. The Court also stated that granting the amendment after discovery had closed would cause delay, require further discovery, and unfairly prejudice Defendant.
Next, the Court analyzed Defendant’s Motion to Compel.
The Court denied Defendant’s motion for failing to follow procedural requirements, including not requesting a conference with the magistrate judge as required by the Case Progression Order and Civil Case Management Practices. Defendant also failed to show proof of a proper meet and confer, such as the date, time, or attachments any related communications between the parties. Plaintiff, on the other hand, submitted email evidence demonstrating that his counsel requested to meet and confer to resolve discovery issues, however, Defendant ignored the request and instead focused on filing the instant motion.
Moreover, the Court found that even if Defendant’s procedural failures were excused, the motion to compel still lacked the required evidentiary support to challenge Plaintiff’s production or objections, as local rules require supporting evidence for motions relying on facts outside the pleadings.
Specifically, the Court denied Defendant’s request for Plaintiff to respond to its second set of interrogatories, because Defendant exceeded the 25-interrogatory limit under Rule 33(a)(1) and failed to address the merits of Plaintiff’s objections or provide the original set of interrogatories.
Defendant’s request for production was denied as Defendant did not identify which of the 29 requests were deficient or explain why Plaintiff’s objections were invalid.
Finally, the Court denied the requests for admissions. Although Plaintiff’s responses were three days late, the Court, in its discretion, treated them as a request to withdraw deemed admissions and accepted them, finding no prejudice to Defendant and no impact on the merits of the case.
Takeaways
Scheduling Orders are not mere suggestions made by the Court and parties are expected to follow them. While the Court has the discretion to approve untimely requests to amend, the movant must show good cause under Rule 16(b), supported by diligence and not rely on preexisting facts that could have been included earlier.
Further, skipping procedural steps, such as a meet-and-confer, can kill your motion before its merits are weighed.
Finally, if you’re challenging discovery responses, make sure to bring receipts. Courts want precision—not general statements.