Supreme Court Ends Circuit Split with Ruling That Plaintiffs Can Seek RICO Damages for Certain Personal Injury Claims
Resolving a deep split among federal circuit courts, the U.S. Supreme Court has broadened plaintiffs’ ability to sue under the Racketeer Influenced and Corrupt Organizations Act (RICO) for economic loss stemming from personal injury. The decision stands to permit plaintiffs to bring federal claims — particularly against generic drug and medical device manufacturers — utilizing an avenue many courts previously believed was foreclosed.
In a 5-4 ruling, Justice Amy Coney Barrett wrote for the court in Medical Marijuana, Inc. v. Horn that RICO’s Section 1964(c), while “implicitly denying” plaintiffs from suing to recover for personal injuries, permits plaintiffs to recover for “business and property loss that derives from a personal injury.” (emphasis added).
Barrett wrote on behalf of Justices Sonia Sotomayor, Elena Kagan, Neil Gorsuch, and Ketanji Brown Jackson. Justice Brett Kavanaugh was joined in dissent by Chief Justice John Roberts and Justice Samual Alito. Justice Clarence Thomas, who also dissented, wrote separately.
The case centered on a truck driver, Douglas Horn, who had injured his back and shoulder. When traditional therapies were unsuccessful in alleviating Horn’s chronic pain, he resorted to a CBD product sold by Medical Marijuana, Inc. Concerned about any positive drug test that might cost him his job, Horn was attracted to the company’s product, which Medical Marijuana, Inc. described as “0% THC” and “legal to consume both here in the U.S. and in many countries abroad.” A customer service representative reinforced the company’s statements. When Horn later tested positive for THC and was fired, he sued, alleging that the company was a RICO enterprise, with its “false or misleading advertising” constituting mail and wire fraud and a “pattern of racketeering activity.” See 18 U.S.C. §§1961(1), (5); 18 U.S.C. §§ 1341, 1343.
The district court had ruled for the company, reasoning that because Horn’s firing was “derivative of” a personal injury — ingesting THC — and because a plaintiff cannot sue under RICO for a personal injury, Horn was also unable to recover for business or property harm that flowed from a THC-related injury. The U.S. Court of Appeals for the Second Circuit later reversed that ruling, holding that Section 1964(c)’s use of “business” includes an individual’s employment and that nothing in the RICO statute excludes recovery for economic loss caused by personal injury.
Analyzing the statute’s text and surveying civil RICO precedent, the Supreme Court ultimately sided with the Second Circuit’s view, closing the book on what had become a 3-2 circuit split. The Sixth, Seventh, and Eleventh Circuits had interpreted Section 1964(c) to bar the sort of claims at issue. The Ninth and Second Circuits had gone the other way.
The principal dissent expressed concern that the Supreme Court’s decision will enable plaintiffs to “circumvent RICO’s categorical exclusion of personal-injury suits simply by alleging that a personal injury resulted in losses of business or property,” effectively federalizing traditional state tort suits. The dissent continued: “When enacting civil RICO in 1970, Congress did not purport to usher in such a massive change to the American tort system.”
The majority opinion left a variety of questions unanswered, including (1) whether the Second Circuit correctly interpreted “business” to include a person’s employment, (2) whether Section 1964(c)’s “injured in his . . . property” covers all economic loss, and (3) whether Horn’s THC consumption, which led to termination, actually constituted an “antecedent personal injury.” (After all, Horn argued in the lower courts that Medical Marijuana, Inc. had harmed his ability to earn a living rather than injured his body.)
More broadly, the decision stands to open a pathway for plaintiffs to bring federal claims against generic drug and medical device manufacturers where other doors have been tightly shut. The Supreme Court has already held that federal law preempts — and thus bars — state law failure-to-warn claims against generic drug manufacturers, see PLIVA, Inc. v. Mensing, 564 U.S. 604, 609 (2011), as well as design-defect claims under state law against the same, see Mut. Pharm. Co., Inc. v. Bartlett, 570 U.S. 472, 476 (2013).
Seeking the prospect of treble damages under RICO, Foley anticipates that plaintiffs will attempt to use the Court’s most recent decision to expand the scope of claims in the pharmaceutical and consumer product manufacturing space, where federal preemption has kept most of the plaintiffs’ bar’s liability theories at bay. Foley will continue to monitor the state of affairs and provide updated guidance accordingly.
CLEAR, UNMISTAKABLE, COMPELLING: Court Compels Arbitration Based On Inclusion Of AAA Rules
Hey, TCPAWorld!
The District of Utah just issued a defendant-friendly decision staying a case and compelling arbitration. See generally Christiansen v. Desert Rock Cap., Inc., No. 2:24-cv-00808, 2025 WL 1135598 (D. Utah Apr. 17, 2025). This case serves as a straightforward reminder of the importance of including an arbitration provision that clearly delegates questions of arbitrability to the arbitrator and incorporates the American Arbitration Association (AAA) rules.
In Christiansen, Plaintiff Christiansen applied for and was issued a loan from Defendant Desert Rock Capital, Inc. (“Desert Rock”). In the loan documents, Christiansen consented to be contacted by Desert Rock for “potential extensions of credit, marketing and advertisement, and any other business purpose.” Id. at *1. He also agreed to resolve “[a]ny and all controversies, claims, alleged breaches or disputes arising out of or relating in any way” to the loan documents through arbitration and to waive his ability to bring a class action. Id.
In the lawsuit, Christiansen alleged that Desert Rock called and texted him advertisements despite being on the national DNCR and despite his repeated DNC requests. Accordingly, he brought claims under the TCPA’s national DNCR and internal DNC provisions. In response, Desert Rock moved to dismiss the complaint or, alternatively, to stay the case and compel arbitration.
In deciding this motion, the Court first explained that it must enforce arbitration agreements according to their terms. And where there is “clear and unmistakable evidence” that the parties delegated the issue of arbitrability to the arbitrator, then it must be submitted to the arbitrator and is not for the court to decide. The Tenth Circuit has found this standard to be met where an arbitration agreement incorporates the AAA rules.
Although Christensen disputed the validity of the arbitration agreement and its applicability to the dispute, the Court rejected this argument because the loan documents explicitly referenced the AAA rules. Accordingly, the Court found the “clear and unmistakable” evidence standard to be met with respect to the issue of arbitrability.
And while Desert Rock sought dismissal of the complaint, the Court explained that “[w]hen a federal court finds that a dispute is subject to arbitration, and a party has requested a stay of the court proceedings pending arbitration, the court does not have discretion to dismiss the suit on the basis that all the claims are subject to arbitration.” Id. at *4 n.26 (quoting Smith v. Spizzirri, 601 U.S. 472, 475-76 (2024), and noting the Tenth and Seventh Circuits’ agreement). Per the Supreme Court’s instruction, the Court therefore stayed the case and compelled arbitration.
Until next time.
FCC’s POWER CUT: Fifth Circuit Guts FCC’s Ability to Issue Forfeiture Orders And this is Completely Game Changing
Not long ago we covered the story of an FCC forfeiture penalty issued against Telnyx related to a robocall scam targeting the FCC itself.
The Commission had determined Telnyx seemingly violated vague know-your-customer rules and was set to hit Telnyx with a multi-million dollar penalty. Telnyx fought back aggresively but the FCC was still left to determine how much it would fine Telnyx for the behaviour.
If that seems weird its because it is.
The FCC was simultaneously acting as victim, witness, prosecutor, judge and jury.
Telnyx’ response noted that Commission staff that received calls at issue should recuse themselves since they were directly involved with the underlying claim– which just makes common sense.
But there is a larger issue– one that AT&T just used to its high advantage. The FCC is weighing the evidence and then imposing a penalty without a court or a jury’s involvement.
And that, my friends, rather obviously violates the Constitution.
None of us can be harmed in any way without: i) a law that makes conduct illegal in place before we engaged in illegal conduct; and ii) a judge and/or jury determining that we, in fact, violated that law based on admissible evidence.
That’s the bedrock of due process and the bedrock of what makes us “free.”
But AT&T was recently denied that freedom by the FCC when it unilaterally determined AT&T was guilty of misusing consumer data and fined it $57MM without a jury’s involvement.
And while that might not sound too scary–I mean, why was AT&T misusing customer location data?–consider that Mr. Trump has recently ordered the FCC to do his exclusive bidding. In theory allowing the FCC to unilaterally determine and assign penalties to any communications company in America could very quickly escalate into something highly political and unpleasant.
The Fifth Circuit Court of Appeals cut all of that off at the pass, however, with a ruling in favor of AT&T holding the FCC’s actions violated the constitution.
In AT&T v. FCC the Court determined the forfeiture penalty at issue was a remedy akin to damages and not akin to equitable relief. The difference is critical– Americans (and companies) have a right to a jury and judge determinations for any relief that is properly considered a damage recovery. Further although the FCC argued it had the exclusive right to determine matters related to common carriers as a “public right” the Court disagreed noting claims against common carriers are often litigated by private rights in court.
The ruling itself is pretty straightforward: outside of very narrow situations, no penalties can be handed down in this country without a judge and jury. There were no exceptions to that rule present here. So out goes the award.
So where does this leave the FCC’s forfeiture power?
Well, unless there is an appeal to the Supreme Court–probably will be–I’d say it is dead, at least in so far as the penalties handed down are monetary awards. That is a MASSIVE change for the FCC that has just lost one of its most potent enforcement tools.
One wonders whether other extra-judicial penalties– such as “shut down orders” targeting intermediate and upstream carriers permitting robocalls to traverse their network–might also be set aside under this doctrine. Very fascinating to consider how deeply this new ruling cuts.
For now though, AT&T gets to walk away from $57MM in penalties–it already paid the money so will be curious to see how it gets it back– and Telnyx is sitting pretty.
Will keep an eye on all of this.
A New Chapter in FCPA Enforcement: State Attorneys General Take Action to Enforce Violations
In a significant shift, California’s Attorney General announced his intention to enforce violations of the FCPA by businesses operating in California under the state’s Unfair Competition Law (UCL).
A cornerstone of U.S. anti-bribery and anti-corruption policy, the Foreign Corrupt Practices Act (FCPA) has for decades fallen exclusively to the U.S. Department of Justice (DOJ) to enforce, providing a relatively stable and predictable enforcement environment for corporations and individuals engaged in international business. However, this predictability was upended this past February.
In response to a February 10 executive order temporarily suspending federal enforcement of the FCPA — which prompted the DOJ to review active FCPA matters, postpone trial dates, and, in at least one case, voluntarily dismiss charges — California has moved swiftly to assert its own enforcement authority. On April 2, California Attorney General Rob Bonta issued a legal advisory signaling his office’s intent to enforce FCPA violations under California’s Unfair Competition Law (“UCL”) — the federal government’s temporary pause notwithstanding.
Specifically, the advisory explains that the FCPA continues to impose binding obligations on California businesses and that violations of the statute may give rise to liability under the UCL, which prohibits “unlawful, unfair, and fraudulent business acts and practices.” Cal. Bus. & Prof. Code § 17200 et seq. The UCL’s broad reach allows the Attorney General to “borrow” violations of other laws, including federal statutes like the FCPA, and pursue them as independently actionable violations under state law. The advisory underscores the range of remedies available to the California Attorney General in such cases, including civil penalties, restitution, injunctive relief, and disgorgement of ill-gotten gains.
State-Level FCPA Enforcement: California at the Forefront
While California is currently leading the way, the question remains whether other states will adopt a similar approach. Several factors suggest this could be the beginning of a broader trend:
1. State attorneys general have increasingly positioned themselves as active enforcers in the face of shifting federal priorities.
This is particularly true when those shifts touch on matters of consumer protection, public integrity, and corporate accountability.
2. Many states possess statutes analogous to California’s UCL.
Commonly referred to as Unfair and Deceptive Acts and Practices (UDAP) laws, these provide state-level enforcement mechanisms against a broad range of unlawful or deceptive business practices. Some UDAP laws, such as New York’s General Business Law § 349, require a showing of consumer harm, while others (such as California’s UCL) allow enforcement actions without the need to demonstrate direct consumer injury. Enforcement authorities in states with laws similar to California’s UCL are well-positioned to leverage them against conduct traditionally addressed under the FCPA.
Whether other state attorneys general will follow California’s lead remains to be seen, but the shifting enforcement landscape demands careful attention, as scrutiny from state-level enforcement may soon fill the gaps left by the DOJ’s recalibrated approach.
3. Unlike the FCPA, private litigants have an independent, private right of action under California’s UCL that empowers them to bring civil actions — suggesting the potential viability of leveraging FCPA violations as the predicate misconduct for UCL claims.
Indeed, Attorney General Bonta’s Advisory and accompanying press release may serve as such a signal to the UCL plaintiffs’ bar. This prospect may be particularly attractive in the current enforcement climate, where some federal FCPA actions are temporarily paused or dropped altogether.
Under the UCL, private plaintiffs who can demonstrate that they have “suffered injury in fact and lost money or property as a result of unfair competition” may pursue claims for relief if they can meet the necessary standing requirements, including demonstrating that an economic injury was causally linked to the alleged misconduct. But in certain circumstances, companies with international operations may be face significant financial exposure associated with alleged FCPA/UCL violations.
Against this backdrop, the most immediate and obvious targets for California state enforcement are likely to be companies with operations in California that were previously charged in federal FCPA cases but are now seeing their matters dismissed following DOJ’s ongoing review. In addition, any “whistleblower” allegations of foreign bribery may now grab the attention of state enforcement authorities.
Fragmented Authority and the Future of FCPA Enforcement
While California’s legal advisory signals a new direction for FCPA enforcement at the state level, the practical realities of international anti-corruption investigations raise significant questions about the scope and effectiveness of such efforts.
Unlike the DOJ, state attorneys general lack dedicated federal investigative resources such as the FBI and typically do not maintain established channels of communication and cooperation with foreign law enforcement agencies. These structural limitations could pose serious challenges for state-led enforcement of complex, cross-border bribery schemes.
At the same time, the federal enforcement landscape is also shifting. Under recently revised DOJ policy, each of the 94 U.S. Attorneys’ Offices throughout the country now have greater authority to initiate and prosecute FCPA-related matters without the need for oversight or direct involvement from DOJ’s Fraud Section, provided the conduct can be framed as “foreign bribery that facilitates the criminal operations of Cartels and Transnational Criminal Organizations (TCOs).”
Takeaways
This development marks a significant shift in the FCPA enforcement landscape, particularly in light of the current administration’s recent pronouncements and policies limiting federal enforcement of the statute. In this evolving environment, companies would be well-advised to reassess their anti-corruption compliance programs to ensure they account not only for federal enforcement risks, but also for the growing likelihood of state-level investigations, enforcement actions, and private causes of action.
Former Executive Secures $34.5 Million Settlement in Whistleblower Retaliation Case
On March 20, 2025, in Zornoza v. Terraform Global Inc. et al, No. 818-cv-02523 (D. Md. Apr. 4, 2025), a former executive of two SunEdison subsidiaries secured a $34.5 million settlement over his SOX whistleblower retaliation claims.
Background
Carlos Domenech Zornoza (the “Executive”), the former President and CEO of two SunEdison subsidiaries, filed a whistleblower retaliation complaint with the U.S. Department of Labor in May 2016. He alleged under Section 806 of SOX that he had been terminated for raising, among other things, concerns about SunEdison’s allegedly false reporting of its projected cash holdings to company officers, directors, and the investing public, as well as potential self-dealing transactions between SunEdison and its subsidiaries. In August 2018, the Executive asserted his claims against the two subsidiaries and SunEdison, as well as several individual officers and directors of the companies, in the U.S. District Court for the District of Maryland. He sought damages exceeding $35 million, including for back pay, interest, benefits, and lost stock grants.
In January 2025, after a two-week bench trial and rounds of motion practice, the court found for the Executive on the issue of liability, and set the damages phase of the trial for a later date.
Settlement
Immediately prior to the commencement of the damages phase, the Executive’s counsel announced that the Executive had agreed to a whopping $34.5 million settlement, the largest documented settlement for a whistleblower retaliation claim under the statute.
Takeaway
The record-breaking settlement in this case, as well as the protracted length of the litigation, underscores the cost and potential damages implicated by alleged SOX violations. The settlement may also further embolden plaintiffs with purported SOX whistleblower claims to assert them in court, and inflate the value of such claims in the future.
Nevada Supreme Court: Chapter 7 Filing Dooms Shareholder Breach Of Fiduciary Claim
Globe Photos, Inc. owned a portfolio of millions of images of celebrities and musicians, including Marilyn Monroe, the Beatles, and Jimi Hendrix, some taken by famous photographers such as Frank Worth. Despite these assets, Globe didn’t make a go of it and its assets were used to pay off its secured creditors, leaving the shareholders and unsecured creditors with nothing. Some of the shareholders sued alleging that the directors breached their fiduciary duties.
The defendant directors unsuccessfully moved to dismiss on the basis that the plaintiffs lacked standing to sue them because the breach of fiduciary duty claim seeks to redress harm to Globe. Consequently, the claim belonged to Globe’s bankruptcy estate which the trustee controlled, and over which the bankruptcy court had exclusive jurisdiction. The plaintiffs countered by claiming that the breach of fiduciary duty claim hurt them specifically while benefiting another shareholder.
The Nevada Supreme Court reversed, finding that the plaintiffs’ claims were derivative, not direct, and the plaintiffs therefore lacked standing to bring the claim. Black v. Eighth Judicial Dist. Ct, 141 Nev. Adv. 11 (April 17, 2025). It should be noted that the Supreme Court applied Delaware, not Nevada, law because Globe was a Delaware corporation. Thus, it applied the two-part test enunciated in Tooley v. Donaldson, Lufkin & Jenrette, Inc., 845 A.2d 1031 (Del. 2004) which asks:
who suffered the alleged harm (the corporation or the suing stockholders, individually); and
who would receive the benefit of any recovery or other remedy (the corporation or thestockholders, individually)?
The Nevada Supreme Court’s original decision issued as an unpublished order. The Court subsequently granted the petitioners’ (defendants below) request to publish the order as an opinion. The opinion was signed by all seven justices.
Litigation & the Dispositive Motion
Litigation in the United States is notoriously slow and expensive — at least that’s its reputation. This is one reason ADR (alternative dispute resolution, i.e., mediation, and arbitration) has become so popular. But if a lawsuit can be resolved with a dispositive motion, then the pain of litigation can be faster and cheaper.
Understanding the Power of Dispositive Motions
In litigation, dispositive motions serve as pivotal tools that can resolve legal disputes without the necessity of a full trial. When granted, these motions effectively ‘dispose’ of either the entire case or specific claims within it. Understanding when and how dispositive motions can be used is important for both attorneys and clients alike.
What Is a Dispositive Motion?
A dispositive motion is a formal request submitted to the court, seeking a ruling that either terminates the entire lawsuit or dismisses particular claims or defenses. The primary objective is to achieve a legal resolution without proceeding to the time-consuming and costly process of a trial. In the United States, the most prevalent types of dispositive motions include:
Motion to Dismiss: Challenges the legal sufficiency of the opposing party’s claims.
Motion for Summary Judgment: Asserts that there are no genuine disputes of material fact, and the movant is entitled to judgment as a matter of law.
Motion for Judgment as a Matter of Law: Contends that no reasonable jury could find for the opposing party based on the presented evidence.
Each of these motions serves distinct purposes and is utilized at various stages of litigation.
Motion To Dismiss: Challenging the Pleadings
A motion to dismiss is typically filed at the onset of litigation, targeting the initial pleadings — usually the plaintiff’s complaint. The defendant asserts that, even if all alleged facts are accepted as true, there is no legal basis for the lawsuit to proceed. Common grounds for filing a motion to dismiss include:
Lack of Subject Matter Jurisdiction: The court does not have the authority to hear cases of this nature.
Lack of Personal Jurisdiction: The court does not have authority over the defendant.
Improper Venue: The location where the lawsuit was filed is not appropriate.
Insufficient Process or Service of Process: Deficiencies in the delivery or content of legal documents.
Failure to State a Claim Upon Which Relief Can Be Granted: The complaint does not allege facts that constitute a legal violation.
For instance, under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant can seek dismissal if the plaintiff’s complaint fails to state a claim upon which relief can be granted. This rule ensures that only claims with legal merit proceed, thereby conserving judicial resources.
According to Jeff Leon, a veteran litigator at the law firm Karon, motions to dismiss can be incredibly effective when used strategically, but they should not be filed reflexively. If the opposing party has the opportunity to amend their complaint and strengthen their case, it may be more beneficial to hold off.
Motion for Summary Judgment: Resolving Cases Without Trial
A motion for summary judgment is filed after the discovery phase, where both parties have exchanged pertinent information. The movant argues that there are no genuine disputes regarding material facts and that they are entitled to judgment as a matter of law. This motion hinges on the premise that even if all evidence is viewed in the light most favorable to the non-moving party, no reasonable jury could find in their favor.
The landmark case Celotex Corp. v. Catrett clarified the standards for summary judgment. The US Supreme Court held that the moving party does not need to provide affirmative evidence negating the opponent’s claim but can simply demonstrate the absence of evidence supporting the non-moving party’s case. This decision emphasized that summary judgment is appropriate when the non-moving party fails to make a sufficient showing on an essential element of their case.
Timothy Pastore, a partner with Montgomery McCracken Walker & Rhoads, notes that summary judgment is not about making a jury decision from the bench but rather about determining whether a trial is necessary. If there are no factual disputes, then the judge can resolve the legal issues without the need for a jury.
In practice, courts grant summary judgment when:
No Genuine Issue of Material Fact Exists: The facts are undisputed and pivotal to the case’s outcome.
Entitlement to Judgment as a Matter of Law: The law unequivocally favors the movant based on the established facts.
It’s important to note that summary judgment is not a mechanism for weighing evidence or assessing witness credibility; instead, it determines whether a trial is necessary to resolve factual disputes.
Motion for Judgment as a Matter of Law: Mid-Trial Resolution
Formerly known as a directed verdict, a motion for judgment as a matter of law is made during or after a trial. The movant contends that the opposing party has insufficient evidence to reasonably support their case, and thus, no reasonable jury could rule in their favor. This motion can be presented:
After the Opposing Party’s Presentation of Evidence: Arguing that the evidence is legally inadequate to sustain a verdict.
After the Jury’s Verdict: Requesting the court to overturn the jury’s decision on the grounds that it lacks evidentiary support.
According to Adam Russ, a partner at Gordon Arata, these motions are particularly important for defense attorneys. It provides one last opportunity to prevent an unfavorable verdict from being entered by highlighting weaknesses in the opposing party’s evidence.
This motion ensures that judgments are grounded in law and evidence, preventing unjust outcomes based on insufficient proof.
Strategic Considerations in Filing Dispositive Motions
The decision to file a dispositive motion requires meticulous consideration, as it can significantly influence the trajectory of a case. Key factors to evaluate include:
Strength of Legal Arguments: Assessing whether the law clearly supports the movant’s position.
Evidentiary Support: Ensuring robust and admissible evidence underpins the motion.
Potential Outcomes: Weighing the benefits of an early resolution against the possibility of an unfavorable ruling.
Judicial Preferences: Considering the presiding judge’s history and inclinations regarding dispositive motions.
Steven Reingold of Saul Ewing cautions that filing a dispositive motion isn’t always the best strategy. It’s important to assess whether an unsuccessful motion might reveal too much about your case strategy or give the opposing party an opportunity to strengthen their claims.
Financial Implications of Dispositive Motions
Beyond their legal impact, dispositive motions carry significant financial implications. For businesses and individuals involved in litigation, these motions can either serve as cost-saving tools or escalate legal expenses. Considerations include:
Cost of Filing and Defending: Drafting and responding to dispositive motions require substantial legal resources, including attorney fees and court filing costs.
Impact on Settlement Negotiations: Successfully dismissing claims can strengthen a party’s bargaining position in settlement discussions.
Potential for Delaying Litigation: While dispositive motions can expedite case resolution, unsuccessful motions may prolong litigation and increase overall costs.
Understanding the cost-benefit analysis of dispositive motions can help companies, particularly those facing frequent litigation, make effective legal and financial planning decisions.
Conclusion
Dispositive motions are powerful litigation tools that can streamline legal proceedings, reduce costs, and achieve early case resolution. However, their effectiveness hinges on strategic deployment, strong evidentiary support, and a deep understanding of procedural rules. Whether seeking to dismiss a case at its outset, obtain judgment without trial, or challenge a jury’s findings, litigants must carefully weigh the risks and benefits associated with these motions.
To learn more about this topic view Litigation Basics / Dispositive Motions. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about litigation, including temporary restraining orders and preliminary injunctions.
This article was originally published on here.
©2025. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
Antitrust & Tech At The 2025 Antitrust Spring Meeting
Technology was a key focus of this year’s ABA Antitrust Spring Meeting, one of the largest gatherings of antitrust professionals in the world. Over a dozen panels focused on cutting-edge technology issues as it pertains to antitrust, consumer protection, and privacy. Below are 5 key technology-related takeaways.
1. 2024 was a busy year for Big Tech cases, and 2025 looks to be on the same path.
One topic of conversation was the Big Tech antitrust cases that had seen developments in 2024 and 2025. For example, Apple filed a motion to dismiss in the U.S. v. Apple case, which is currently pending. In the FTC v. Amazon case, the FTC’s Sherman Act Section 2 and FTC Act Section 5 claims survived Amazon’s motion for dismissal. Panelists opined that there is a trend towards more high litigation risk cases from the government.
For tech-related updates coming down the pike, the panelists noted that Judge Mehta is expected to issue the remedies order in the U.S. v. Google search monopolization case, and the U.S. v. Google adsearch trial will begin later this year. Panelists also noted that Chair Ferguson of the FTC has publicly expressed interest in ensuring innovation in “Little Tech.”
2. Increasing interest in regulating big data across the globe.
Big data was also on the mind as both a driver of innovation and a potential tool of market dominance. Panelists emphasized that data is not inherently valuable—it must be analyzed effectively; stale or contaminated data can impose real costs; and more data isn’t always better since errors can be introduced.
For antitrust specifically, the panel noted big data issues come up in two contexts: 1) anticompetitive conduct like self-preferencing and refusal to deal and 2) as an important input in markets where no data means no competing. Additionally, big data often comes up in the context of barriers to entry, especially for smaller firms, considering how incumbents benefit from network effects and lower marginal costs. Panelists noted that some businesses are making essential facilities arguments about data. As such, companies may run into problems if they block access to big data through artificial impediments.
Panelists also touched on increasing scrutiny from regulators around the globe. In the EU, deals like Google/Fitbit have required data separation. The EU’s Digital Markets Act (DMA) and the UK’s Digital Markets, Competition and Consumers Act (DMCC) introduce obligations around data interoperability and access. While these interventions aim to prevent foreclosures and level the playing field, some panelists cautioned that preemptive regulation could stifle innovation. In the U.S., the panelists discussed DOJ’s search monopolization case against Google, noting that one of the proposed remedies is that Google share certain data with competitors for decade.
3. Uncertainty about the benefits and harms of algorithmic pricing software.
Algorithmic pricing and machine learning tools continue to gain traction in all sorts of industries. These tools promise efficiency and competitive pricing, but also present potential risks of collusion allegations. One widely-attended panel moderated by Maureen Ohlhausen, who originally analogized algorithmic pricing software to a guy named “Bob,” focused on these issues.
A central discussion point was the standard that courts are using to analyze algorithm-related price fixing claims. The prevailing view on the panel seemed to be that the rule of reason should apply, with analysis depending on factors like whether the data is public, forward-looking, or shared among competitors. On the flip side, other panelists suggested that use of an algorithmic pricing software could be likened to a hub and spoke conspiracy. As far as using the algorithms goes, the panel opined that using public data to feed the algorithm is probably safe territory although not an absolute safe harbor. Some panelists also suggested that courts look at how the software is being used, such as whether the user is blindly accepting the pricing recommendations, how much of the strategy is put up front in the prompts and programming, etc.
The panel also discussed how some jurisdictions are already experimenting with regulation of algorithm pricing software. For example, Germany has introduced AI-assisted gasoline pricing. Some evidence suggests in oligopoly situations, use of the algorithm seemed to lead to higher prices. However, many of the panelists cautioned against imposing blanket remedies before more research is done to understand any potential economic harms algorithm pricing software use may have.
Algorithmic pricing software also came up at the close of the Meeting during the Enforcers Roundtable. Elizabeth Odette, current chair of the NAAG Multistate Antitrust Task Force, noted that there was interest in regulating algorithmic software at the state and local level. For example, she stated that there were 4 cities in the U.S. that had banned algorithmic price software used in the housing context. However, she also noted that there was a concern with imposing wide bills banning use that ignores benefits to some competitors.
4. Tech cases are leading the charge in reviving refusal to deal claims.
Refusals to deal remain a hotly contested area in antitrust law, particularly as platforms and data gatekeepers exert growing control over digital ecosystems. One of the Spring Meeting’s panels discussed the potential revival the doctrine, particularly in technology cases. Due to limitations in the doctrine, the panelists noted that plaintiffs increasingly frame alleged anticompetitive conduct under alternative theories, such as exclusive dealing or foreclosure, to varying degrees of success. Some panelists cautioned that plaintiffs cannot elevate form over economic realities to avoid refusal to deal doctrine.
5. Document preservation issues related to technology is keeping some attorneys up at night.
As digital communications and technology use diversify, so do the risks of spoliation and other discovery failures. Regulators are increasingly focused on how companies preserve (or fail to preserve) electronic records, especially when tools like Slack, ephemeral messaging, and generative AI complicate compliance. One of the panels, including an attorney from the FTC, focused on these issues.
Recent enforcement actions underscore the stakes. The panel flagged major gaps in recordkeeping in cases like the U.S. v. Google search monopolization case and the failed Kroger/Albertsons merger, where use of personal devices and auto-deletion policies hindered document production. The panel also noted that on April 1, 2025, a DOJ Antitrust Division press release revealed that an individual had pleaded guilty for deleting text messages after receiving a litigation hold notice in connection with an antitrust investigation.
The panel also noted the inevitability of discovery requests for AI-generated content or prompts. One panelist gave the example of potentially relevant evidence being a business person asking AI to generate an email to a competitor without the use of the word “competition” to show the person’s state of mind. Interrogatories may soon probe usage of large language models and related tools, especially in high-stakes investigations.
ANOTHER ARBITRATION LOSS: Lead Buyers Just Can’t Catch a Break As Litigators Deny Visiting Websites
Pretty common theme right now in TCPAWorld.
Lead buyer buys a lead and makes an outbound call. Lead buyer sued by a litigator who claims “wasn’t me.” Lead buyer tries to enforce the arbitration provision–to kill the class action component of the case–and the court refuses to enforce because the Plaintiff denied visiting the website to begin with.
That fact scenario played itself out anew in Gilliam v. Prince Health, 2025 WL 1126545 (M.D. Tenn April 16, 2025).
There Prince Health bought a lead from JLN CORP d/b/a P1 Solutions who bought it from Techforcemedia LLC d/b/a Top American Insurance pertaining to website topamericaninsurance.com. (None of these companies are R.E.A.C.H. members!) The website contained an arbitration provision in its terms of use.
A visual rendering was provided to the court of the web session by either Active Propsect or Jornaya and it showed Plaintiff’s name and information being entered on the form. On that basis Prince Health tried to compel arbitration arguing plaintiff had accepted the terms and conditions and agreed to arbitrate claims arising out of the lead form submission.
Plaintiff, however, testified at deposition that he had not visited the website and it was not him who had filled out the form.
Just that simply the court denied the motion to compel arbitration. Although the court determined Prince had met its initial burden the fact Plaintiff denied visiting the website under oath was enough for the court to deny the arbitration motion and set further proceedings.
The court’s order is unclear in terms of next steps but under the Federal Arbitration Act a jury or bench trial is needed to determine whether a contract was formed and whether the case may proceed to arbitration. Of course such a proceeding is high stakes– if the plaintiff didn’t fill out the form then not only will he defeat arbitration he will also defeat any claim of consent!
And if the court finds one person didn’t fill out the form perhaps the court will question the credibility of the lead source and certify a class down the line…
So yeah, high stakes poker.
We’ll keep an eye on this and see where it goes.
Federal Judge in Pennsylvania Reverses Dismissal of Medical Marijuana Cardholder’s Disability Discrimination Claim
On April 11, 2025, a federal judge for the U.S. Western District of Pennsylvania reversed his recent decision to dismiss a disability discrimination claim from a job applicant with a medical marijuana card who alleged he had a job offer rescinded following a pre-employment drug screen.
Quick Hits
A federal judge reinstated a disability discrimination claim after a job applicant with a medical marijuana card alleged that his job offer was rescinded without proper consideration of reasonable accommodations for his underlying medical conditions.
The judge had previously dismissed the disability discrimination claim after finding that status as a medical marijuana cardholder was not a qualifying disability.
The ruling underscores the legal uncertainty surrounding the protection of employees’ lawful medical marijuana use under the Pennsylvania Human Relations Act.
While considering a motion to certify an appeal, U.S. District Judge Robert J. Colville reversed his March 2025 dismissal of a disability discrimination claim under the Pennsylvania Human Relations Act (PHRA) brought by a job applicant who alleged a construction company failed to accommodate his medical marijuana use.
Judge Colville said he had “failed to give due consideration” to the allegation the employer did not discuss any reasonable accommodations for the job applicant’s disability other than his medical marijuana use.
The plaintiff, Brian Davis, alleged that Albert M. Higley Company, LLC, rescinded the job offer for a project engineer position following a pre-employment drug screen. Davis alleged that he was diagnosed with anxiety, depression, and attention-deficit/hyperactivity disorder (ADHD) and was certified to use medical marijuana to treat the conditions along with other prescription drugs.
On March 7, 2025, Judge Colville dismissed Davis’s claim for disability discrimination under the PHRA. Still, the judge allowed the suit to continue on a separate claim that the company refused to hire him in violation of Pennsylvania’s Medical Marijuana Act (MMA).
In that ruling, Judge Colville stated he was “constrained” by the 2020 Commonwealth Court of Pennsylvania decision in Harrisburg Area Community College (HACC) v. Pennsylvania Human Rights Commission, which held the PHRA does not require accommodation of an individual’s legal medical marijuana use because it is not a qualified disability.
The ruling was significant in that it was potentially the first instance of a federal court finding that lawful medical marijuana use was not a qualifying disability under the PHRA.
However, in his latest decision, Judge Colville declined to certify the issue for an immediate appeal. Instead, he reinstated the disability discrimination claim “to the extent that it asserts that Defendant failed to engage in the interactive process in good faith by failing to discuss or consider reasonable accommodations other than Plaintiff’s marijuana use.” (Emphasis in the original.)
“To be clear, the Court did not hold that an individual with a disability who is also a medical marijuana user is not entitled to any reasonable accommodation for their disability under the PHRA,” Judge Colville said. “Rather, the Court simply held that continued marijuana use is not a reasonable accommodation under the PHRA.” (Emphasis in the original.)
Notably, the judge said the job applicant had support in a 2020 decision by the U.S. District Court for the Eastern District of Pennsylvania in Hudnell v. Thomas Jefferson University Hospitals, Inc., which had allowed a similar claim to continue where a plaintiff had “alleged a disability apart from her medical marijuana use.”
Judge Colville said that even if the PHRA does not require off-duty marijuana use as an accommodation, the allegations were that the company “summarily rescinded its offer of employment” without exploring various other potential accommodations. Therefore, the company potentially failed to engage in the required interactive process under the PHRA.
“The Court believes that the issue of good faith is a factual question that cannot be resolved at this time,” Judge Colville said.
Next Steps
Judge Colville’s reversal highlights the legal uncertainty around whether employees’ lawful, off-duty medical marijuana use is protected under the PHRA. Several courts have allowed disability discrimination claims for medical marijuana under the PHRA to continue. However, the recent ruling suggests that such claims may only be able to proceed if the medical marijuana use is simply indicative of a separate qualified disability that employers have an obligation to reasonably accommodate. Judge Colville maintained that medical marijuana use itself is not a reasonable accommodation and denied an immediate appeal on that issue.
As such, employers may want to review their drug testing and accommodations policies regarding medical marijuana cardholders in Pennsylvania. Additionally, employers may want to consider engaging in an interactive process with employees who are medical marijuana cardholders, at least to gauge the extent to which there may be another reasonable accommodation for an employee or job applicant with a qualifying disability aside from medical marijuana use.
Delaware Law on Fiduciary Duties and Stockholder Agreements
Delaware corporate law is renowned for its balance between flexibility in business arrangements and the fundamental principles of fiduciary accountability. One of the areas where this balance is most evident is in the treatment of fiduciary duties and their modification through stockholder agreements. These agreements enable shareholders to manage their rights and obligations within a corporation while still operating within the parameters of Delaware law.
The natural inquiry, then, is “how far is too far?” or “what agreements are enforceable?” The Delaware Court of Chancery addressed these questions in New Enterprise Associates 14, L.P. v. Rich, C.A. No. 2022-0406-JTL (Del. Ch. May 2, 2023) (Laster, V.C.), where it upheld a covenant not to sue in a drag-along provision. The court found the provision was narrowly tailored, clearly written, negotiated among sophisticated parties, negotiable at the time the agreement was made, and part of a “bargained-for exchange.” Id. at 589-90. However, it refused to extend the covenant to claims involving intentional misconduct, reinforcing the notion that Delaware law does not allow private agreements to shield fiduciaries from liability for bad faith. Id. at 591-93.
Stockholder Agreements and Their Role
Stockholder agreements are private contracts among shareholders or between shareholders and the corporation that govern specific rights, obligations, and operational structures. These agreements often are negotiated among sophisticated parties and are crafted with the aim of reducing conflicts and enhancing operational efficiency within the company. Delaware law generally respects such agreements, provided they meet three specific criteria:
Explicit Terms: The terms of the agreement must be clear and unambiguous, leaving no room for confusion. Id. at 589.
Voluntary Negotiation: The agreement must be entered into knowingly and voluntarily, particularly in cases involving sophisticated parties like venture capitalists or institutional investors. Id. at 589-90.
Compliance with Public Policy: The agreement cannot contravene the public policy of Delaware corporate law or statutory mandates. Id. at 591-93.
While stockholder agreements can vary widely, depending on the needs and structure of the company, they often include provisions on:
Voting Arrangements: These provisions specify how shareholders will vote on certain matters, potentially bypassing the usual voting mechanisms in the company’s charter or bylaws.
Information Rights: Shareholders may be granted rights to specific financial or operational information from the company.
Transfer Restrictions: These restrictions can limit a shareholder’s ability to sell or transfer their shares under certain conditions.
Drag-Along Rights: This provision allows majority shareholders to compel minority shareholders to sell their shares in a company sale, streamlining the sale process.
Fiduciary Duty Tailoring: Particularly in private equity and venture capital, these agreements may include clauses that limit fiduciary claims, often by including covenants not to sue.
Waivable vs. Non-Waivable Fiduciary Duties
Delaware law recognizes that some fiduciary duties may be modified or waived through stockholder agreements, providing companies with greater flexibility in managing their internal affairs. However, Delaware imposes limitations to preserve core principles of corporate governance.
Waivable Duties
Corporate Opportunity Doctrine: Under Section 122(17) of the Delaware General Corporation Law (DGCL), directors and officers may waive the corporate opportunity doctrine. This allows them to pursue business opportunities without offering them to the corporation, a critical flexibility in complex corporate structures and relationships.
Duty of Loyalty: Certain aspects of the duty of loyalty, particularly those related to conflicts of interest, may be tailored through stockholder agreements. For example, drag-along rights often include waivers of fiduciary claims, allowing transactions to proceed without the risk of litigation. New Enterprise Associates 14, L.P.,C.A. No. 2022-0406-JTL.
Duty of Care: Stockholder agreements also may limit the monetary liability associated with breaches of the duty of care. However, Delaware law distinguishes between direct and derivative claims in this regard. While direct claims for breaches of the duty of care can be waived, derivative claims — those involving the corporation itself — cannot be easily negated. Id. at 549.
Non-Waivable Duties
While Delaware law permits the modification of certain fiduciary duties, there are critical areas where fiduciary obligations cannot be waived, as they are essential to maintaining trust and accountability in corporate governance:
Bad Faith and Intentional Misconduct: Fiduciaries cannot contract out of liability for bad faith or intentional wrongdoing. Delaware courts have consistently held that these breaches of duty are so serious that they cannot be shielded by private agreements. Id. at 591-93.
Duty of Oversight: Under Delaware law, directors are responsible for overseeing the corporation’s activities and ensuring the company complies with legal requirements. Claims related to gross neglect of fiduciary oversight, such as those arising from Caremark duties, remain actionable even if other fiduciary duties are waived. See In re Caremark Int’l Inc. Deriv. Litig., 698 A.2d 959, 970 (Del. Ch. 1996).
The Role of Covenants Not to Sue
A common mechanism for modifying fiduciary duties within stockholder agreements is the inclusion of covenants not to sue. These provisions prohibit stockholders from bringing claims against fiduciaries under certain circumstances, streamlining the resolution of potential disputes. However, for such covenants to be enforceable, Delaware courts impose several requirements:
Specificity: The covenant must be narrowly tailored, applying only to specific transactions or actions to avoid overreach. New Enterprise Associates 14, L.P.,C.A. No. 2022-0406-JTL, at 589.
Reasonableness: Courts evaluate whether the parties to the agreement were sufficiently sophisticated, whether they had legal counsel, and whether the covenant respects Delaware’s fundamental principles of corporate governance. Id. at 589-90.
Balancing Flexibility and Accountability
Delaware’s approach to stockholder agreements reflects its broader commitment to balancing flexibility with accountability. While these agreements offer valuable tools for aligning fiduciary duties with business objectives, Delaware law remains steadfast in ensuring certain fiduciary principles are upheld. Stockholder agreements can:
Tailor Fiduciary Duties: They provide parties with the flexibility to define and limit fiduciary responsibilities, aligning them with business objectives. This is especially important in venture capital and private equity contexts, where companies may wish to streamline governance and reduce the risk of litigation.
Clarify Stockholder Rights: While the DGCL permits stockholder agreements to determine stockholder rights, it makes clear that these agreements cannot override provisions in the corporate charter or bylaws. Delaware courts have ruled that any provision in a stockholder agreement that conflicts with the corporate charter or the DGCL is ineffective. In W. Palm Beach Firefighters’ Pension Fund v. Moelis & Co., C.A. No. 2023-0309-JTL (Del. Ch. Feb. 23, 2024), the court emphasized that any attempt to alter the governance structure mandated by the DGCL or corporate charter is void.
Ensure Judicial Oversight: Delaware courts rigorously review stockholder agreements to ensure they do not undermine public policy or statutory protections. While these agreements are respected, courts remain vigilant in ensuring their enforcement does not lead to outcomes that would undermine the integrity of corporate governance.
Conclusion
Delaware law allows for a dynamic approach to corporate governance, balancing the need for flexibility with the necessity of maintaining fiduciary responsibility. Stockholder agreements, when carefully crafted, offer a useful framework for resolving disputes and establishing clear governance structures. However, the law’s safeguards against the waiver of non-waivable fiduciary duties, like the duty of oversight and prohibitions against bad faith conduct, ensure that the integrity of corporate governance is preserved. In this way, Delaware remains committed to fostering innovation in business practices while ensuring trust and accountability remain at the heart of corporate operations.
Update: US Supreme Court Stays Lower Courts’ Orders Reinstating NLRB and MSPB Members, Removing Them Once Again (US)
For the first—but not last—time, the US Supreme Court weighed in on President Donald Trump’s removal of Gwynne Wilcox, a Biden-appointed National Labor Relations Board (NLRB) member (whose removal we discussed in a prior post), and Cathy Harris, a Biden-appointed Merit Systems Protection Board (MSPB) member. Chief Justice Roberts’ April 9 order temporarily stayed the D.C. Circuit’s en banc decision permitting Wilcox and Harris to resume their duties at their respective agencies, effectively re-removing them following their reinstatement by the D.C. Circuit. The most significant consequence of that action is that, once again, the NLRB lacks a quorum, and thus cannot decide cases.
Chief Justice Roberts’ order, which did not address the merits of the case, sets the stage for the Supreme Court to further clarify the scope of the President’s power to remove government officials of multi-member boards like the NLRB and MSPB. Such clarification will almost certainly require the Court to re-examine its 1935 decision in Humphrey’s Executor v. FTC, which held that Congress can impose for-cause removal protections on multi-member boards of independent agencies (in that case, FTC commissioners). The Court reasoned that such removal protections did not unconstitutionally interfere with executive power due to the FTC’s structure (e.g., the FTC’s board was designed to be non-partisan and act with impartiality; the FTC’s duties called for the trained judgment of experts informed by experience; and the commissioners’ staggered terms allowed for the accumulation of technical expertise while avoiding a wholesale change of leadership at any one time). But now, 90 years later, Humphrey’s Executor and its progeny find themselves within the Government’s crosshairs, as the Government insists that the President’s Article II obligation to “take Care that the Laws be faithfully executed” empowers the president to remove, at will, members of multi-member boards such as the NLRB and MSPB, notwithstanding the for-cause removal requirements embedded in the statutes governing those boards.
The Court’s resolution of these two conflicting views of presidential power could have sweeping implications. A decision overruling or paring back Humphrey’s Executor could call into question the constitutionality of the structure of even more independent agencies, such as the Federal Reserve and the National Transportation Safety Board. In such a scenario, for example, a win for the Government could give President Trump the green light to remove Jerome Powell, Chair of the Federal Reserve, about whom he recently commented that his “termination cannot come soon enough .”
We are closely monitoring this litigation and will track additional developments as it progresses through the court system.