Commercial Litigation Update

The U.S. Supreme Court has stayed the nationwide injunction that had been blocking the enforcement of the Corporate Transparency Act (CTA) while the merits of the CTA are pending a decision in the U.S. Court of Appeals for the Fifth Circuit, which will hear oral argument on March 25 in McHenry v. Texas Top Cop Shop, Inc.

The CTA requires more than 32 million existing businesses to disclose their beneficial owners. That number is expected to grow by five million new businesses per year. Texas Top Cop Shop, a firearms retailer, has challenged the CTA’s constitutionality.

During this interim period, it is unclear what, if any, action the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) will take. Today’s decision does not reinstate the previous January 13 filing deadline. Throughout the tortured history of this case, FinCEN has updated earlier compliance deadlines, but with a new administration, it is possible for the agency to await the action of the Fifth Circuit, which many believe is a commodious environment for firearms purveyors. Others stress the importance of a law designed in part to disclose foreign and domestic criminals who use anonymous U.S. companies to launder profits from drugs such as fentanyl or mask cybercrime-related transactions.

On January 7, 2025, the Consumer Financial Protection Bureau (“CFPB”) published a final Rule (the “Rule”) that prohibits consumer reporting agencies from including individuals’ medical debt on consumer credit reports. The CFPB states that this Rule, which amends Regulation V of the Fair Credit Reporting Act, aims to ease financial burdens placed on individual consumers seeking loans by preventing medical debt from negatively impacting credit scores. Additionally, the Rule prohibits creditors from considering consumer medical debt information in credit eligibility determinations and decisions.

The Rule has been published in the Federal Register and is scheduled to become effective March 17, 2024. A recent Executive Order, however, may delay or impact whether the Rule is implemented and, if it is implemented, the timing of when the Rule becomes effective.

The U.S. Supreme Court’s decision today in Andrew v. White merits at least passing attention. Though a capital murder case—not the sort of case that most of this blog’s readers are ever likely to confront—it provides a useful discussion of how holdings of the Supreme Court, or the fact of the Court’s having no precedent at all, should be applied to lower court proceedings.

In the case at bar, an Oklahoma jury convicted Brenda Andrew of murdering her husband and sentenced her to death. At trial, the state adduced substantial evidence concerning Ms. Andrew’s adulterous sex life and her failings as a wife and mother. In response to a subsequent habeas petition, the state conceded that much of this evidence was irrelevant. Ms. Andrew predictably contended that its admission violated the Due Process Clause. The U.S. Court of Appeals for the Tenth Circuit rejected that claim because it assumed that no holding of the Supreme Court established a general rule that the erroneous admission of prejudicial evidence could violate due process. In a per curiam decision, the Supreme Court held that the circuit court “was wrong. By the time of Andrew’s trial, this Court had made clear that when ‘evidence is introduced that is so unduly prejudicial that it renders the trial fundamentally unfair, the Due Process Clause of the Fourteenth Amendment provides a mechanism for relief.’ Payne v. Tennessee, 501 U. S. 808, 825 (1991).”

Having erroneously assumed that no relevant, clearly established law existed, the lower court never considered whether the state court’s application of such law was reasonable. Thus, on remand, the Tenth Circuit must initially consider whether a fair-minded jurist could disagree with Andrew that the trial court’s mistaken admission of irrelevant evidence was so “unduly prejudicial” as to render her trial “fundamentally unfair.” See Payne at 825. “The Court of Appeals must ask that question separately for the guilt and sentencing phases. As to each phase, it might consider the relevance of the disputed evidence to the charges or sentencing factors, the degree of prejudice Andrew suffered from its introduction, and whether the trial court provided any mitigating instructions.”

As the snow has fallen on Washington, DC’s First Street over the past few days, the Supreme Court has begun to issue opinions in the current term.

One of those cases has been in the news constantly, as it relates to a matter at issue in the recent presidential campaign that will likely get attention after the inauguration. The other two relate to federal court jurisdiction, but they are also consequential because their fact patterns are likely to be duplicated in future litigation.

While, with the advent of the new administration, things very well might change, the news today that the Court has upheld a law that could ban the social media platform TikTok this Sunday is significant not only to expressive younger Americans (perhaps your children and mine) but also as a matter of national security.

The Second Circuit Court of Appeals has once again revived Sarah Palin’s longstanding defamation suit against The New York Times. The Second Circuit’s opinion highlights important procedural and substantive issues in defamation actions involving public figures, particularly in the current polarized media environment.

Palin’s lawsuit, which we previously wrote about here, relates to a 2017 Times editorial that incorrectly linked a political ad from the 2008 Republican vice presidential candidate and former governor of Alaska to a 2011 mass shooting in Arizona that killed six people and injured 13 more, including Congresswoman Gabby Giffords. After an initial dismissal that was reversed on appeal, Palin’s case proceeded to trial in February 2022.

During jury deliberations, the District Court Judge announced in open court that he believed Palin had failed to produce sufficient evidence of actual malice, and, for that reason, would grant judgment in favor of the Times. However, the judge allowed the jury to continue deliberations and the jury subsequently returned a verdict for the Times. The court later revealed in a public filing that members of the jury had learned about the judge’s decision to dismiss the case during deliberations after receiving push notifications on their smartphones. This unusual procedural sequence, compounded by errors during the trial, led the Second Circuit to vacate the judgment and order a retrial, which is scheduled to begin on April 14, 2025.

New episode of our video podcast, Speaking of Litigation: What makes a jury work—and what earns their trust?

Dive into the nuanced world of jury selection with Epstein Becker Green attorneys Eric Neiman, Teddy McCormick, and Jonathan Brollier.

This episode unpacks the art of voir dire, blending centuries-old practices with innovative tools such as artificial intelligence-driven analytics. Along the way, they tackle how to identify bias, manage polarization, and create a fair but effective jury pool in an era of societal change.

From high-stakes civil trials to the finer points of building rapport with jurors, discover how modern litigators balance strategy with ethics to shape the courtroom narrative. Whether you’re a seasoned litigator or just curious about the inside workings of jury trials, this discussion offers fresh perspectives and practical advice for excelling in the courtroom.

In its recent unpublished decision, United States ex rel. Stebbins v. Maraposa Surgical Inc., 2024 WL 4947274 (3d Cir. Dec. 3, 2024), the Third Circuit clarified that the public disclosure bar prevents whistleblower False Claims Act (FCA) qui tam actions arising from information gathered solely through publicly accessible databases.

As the Third Circuit explained, “[t]he FCA punishes the submission to the Government of fraudulent claims for payment under, for example, the Medicare and Medicaid programs.”  Id. at *1.  While the FCA encourages individuals, known as relators, to report government-related fraud by way of filing a qui tam suit, the public disclosure bar prevents a relator from bringing an FCA qui tam suit “if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed” in a “Federal report” or “from the news media” unless the relator is “an original source of the information.” 31 U.S.C. § 3730(e)(4)(A).  In the Third Circuit, “the public disclosure bar applies if either Z (fraud) or both X (misrepresented facts) and Y (true facts) are publicly disclosed by way of a listed source.” Stebbins, 2024 WL 4947274, at *2 (quoting U.S. ex rel. Zizic v. Q2Administrators, LLC, 728 F.3d 228, 236 (3d Cir. 2013)). 

In United States ex rel. Stebbins v. Maraposa Surgical Inc. et al., despite having no affiliation whatsoever with the defendants, the relator filed a qui tam action alleging, inter alia, that the defendants fraudulently sought reimbursement for the arteriograms performed in a physician’s office, rather than a licensed ambulatory surgery center, which the relator asserted violates Pennsylvania’s regulations.  Without deciding whether the defendants actually engaged in any wrongdoing, the Third Circuit held that the public disclosure bar prohibited the relator from proceeding with suit because the relator drew each piece of information supporting his FCA allegations from publicly disclosed databases.

Background

On December 10, 2024, the Supreme Court of Ohio issued its decision in Stull v. Summa, a medical negligence case in which the defendants argued that Ohio’s statutory peer-review privilege protected from discovery the file a hospital maintained on a resident physician, which included, among other things, quality reviews and assessments of the resident’s clinical competency and professional conduct. The Supreme Court of Ohio decided one issue: Does the peer-review privilege in R.C. 2305.252 apply to a healthcare entity’s files concerning resident physicians?

This case arose from the medical treatment of head injuries that the patient sustained during a car crash. The patient and his guardians filed a medical negligence lawsuit against the hospital and its employed healthcare professionals, including a resident physician who participated in the patient’s care. The plaintiffs alleged that the resident improperly intubated the patient, causing the patient to sustain a brain injury

In its first decision on the merits in the current term, a unanimous U.S. Supreme Court (per Jackson, J.) has held in Bouarfa v. Mayorkas that revocation of an approved visa petition under 8 U.S.C. §1155, based on a sham-marriage determination by the Secretary of Homeland Security (the “Secretary”), is the kind of discretionary decision that falls within the purview of 8 U.S.C. §1252(a)(2)(B)(ii), which strips federal courts of jurisdiction to review certain actions “in the discretion of ” the agency.

The Court held that Section 1155 is a "quintessential grant of discretion." Thus, the Secretary “may” revoke a previously approved visa petition “at any time” for what the Secretary deems “good and sufficient cause.”

This broad grant of authority “fairly exudes deference” to the Secretary. This conclusion is similar to that reached as to other statutes held to “commi[t]” a decision “to agency discretion.” Webster v. Doe, 486 U. S. 592, 600. Following its recent line of decisions (here, unusually, unanimously), the Court takes a literal view of the text, holding that "Congress did not impose specific criteria or conditions limiting this authority, nor did it prescribe how or when the Secretary must act."

Since the U.S. Supreme Court’s landmark Loper[1] decision, which overturned the longstanding precedent of the Chevron doctrine for agency deference, it was anticipated that lower courts, as well as the Supreme Court, would begin to decide whether specific deference to agency interpretation and power was appropriate, likely on a policy-by-policy and agency-by-agency basis. As expected, in the few short months since the Loper decision, the SEC and FINRA’s administrative power to seek and award civil penalties in their in-house disciplinary function has been called into question.

Specifically, alongside and in the same term as Loper, the Supreme Court decided SEC v. Jarksey, which reviewed whether the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud.  In Jarksey, the Supreme Court held that, “[w]hen the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.”