Public Law Legal Research Blog

EMPLOYMENT: Trump’s DEI Executive Orders Survive Constitutional Attack

Nadine Roddy — Tue, 03 Mar 2026 15:44:54 GMT

Nadine Roddy—Senior Attorney

On February 6, 2026, the U.S. Court of Appeals for the Fourth Circuit vacated a nationwide preliminary injunction blocking key provisions of two Executive Orders (“EOs”) issued by President Trump, finding that they were not facially unconstitutional. Nat’l Ass’n of Diversity Officers in Higher Educ. v. Trump, No. 25-1189, ___ F.4th ___, 2026 WL 321433 (4th Cir. Feb. 6, 2026).

EO 14151, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” and EO 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” addressed diversity, equity, and inclusion (“DEI”) programs of federal agencies, grantees, and contractors. The court had previously stayed the injunction pending appeal. The three-judge panel remanded the case to the U.S. District Court for the District of Maryland for further proceedings, leaving open the possibility of challenges based on individual application of the EOs (“as applied” challenges).

At the outset of his second term, President Trump issued the EOs with the goal of eliminating “illegal” DEI programming in the government and private sectors. EO 14151 ordered each “agency, department, or commission head” to “terminate, to the maximum extent allowed by law, all ‘equity-related’ grants or contracts [the Termination Provision].” EO 14173 ordered agency heads to include provisions in every contract or grant award (1) certifying that the grantee did not operate any programs promoting DEI in violation of federal anti-discrimination laws, and (2) making compliance with federal anti-discrimination laws “material to the government’s payment decisions” for False Claims Act purposes (the Certification Provision). The EO also directed the Attorney General to submit recommendations and a strategic plan for enforcement actions to challenge illegal DEI “programs or principles . . . that constitute illegal discrimination or preferences” in the private sector (the Enforcement Threat Provision).

The plaintiffs—the Mayor and City Council of Baltimore, the National Association of Diversity Officers in Higher Education, the American Association of University Professors, and Restaurant Opportunities Centers United—filed suit against President Trump, Attorney General Bondi, and other federal agency heads, asserting that these and other provisions of the EOs violated the First and Fifth Amendments on their face.

In a decision issued on February 6, 2026, the Fourth Circuit first determined that the plaintiffs had standing to challenge the Termination and Certification Provisions of the Orders. However, they lacked standing to challenge the Enforcement Threat Provision, as that provision was purely intra-governmental, and the plaintiffs did not sufficiently allege an injury-in-fact.

Concerning the facial constitutionality of the Termination Provision, the plaintiffs asserted a Fifth Amendment challenge, arguing that the provision was unconstitutionally vague because it failed to define what constituted “equity-related” grants or contracts. The court disagreed, noting that the provision only “instruct[ed] the President’s subordinates to act, and then only ‘to the maximum extent allowed by law.’” 2026 WL 321433, at *8. Further, courts allow greater latitude for vagueness when the government acts as a funding patron—as in this case—rather than as a criminal or regulatory sovereign. Any uncertainty in how federal agencies apply the directive may give rise to as-applied legal challenges, but it does not render the provision facially invalid, the court concluded.

In its First Amendment challenge to the Certification Provision, the plaintiffs contended that the provision impermissibly discriminated based on viewpoint, and it also chilled protected speech by targeting DEI programs. The court disagreed once again, noting that the provision required only certification of compliance with existing federal anti-discrimination laws—laws with which the plaintiffs already had to be in compliance.

For these reasons, the court concluded that the plaintiffs were unlikely to succeed on the merits of their claims, and thus the permanent injunction would be vacated and the case remanded for further proceedings.

WORKERS’ COMPENSATION: Particular Workplace Conditions and Duties Can Create Risk of Dog Bites So That Injury “Arises” from Employment

tsifka@nlrg.com (Trish Sifka) — Tue, 03 Mar 2026 15:41:44 GMT

Trish Sifka—Senior Attorney

Dog bite injuries do not just occur in neighborhoods. If a dog bites an employee while at work, the Virginia Workers’ Compensation Action may be the plaintiff’s exclusive remedy, even if being a dog trainer, sitter, or other kind of dog care or handling is not the plaintiff’s occupation or primary duty. Generally, the Virginia Workers' Compensation Act (“VWCA”), Va. Code Ann. § 65.2-100 et seq., provides the exclusive remedy for workplace injuries arising out of and in the course of employment. (Emphasis added.) As recently held by the Virginia Court of Appeals, if the work conditions and employee duties create a particular or a peculiar risk of dog bite injury, the plaintiff employee’s personal injury action will be barred. Vidunas v. Camp Mont Shenandoah Ltd., No. 2008-24-3, 2025 Va. App. LEXIS 700, at *9, 2025 WL 3083717 (Nov. 5, 2025).

Plaintiff Catherine Vidunas was the barn manager for Defendant Camp Mont Shenandoah, Limited, "a small, traditional, all-girls camp." Id. at *1. Defendant Ann Warner was Vidunas’s employer and the majority stockholder for the camp. Id. At the time of the injury in the summer of 2021, Vidunas provided horse care and stable maintenance, selected horses, assisted in organizing and planning equestrian events, and responded to any miscellaneous requests from Warner and the riding director. Id. at *2. During that summer, Vidunas knew that Warner would regularly bring her two dogs, Rollin and Otis, and walk them around the campsite with her. It was known that the border collie, Otis, had previously bitten someone when he was a puppy, but had not been a problem until the day in question. The day before a horse show in August 2021, Warner asked Vidunas to “trot” a certain horse to determine potential “lameness.” Id. at *2. Warner showed up with Otis to jog beside the horse during this trot exercise. While the riding director led the horse from the front, “Vidunas followed the horse ‘clucking’ with a ‘raised voice,’ waving and clapping her hands, and smacking the horse's rump,” while running. Id. at *2-3. As Otis witnessed Vidunas running up behind and chasing his owner, Warner, Otis ran over and bit Vidunas in her calf, thereby causing injury necessitating medical attention. Id. at *3.

Vidunas filed a personal injury suit based on the defendants’ negligence causing her injuries. Id. at *3-5. The defendants filed a plea in bar which was later amended in an appeal before the circuit court in August 2024, which asserted that the VWCA barred the action. Id. Notably, the VWCA will not apply unless both conditions of, “arising out of” and “in the course of,” employment are satisfied. Id. at *5-6. "The 'arising out of' requirement focuses on 'the origin or cause of the injury'." Id. at *6. There must be a causal connection between the injury and the conditions of employment “under which the employer requires the work to be performed.'" Id. (quoting Lopez v. Intercept Youth Servs., Inc., 300 Va. 190, 197, 861 S.E.2d 392 (2021) (quoting R&T Invs., Ltd. v. Johns, 228 Va. 249, 252, 321 S.E.2d 287 (1984))). In other words, the actual risk is "'peculiar to the work and not common to the neighborhood.'" Id. (quoting Taylor v. Mobil Corp., 248 Va. 101, 107, 444 S.E.2d 705 (1994) (internal citations omitted)). “The risk ‘need not have been foreseen or expected, but after the event it must appear to have had its origin in a risk connected with the employment, and to have flowed from that source as a rational consequence’." Id. (quoting Simms v. Ruby Tuesday, Inc., 281 Va. 114, 123, 704 S.E.2d 359 (2011) (quoting Bradshaw v. Aronovitch, 170 Va. 329, 335, 196 S.E. 684 (1938))).

Vidunas claimed that the dog bite injury did not “arise out of" her employment as a barn manager, by relying on Virginia’s Supreme Court decision in Lipsey v. Case, 248 Va. 59, 445 S.E.2d 105 (1994), in which the VWCA did not bar a negligence suit where a dog bit a horse farm employee. However, the similarity between Vidunas’s situation and Lipsey was considered “superficial.” Vidunas, 2025 Va. App. LEXIS 700, at *6-7. Lipsey was an unpaid student horse trainer who was bit by another student’s dog while on her lunch break at the student residence house at the farm. Id. Instead, the unpublished court of appeals decision in Prince William County School Board v. Fogarty, No. 1866-98-4, 1999 Va. App. LEXIS 513 (Aug. 31, 1999), was the most persuasive authority. Vidunas, 2025 Va. App. LEXIS 700, at *7. Fogarty was an assistant principal who was bitten “when her supervising principal thrice instructed her to meet his dog at the school during working hours” Id. (citing Fogarty, slip op. at 2, 1999 Va. App. LEXIS 513, at *2-3).

Moreover, some unpublished spider bite cases further illustrated the distinction. Id. at *7. The VWCA applied especially where the work conditions showed that the employee was regularly subjected to spiders at the workplace due to office construction. Id. at *9 (citing James Madison Univ. v. Housden, No. 1252-19-3, 2020 Va. App. LEXIS 63 (Mar. 10, 2020)). Thus, the court held that “an animal bite arises out of employment if the employer requires the employee to work under conditions where such a bite is peculiarly likely.” Id. Lipsey did not assert that the employer’s work conditions or instructions did not include physical contact with dogs. Id. Yet, “Warner not only instructed Vidunas to trot the horse, she required that Vidunas do so in Otis and Rollins's presence.” Id. at *8. Warner also “required her to run behind a horse, making loud noises and slapping the horse's rump, while the employer ran alongside with her dog. Those were the conditions of Vidunas's employment.” Id. at *9-10. The case was dismissed with prejudice.

IMMIGRATION LAW: Gang Violence and Relief from Removal Fourth Circuit Update

sbailey@nlrg.com (Suzanne L. Bailey) — Tue, 06 Jan 2026 18:05:34 GMT

IMMIGRATION LAW: Gang Violence and Relief from Removal Fourth Circuit Update

Suzanne Bailey—Senior Attorney

With the widely reported drama surrounding escalated enforcement by Immigration and Customs Enforcement, it is easy to lose sight of the fact that not every apprehension is the end-of-the line for non-citizens who have unlawfully entered the United States. Some non-citizens are permitted by U.S. law to remain in the United States.

A recent decision from the Fourth Circuit Court of Appeals addresses two potential avenues of relief for those for whom a return to their homeland would pose a danger that could not be alleviated by their own governments. See Ramos Marquez v. Bondi, No. 24-1842, ___ F.4th ___, 2025 U.S. App. LEXIS 30262, 2025 WL 3223424 (4th Cir. Nov. 19, 2025).

Carlos Ramos Marquez, a citizen of Honduras, left his country and entered the United States in May 2019. He was put in removal proceedings in 2023. He conceded that he was removable, but filed requests for the relief of (1) withholding of removal, 8 U.S.C. § 1231(b)(3); 8 C.F.R. § 1208.16(b), and (2) protection pursuant to the Convention Against Torture ("CAT"), 8 C.F.R. § 1208.16(c). Withholding of removal is available to a noncitizen who demonstrates a clear probability that, if removed to a particular country, their "life or freedom would be threatened in that country because of [his] race, religion, nationality, membership in a particular social group, or political opinion." Ramos Marquez, 2025 U.S. App. LEXIS 30262, at *14 (quoting 8 U.S.C. § 1231(b)(3)(A)). "Proof of past persecution in the proposed country of removal entitles the applicant to a rebuttable presumption that his life or freedom would be threatened." Id. at *15 (citing 8 C.F.R. § 1208.16(b)(1)(i)). The government can rebut the presumption by demonstrating by a preponderance of the evidence either that "there has been 'a fundamental change in circumstances such that the applicant's life or freedom' would no longer be threatened or that the applicant could avoid future harm 'by relocating to another part of the proposed country of removal.'" Id. (quoting 8 C.F.R. § 1208.16(b)(1)(i)(A)-(B)). Applicants cannot establish a clear probability of future persecution if they could avoid persecution by relocating within their country. 8 C.F.R. § 1208.16(b)(2). Protection pursuant to the CAT requires an applicant to "establish that it is more likely than not that he or she would be tortured if removed to the proposed country of removal." Id. at *25 (quoting 8 C.F.R. § 1208.16(c)(2)). The applicant bears the burden of proof. Id. "For purposes of the CAT, torture includes only conduct 'by, or at the instigation of, or with the consent or acquiescence of, a public official or other person acting in an official capacity.'" Id. at *25-26 (quoting 8 C.F.R. § 1208.18(a)) (emphasis added).

At the hearing before the Immigration Judge ("IJ"), Ramos Marquez testified to a reign of terror against him and members of his family ("a particular social group") by MS-13[1] members. The gang murdered one of his brothers in 2014 or 2015 in one town in Honduras. Some years later, another brother opened a business in another town, and Ramos Marquez worked there. In 2018, MS-13 members went to the business, threatened Ramos Marquez, and demanded extortion from his brother. The threats continued until the brother closed up shop and moved to yet another town in Honduras. Gang members then focused their attention on Ramos Marquez, trying to extort money from him, to get him to join the gang, and to turn in his brother to them. When he refused to cooperate, they resorted to physical violence on two occasions. The first time, he sought medical attention near his sister's home about 30 minutes from where he had been living and working and was assaulted and ultimately moved in with his sister. After the second serious assault, Ramos Marquez stayed inside his sister's house until he fled to the United States in April 2019. MS-13 members continued to send Ramos Marquez Facebook messages demanding money in 2020, even while he was living in the United States. In August 2021, the MS-13 members killed his other brother. In July 2022, Ramos Marquez's sister fled to the United States after MS-13 members threatened her when they came to her house looking for him. Police reports were filed by others concerning the murders of his brothers and the threat to his sister, but no arrests were made. Ramos Marquez never reported any of the assaults on him by MS-13 to the police because, as he explained at his hearing, the government was corrupt and nonresponsive and the gangs always found out when someone filed a complaint. The IJ found his testimony to be credible. Ramos Marquez, 2025 U.S. App. LEXIS 30262, at *2-7.

Nonetheless, the IJ and, ultimately, the Board of Immigration Appeals ("BIA") denied the application for withholding of removal because they determined that he had not been subject to past persecution by an entity Honduras was "unable or unwilling" to control, i.e., MS-13, and because he had not shown that he could not reasonably relocate to another place in Honduras to avoid future persecution. Id. at *14-16. The BIA affirmed the IJ's denial of protection under the CAT on the ground that Ramos Marquez did not establish that the Government of Honduras would acquiesce in any torture by MS-13. Id. at *26.

The Fourth Circuit reversed the decision of the BIA and remanded for a new hearing, finding that the IJ disregarded credible evidence without explanation, including evidence that Honduras would acquiesce in his torture if he were returned to the country; the evidence in the record compelled a conclusion that Ramos Marquez demonstrated that Honduras is unable or unwilling to control the MS-13 gang; reporting his past persecution to Honduran authorities would have been futile or subjected him to further harm; and he could not have relocated to avoid persecution. Id. at *1-2. The dissent argued that the majority failed to defer to the administrative findings of the IJ and the BIA.

There are several key take-aways from this decision. In the Fourth Circuit, there is no per se requirement to report persecution to the police, and the IJ must carefully weigh credible evidence of futility or danger in reporting such persecution. Token or merely procedural police response to the report of a crime does not, without more, prove that a state is “willing and able” to protect victims from powerful gangs. Once past persecution by a non-state actor whom the government cannot control, such as MS-13, is established, the burden shifts to the government to rebut the presumption of future persecution, including on the issue of relocation within the country. A review of the record requires that the IJ and the BIA meaningfully engage with evidence of conditions within the country, especially in CAT cases where such evidence can be dispositive of governmental acquiescence. Finally, the Fourth Circuit will treat the IJ’s or the BIA's unexplained disregard of credible, unrebutted, legally significant evidence as an abuse of discretion, even under a highly deferential substantial-evidence standard of review.

[1] La Mara Salvatrucha, commonly known as MS-13, a large and violent street gang, is a U.S. export which has spread to Mexico and Central America and is the frequent source of claims of persecution and torture by applicants for relief from removal. Ramos Marquez, 2025 U.S. App. LEXIS 30262, at *2 n.1.

ATTORNEY ETHICS: How to Make a Bad Situation Worse

jholder@nlrg.com (Jason Holder) — Tue, 06 Jan 2026 18:02:13 GMT

Jason Holder—Senior Attorney

ATTORNEY ETHICS: How to Make a Bad Situation Worse: Court Sanctions Attorney for Using Hallucinated Cases to Defend Himself Against Motion Alleging Prior Use of Hallucinated Cases

In a cautionary tale for attorneys seeking to use artificial intelligence (“AI”) technology in an effort to save time and money, a New York trial court has sanctioned counsel for relying “upon unvetted AI—in his telling, via inadequately supervised colleagues—to defend his use of unvetted AI.” Ader v. Ader, 2025 N.Y. Misc. LEXIS 7848, at *1, 2025 NY Slip Op 51563(U), 1, 87 Misc. 3d 1213(A), 240 N.Y.S.3d 701 (Sup. Ct. N.Y. County Oct. 1, 2025). The initial offense was brought to the court’s attention when the opposition “identified inaccurate citations and quotations in Defendants' opposition brief that appeared to be ‘hallucinated’ by an AI tool.” Id. at *3. Without admitting or denying the use of AI, the offending attorney initially suggested that the passages cited by the opposition “were intended as paraphrases or summarized statements of the legal principles established in the cited authorities.” Id. Rejecting this argument, the court noted that the “paraphrases” included “bracketed terms to indicate departure from a quotation (not something one would expect to see in an intended paraphrase) and comments such as ‘citation omitted.’” Id. at *4. Compounding matters, the cases cited relied upon for the alleged paraphrases of law “did not stand for the propositions quoted, were completely unrelated in subject matter, and in one instance did not exist at all.” Id.

The court was equally troubled by the seeming use of fake citations and quotations to support uncontroversial, correct statements of law. Id. Describing this practice as “no less frivolous” than fabricated case law in support of contested statements of law, the court explained that “when a fake case is used to support an uncontroversial statement of law, opposing counsel and courts—which rely on the candor and veracity of counsel—in many instances would have no reason to doubt that the case exists.” Id. As a result, the fake case may make its way into a judicial opinion, which itself would then be relied upon by subsequent courts resulting in the proliferation of the hallucinated citations. Id. at *4-5 (“The proliferation of unvetted AI use thus creates the risk that a fake citation may make its way into a judicial decision, forcing courts to expend their limited time and resources to avoid such a result.”).

Faced with a motion for sanctions for the repeated use of unvetted AI in the summary judgment opposition, counsel bafflingly submitted an opposition to sanctions containing “another wave of fake citations and quotations,” id. at *5, including “more than double the number of mis-cites, including four citations that do not exist, seven quotations that do not exist in the cited cases, and three that do not support the propositions for which they are offered.” Id. (emphasis in original). While counsel initially denied using unvetted AI in its motion oppositions, he was ultimately forced to admit that he had used AI and missed the references to false citations. Id. at *6-7. Explaining how this could have happened in his opposition to sanctions, the attorney indicated that he reviewed the response as of minimal importance “relative to the other time-sensitive tasks on which he and his recently hired staff were working at the time.” Id. at *7.

Admonishing counsel, the court was careful to note that the use of AI is not the problem per se; instead, “[t]he problem arises when attorneys abdicate their responsibility to ensure their factual and legal representations to the Court—even if originally sourced from AI—are accurate.” Id. at *10-11. By failing to check their work, regardless of the tool used to create it, attorneys “prejudice their clients and do a disservice to the Court and the profession.” Id. at *11. “In sum, counsel's duty of candor to the Court cannot be delegated to a software program.” Id. Ultimately, the court awarded reasonable costs and fees incurred responding to the offending filings with the sanction applying to “both Defendants and their counsel, jointly and severally.” Id. at *12. The court also directed that a copy of the decision and order be sent to “Grievance Committee for the Appellate Division, First Department and the New Jersey Office of Attorney Ethics.” Id.

TORT LAW: What Is “Economic Loss”? The Answer Depends on the State

cjhicks@nlrg.com (Charlene J. Hicks) — Wed, 29 Oct 2025 16:35:47 GMT

Charlene Hicks—Senior Attorney

Beginning with the United States Supreme Court’s decision in East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S. Ct. 2295 (1986), courts nationwide have utilized the economic loss doctrine to preclude plaintiffs from obtaining a tort remedy for contract-based claims. In effect, a plaintiff cannot pursue a tort claim to recover purely economic losses.

Although the economic loss doctrine is universally accepted, the practical application of this doctrine varies considerably from state to state. See In re Target Corp. Customer Data Sec. Breach Litig., 66 F. Supp. 3d 1154, 1171 (D. Minn. 2014) (analyzing the economic loss rules in 11 different states as applied to data breach litigation and finding that some states allowed the negligence claim to continue whereas others barred the claim); Reno Flying Servs. v. Piper Aircraft, Inc., No. 13-cv-04346 NC, 2014 U.S. Dist. LEXIS 163470, at *6 (N.D. Cal. Nov. 21, 2014) (determining that although California, Nevada, and Florida all “employ some form of the economic loss rule, each state would apply it differently in this case”).

“Some states only apply the economic loss doctrine in products liability cases or when a plaintiff in privity with defendant is seeking to circumvent provisions of the contract. Other states apply the doctrine more broadly and bar all claims in tort failing to allege either personal or property damage.” Clearone Communs. v. JAS Forwarding, No. 2:09-CV-450-TS, 2009 U.S. Dist. LEXIS 93545, at *7 (D. Utah Oct. 7, 2009) (internal quotation marks and footnotes omitted). Further, some additional states “view the economic loss doctrine as a method for determining whether a defendant owes a special duty to the plaintiff and go through a foreseeability analysis in applying the doctrine.” Id.

In North Carolina, for example, the economic loss doctrine bars a plaintiff from asserting a negligence claim in cases where a product causes injury to itself. However, an exception to this rule applies in cases where property other than the product itself is damaged. Moore v. Coachmen Indus., 129 N.C. App. 389, 402, 499 S.E.2d 772, 780 (1998). In contrast, Virginia case law has defined an economic loss as “a loss that flows from the failure of the product to perform as expected.” Redman v. John D. Brush & Co., 111 F.3d 1174, 1182 (4th Cir. 1997).

In Indemnity Insurance Co. of North America v. American Eurocopter LLC, No. 1:03CV949, 2005 U.S. Dist. LEXIS 34011, at *42 n.10 (M.D.N.C. July 8, 2005), the United States District Court for the Middle District of North Carolina pointed out that these two state law tests are very different. The Virginia economic loss doctrine is a “more sweeping product liability provision[ ]” than North Carolina courts have adopted. Id. Accordingly, the Virginia courts have “used the economic loss rule to constrain that broad liability, particularly between commercial entities.” Id. In contrast, “North Carolina courts have clearly held that the application of the economic loss rule in this state depends upon the existence of injury to a person or to property other than the product itself, and given the historical basis for this rule and the more limited nature of product liability claims in North Carolina, there is no basis to anticipate that the North Carolina state courts would redefine this rule.” Id.

Ultimately, it is not enough for a civil defendant to simply raise the economic loss doctrine and thereby completely shield himself from tort liability even in cases where the plaintiff’s loss seems to involve damage only to a defective product itself. Instead, it is critical to first determine the parameters of the economic loss doctrine as applied in the state wherein the damage occurred or the case is filed. A defendant who would be exempt from liability under the economic loss doctrine in one state may well be exposed to an actionable tort claim if the same claim were to be filed in a neighboring state.

EMPLOYMENT LAW: SCOTUS: Majority-Group Plaintiffs Held to Same Standard to Meet Prima Facie Burden in Title VII Cases

rwestendorf@nlrg.com (Robert Westendorf) — Wed, 29 Oct 2025 16:32:17 GMT

Robert Westendorf—Research Attorney

Marlean Ames, a heterosexual woman, was hired as an executive secretary by the Ohio Department of Youth Services in 2004 and was later promoted to program administrator. Ames v. Ohio Dep't of Youth Servs., 605 U.S. 303, 306, 145 S. Ct. 1540 (2025). In 2019, she applied for a newly created management position. Id. Although she was interviewed for the position, a lesbian woman was ultimately hired. Id. A few days after her interview, she was demoted from her program administrator position to her old secretary position. Id. The agency then hired a gay man for the now-vacant program administrator position. Id.

Ms. Ames sued under Title VII of the Civil Rights Act of 1964, alleging discrimination based on her sexual orientation. Id. The District Court granted summary judgment to the agency, and the Sixth Circuit affirmed. Id. at 306-07. Both the District Court and the Sixth Circuit held that Ms. Ames had not met her prima facie burden under McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817 (1973), which, in evaluating disparate treatment claims that rest on circumstantial evidence, requires a plaintiff to make a prima facie showing that the defendant acted with a discriminatory motive. Ames, 605 U.S. at 306-07. The Sixth Circuit held that Ms. Ames failed to meet her prima facie burden because she had not shown “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.” Id. at 307 (quoting Ames v. Ohio Dep't of Youth Servs., 87 F.4th 822, 825 (6th Cir. 2023)). According to the Sixth Circuit, Ms. Ames had to make this showing in addition to the usual showing for making a prima facie case. Id. Since Ms. Ames did not satisfy this burden by showing that the member of the relevant minority group made the decision at issue, or with statistical evidence showing that members of the majority group had been discriminated against, summary judgment in the agency’s favor was proper. Id.

The Supreme Court granted certiorari to resolve the circuit split over whether majority-group plaintiffs have to satisfy a higher evidentiary burden to meet their prima facie case and reversed the Sixth Circuit in a unanimous opinion by Justice Jackson. Id. at 308-13. Justice Jackson noted that Title VII’s disparate-treatment provision draws no distinctions between majority-group plaintiffs and minority-group plaintiffs. Id. at 309. The text of Title VII makes it unlawful “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual.” Id. By establishing “the same protections for every ‘individual’—without regard to that individual’s membership in a minority or majority group—Congress left no room for courts to impose special requirements on majority-group plaintiffs alone.” Id. at 310. The Court looked to prior decisions to confirm that “[o]ur case law thus makes clear that the standard for proving disparate treatment under Title VII does not vary based on whether or not the plaintiff is a member of a majority group.” Id.

According to the Court, the “background circumstances” rule leads to inflexible applications of the prima facie burden prong of McDonnell Douglas, which the Supreme Court had repeatedly rejected. Id. at 310-11. The Court noted that the Sixth Circuit’s opinion imposed a higher burden on Ms. Ames because of her sexual orientation. Id. The Court concluded that Title VII plaintiffs do not have to satisfy a heightened evidentiary standard just because they are majority plaintiffs, and remanded to the lower courts. Id. at 312-13.

Justice Thomas wrote a concurring opinion that Justice Gorsuch joined. Id. at 313-26. Justice Thomas argued that the “background circumstances” rule was a product “of improper judicial lawmaking.” Id. at 314. It is also hard to know who is a majority-group plaintiff in many situations, as women make up a majority of the whole population in the country, but not in some states or counties. Id. at 315. There would also be a problem in determining who is the majority-group plaintiff in the context of race and religion. Id. at 316-17. Justice Thomas ended his concurrence by arguing that the McDonnell Douglas framework should be reconsidered in an appropriate case. Id. at 319-26.

BANKRUPTCY: Student Loan Income-Driven Forgiveness Lawsuit on Hold

ahemenway@nlrg.com (Anne B. Hemenway) — Wed, 29 Oct 2025 16:24:49 GMT

Anne Hemenway—Senior Attorney

In March 2025, the American Federation of Teachers ("AFT") filed a lawsuit against the United States Department of Education (U.S. Dist. Ct. D.C. Civ. Action 25-802 (RBW)) for denying federal student loan borrowers their rights to an affordable repayment plan and to debt forgiveness opportunities which are mandated in their loan terms. These student loan income-driven repayment plans were mandated by Congress in part by President Biden's Savings on a Valuable Education ("SAVE") Plan, 20 U.S.C. §§ 1070 et seq., and the Department of Education’s revised regulations which provided more generous terms for income-based repayment plans. See Missouri v. Trump, 128 F.4th 979 (8th Cir. 2025) (citing SAVE Rule, 88 Fed. Reg. at 43901-02). Other students represented in the pending AFT class-action lawsuit are seeking relief through the Public Service Loan Forgiveness Buyback program. At the end of August 2025, the Department of Education had a backlog of 1,076,266 income-driven repayment plan applications.

The AFT lawsuit was filed after the Eight Circuit Court of Appeals' decision in Trump, 128 F.4th 979, filed on February 18, 2025, blocked the Department of Education from implementing aspects of the income-driven repayment plans. Immediately after the ruling, the Department of Education directed student loan services to stop accepting and processing income-driven repayment applications, as allowed under the SAVE Plan.

A large concern of the AFT lawsuit is that the American Rescue Plan Act of 2021, 15 U.S.C. §§ 9001 et seq., made student loan forgiveness tax-free at the federal level through the end of 2025, but Congress's recent budget reconciliation bill, H.R. 1, did not extend the law shielding student loan forgiveness from taxation after the end of 2025. This leaves over a million borrowers who are currently waiting on their repayment applications potentially facing large tax bills if their student loans discharge after December 2025 and not before.

That possibility looks more likely now because AFT's lawsuit against the Department of Education was put on hold by U.S. District Judge Walton in a October 4, 2025 ruling. The judge ruled that the AFT's lawsuit would be stayed until Congress restores appropriations to the Department of Justice.

ATTORNEY AND CLIENT Clarification of the Meaning of Retainer Fees

Amy Gore — Wed, 01 Oct 2025 14:50:19 GMT

Amy Gore—Senior Attorney

Calling a fee payment “non-refundable” is no protection from an ethical violation. The Virginia Supreme Court’s recent decision in Swango v. Virginia State Bar ex rel. Second District, No. 241016, 2025 Va. LEXIS 43, at *1 (July 31, 2025), clarified the differences between a refundable retainer and a non-refundable consultation fees.

The attorney in question accepted two engagements from clients for $300 each and received what he characterized as a non-refundable consultation fee. Both fees were deposited into the attorney’s operating account, rather than an attorney trust account. One client cancelled the representation the day of the contract because the attorney’s services were no longer needed. The second client failed to show for a scheduled meeting with the attorney. In both cases, no consultation ever occurred. Nevertheless, the attorney was not willing to refund the fees after requested to do so by the clients. After ethical charges were filed, the attorney asserted the argument that Rule of Professional Conduct (RPC) 1.5 and Legal Ethics Opinion (LEO) 1606, addressing retainer fees and consultation fees, contained a scienter element that the Bar had not satisfied. The attorney maintained that because the clients did not retain his services for a specific matter, the fees did not constitute advanced legal fees. The court disagreed.

The court reasoned that RPC 1.5 requirement that a fee be “reasonable” along with the obligation to safeguard client property required that an advanced legal fee be deposited in a trust account upon receipt. The funds may only be transferred into an operating account after services are rendered. The ethical limitations on fee agreements is further explained under LEO 1606, which mandates that “any fee charged for work that never is performed is per se unreasonable. Va. Legal Ethics Op. 1606.” 2025 Va. LEXIS 43, at *15. LEO 1606 provided further clarification of advanced legal fees: “Advanced legal fees represent prepayment for services to be rendered in a known matter or for identifiable services that are contemplated by the lawyer and client at the time of the payment.” 2025 Va. LEXIS 43, at *16. If the attorney performs no work before the attorney-client relation has terminated, the fees received cannot constitute advanced legal fees and must be refunded to the client.

The facts established that the fees received represented payment for future legal services and had not been earned.

As noted above, the parties, based on the communications from Swango's firm, contemplated that the fees were paid to secure discrete and known legal services and advice for a known set of legal circumstances—the strife attendant in each of the clients' marriages. Based on the firm's communications to the clients, it was contemplated that, at the end of the consultation, Swango would provide advice and "direction on navigating [the client's] particular matter[.]" (Emphasis added.)

2025 Va. LEXIS 43, at *22.

Also of significance for future ethical disputes is the Virginia Supreme Court’s affirmance of the Circuit Court’s decision to bar an expert in legal ethics. An opinion testimony would be either inadmissible legal conclusions or irrelevant opinion that would not benefit the court’s determination. The court differentiated the role of an expert witness in a legal malpractice action and one in a legal ethics dispute. Simply put, the fact that other attorneys would violate the RPC did not insulate any attorney from ethical evaluation by the Bar or the court.

BANKRUPTCY LAW: Johnson & Johnson Precluded from Using Bankruptcy to Settle Talcum Powder Lawsuits

ahemenway@nlrg.com (Anne B. Hemenway) — Wed, 23 Jul 2025 21:04:22 GMT

Anne Hemenway—Senior Attorney

Over 90,000 individuals have sued Johnson & Johnson and other parties for damages alleging that its talcum powder products—including Johnson's Baby Powder, which has been widely used on babies over the past 50 years—contain asbestos, which causes cancer. While Johnson & Johnson denies that its products contain asbestos, and insists that there is no link between its products and cancer, it has stopped selling talc-based baby powder worldwide.

Since 2021, Johnson & Johnson has tried to use the bankruptcy courts to settle the tens of thousands of claims against it, without success. The effort failed in 2021 and in 2023, and most recently failed a third time on March 31, 2025. In 2021, Johnson & Johnson created a subsidiary called LTL Management and then pulled all of the baby powder claims into the subsidiary. A day after that was accomplished, LTL Management declared bankruptcy in the Bankruptcy Court for the Western District of North Carolina. The LTL bankruptcy was transferred to the Bankruptcy Court for the District of New Jersey and was ultimately dismissed by the Third Circuit Court of Appeals because the appellate court found that LTL—"a company created to file for bankruptcy"—was not in any financial distress. In re LTL Mgmt., LLC, 64 F.4th 84, 110 (3d Cir. 2023).

LTL started a second bankruptcy in the Bankruptcy Court for the District of New Jersey in April 2023, the day after the first bankruptcy was dismissed pursuant to the mandate of the Third Circuit. Johnson & Johnson maintained that the bankruptcy would resolve all of the contested lawsuits in the most equitable way for all parties. As part of the 2023 proposed plan, Johnson & Johnson agreed to establish a trust fund to pay $8.9 billion over 25 years to the claimants. Critics dubbed the shenanigans as the "Texas two-step" and a clear effort to shield Johnson & Johnson by creating an insolvent company. In 2023, the bankruptcy judge, bound by the Third Circuit's decision, rejected LTL Management's bankruptcy filing, but urged the parties to continue negotiations to achieve a global resolution of all claims. In re LTL Mgmt., LLC, 652 B.R. 433, 455 (Bankr. D.N.J. 2023), aff'd sub nom. In re LTL Mgmt. LLC, No. 23-2971 and 23-2972, 2024 U.S. App. LEXIS 18437 (3d Cir. July 25, 2024).

Johnson & Johnson's latest attempt at achieving global settlement of the talc claims through bankruptcy, In re Red River Talc LLC, Case No. 24-90505, 2025 Bankr. LEXIS 863 (Bankr. S.D. Tex. Mar. 31, 2025), was rejected by the Bankruptcy Court for the Southern District of Texas partially on the grounds that the claimants' attorneys failed to secure the consent of enough claimants. Starting in June 2024, well before the bankruptcy filing, Johnson & Johnson started soliciting votes from claimants with ovarian and other gynecological cancer claims. The disclosure statements it sent to claimants stated that once 75% of the claimants agreed to the settlement, Johnson & Johnson would form a Texas entity called Red River Talc, LLC, and immediately file for Chapter 11 bankruptcy and seek confirmation of its plan. This is what, in fact, happened, but the Texas bankruptcy court dismissed the case because of inconsistencies with the prepetition voting, the denial of plan confirmation, and issues with the Texas divisional merger rules. The court noted that although "[r]esolving mass tort claims in bankruptcy is a valid bankruptcy purpose," 2025 Bankr. LEXIS 863, at *96, the fact that Johnson & Johnson filed a settlement-driven divisional merger bankruptcy case distinguished this case from other mass tort bankruptcy cases, id. at *98. The lack of a real business to operate or save or hard assets to sell or employees to consider, coupled with the fact that the debtor, Red River Talc, would be required to rely on funding exclusively from Johnson & Johnson highlighted the need for proper third-party releases and inclusion of retailers in the channeling injunction and pointed to the importance of adhering to the rules. Id. at *98-99. The bankruptcy judge noted that the tort litigation should not be stayed "while all of this gets sorted out. Red River and J&J wanted to get a vote on their Plan, and that happened. It is just not a confirmable one and the vote was unnecessarily rushed." Id. at *100. Court-watchers await Johnson & Johnson's next bankruptcy filing.

CIVIL RIGHTS SCOTUS: Securing a Preliminary Injunction Not Enough to Get Attorney’s Fees Under 42 U.S.C. § 1988(b

rwestendorf@nlrg.com (Robert Westendorf) — Wed, 23 Jul 2025 21:02:15 GMT

Robert Westendorf—Senior Attorney

In Virginia, a statute mandated that drivers lose their licenses when fines or penalties that they owed were not paid. Lackey v. Stinnie, 145 S. Ct. 659, 2025 U.S. LEXIS 866, at *5-6 (Feb. 25, 2025). Drivers whose licenses had been suspended sued and alleged violations of the Due Process and Equal Protection Clauses. Id. at *6. After the district court granted a preliminary injunction against the law, the case was stayed and later dismissed because the Virginia legislature repealed the law. Id.

The drivers asserted they were entitled to attorney’s fees under 42 U.S.C. § 1988(b), which allows prevailing parties in civil rights cases to receive attorney’s fees. Id. The en banc Fourth Circuit determined that the drivers were entitled to attorney’s fees. Id. at *7. The Supreme Court granted certiorari and reversed the Fourth Circuit by a 7-2 vote. Id. at *8. Chief Justice Roberts started the majority opinion by noting that the general rule in America is that the prevailing party is not entitled to collect attorney’s fees from the loser, and that federal courts can depart from this rule only when there is statutory authorization to do so. Id. at *8-9. At the time that Section 1988 was adopted, “prevailing party” is the party who ultimately prevails at the end of the lawsuit. Id. at *9-10. But preliminary injunctions “do not conclusively resolve legal disputes. In awarding preliminary injunctions, courts determine if a plaintiff is likely to succeed on the merits—along with the risk of irreparable harm, the balance of equities, and the public interest.” Id. at *10. The purpose of preliminary injunctions is to preserve the positions of the parties until a trial and often depends as much on the equities of the case as on the legal issues that are involved. Id. A preliminary injunction has a temporary nature because courts can reach a different conclusion at the permanent injunction stage. Id. at *11. Since preliminary injunctions do not “conclusively resolve the rights of parties on the merits, they do not confer prevailing party status.” Id. at *11.

The court found that this view followed from precedent, as previous decisions had established that for a party to be a “prevailing party” to get attorney’s fees, the change in the legal relationship between the parties must be enduring, and the change must be judicially sanctioned. Id. at *12-14. The court also found that this rule served the interests of judicial economy by reducing major litigation over attorney’s fees. Id. Since the drivers only gained preliminary injunctive relief before the case became moot, they were not prevailing parties entitled to attorney’s fees. Id. at *18.

Justices Jackson and Sotomayor dissented. Id. at *19. For the dissent, a prevailing party is one who has successfully maintained his claim when the matter is finally set at rest. Id. at *21-*22. The majority erred in requiring that a party receive a final judgment in their favor to receive attorney’s fees. Id. at *22.

Precedent indicated that a plaintiff prevails if he receives (1) actual relief on the merits of a claim in a manner that (2) materially alters the legal relationship between the parties by modifying the defendant’s behavior in a way that directly benefits the plaintiff. Id. at *27. In this case, the preliminary injunction provided the drivers with actual relief by reinstating their suspended licenses and thus worked a material alteration in the relationship between the parties. Id. at *28. The relief awarded was also on the merits because it provided “a resolution of the dispute which changes the legal relationship between [the plaintiff] and the defendant.” Id. (quoting Tex. State Tchrs. Ass'n v. Garland Indep. Sch. Dist., 489 U.S. 782, 792 (1989)). The dissent noted that a preliminary injunction can only be granted on a strong showing that a party is likely to succeed on the merits, and in this case, “the District Court thoroughly assessed the merits of respondents’ claims and granted their request for preliminary injunctive relief after extensive briefing and an evidentiary hearing during which multiple witnesses testified.” Id. at *29-30. The dissent concluded that “when a court hearing a civil rights lawsuit issues a preliminary injunction that materially alters the relationship between the parties and is never reversed, the requesting party ‘prevails’ for fee-shifting purposes and is thus eligible for a fee award under § 1988(b).” Id. at *41.