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Injunction against Trump’s DEI executive orders unlikely to stem massive wave of ‘reverse discrimination’ lawsuits

Emerging Litigation PodcastProduced by HB Litigation

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Interested in contributing an article? Email us at Editor@LitigationConferences.com.

Injunction against Trump’s DEI executive orders unlikely to stem massive wave of ‘reverse discrimination’ lawsuits

By: Justin Ward

If the Supreme Court rules in the plaintiff’s favor, it could open the floodgates for ‘reverse discrimination’ suits by lowering the evidentiary threshold for claims.

Last week, a federal court enjoined provisions of President Donald Trump’s executive orders targeting “illegal DEI” programs, but legal experts argue that it’s doubtful the ruling will halt the explosive growth in “reverse discrimination” suits under the current administration.

In the case of National Association of Diversity Officers in Higher Education et al. v. Trump et al, a district judge in Maryland issued a preliminary injunction against two executive orders targeting Diversity, Equity, and Inclusion programs in federal contracting and the private sector. One would require agencies to terminate all “equity-related” grants and contracts within 60 days. The second mandated that grant recipients certify compliance with federal anti-discrimination laws and called on the U.S. attorney general to open investigations into private sector DEI programs.

The judge found that the plaintiffs could likely prove the case on its merits that the executive order was unconstitutionally vague. The executive orders did not clearly define critical terms like “equity-related” and “DEI,” causing potential confusion for agencies, contractors, or private entities attempting to interpret and comply with the order.  On similar grounds, the judge argued that ambiguities around what constitutes “illegal DEI” in the orders’ enforcement provisions could have a chilling effect on free speech.

While the injunction temporarily prevents federal agencies, contractors, and grantees from losing funding under the executive orders, it will not affect ongoing and pending “reverse discrimination” suits under Title VII of the 1964 Civil Rights Act or the Equal Employment Opportunity Act. Nothing in the court opinion prevents third parties from bringing lawsuits under these longstanding legal frameworks.

The number of lawsuits claiming discrimination against majority groups has grown substantially in the wake of the Supreme Court’s 2023 ruling in Students for Fair Admission v. Harvard, which dealt a lethal blow to affirmative action in higher education.

Activists and individual plaintiffs have brought more than 100 claims of “reverse discrimination” since then. Meanwhile, state legislators have introduced over 80 anti-DEI laws aimed at programs that promote minority hiring, women-owned businesses, and bias training, potentially creating new causes of action.

Moreover, late last fall, the Supreme Court agreed to hear a case that could potentially lower the bar for successful “reverse discrimination” litigation. Ames v. Ohio Department of Youth Services will determine if a person in a historical majority group must prove that “background circumstances” exist showing that an employer has an interest or inclination to discriminate in favor of a minority.

These “background circumstances” could include things like hiring minority applicants who are unambiguously less qualified than majority ones or demonstrating an obvious pattern of preferring minority employees. In this case, the Sixth Circuit found that the plaintiff, a heterosexual woman who was demoted and replaced by a gay man, could not sufficiently prove there was a pattern by providing other examples of discrimination against heterosexuals.

If the Supreme Court rules in the plaintiff’s favor, it could open the floodgates for “reverse-discrimination” suits by lowering the evidentiary threshold for claims. Still, it’s noteworthy that one of the few times the conservative Supreme Court has broken with the Trump Administration was in the case of Bostock v. Clayton County, in which it found that Title VII applied to discrimination based on sexual orientation.

Justin Ward is a Seattle-based investigative reporter specializing in politics, courts, and criminal justice. His work can be found in national and local media outlets, including USA Today, the Southern Poverty Law Center, and The Seattle Stranger. He can be reached at justinwardtexan@yahoo.com.

March 18, 2025
2025 California Wildfires Prompt Wave of Suits
Wildfire and Climate Change Posts

HB Environmental Update | Tuesday, Feb. 3, 2026 | Climate Funding, Wind Power, Wild Horses, PFAS Regs, PFAS Settlement, and the Decades of Debate Over the Pollution Exclusion

February 6th, 2026|

HB Environmental Update Monday, Dec. 15, 2025 | Feds Step Back, States Step In, Courts Push Back, EPA Wavers

December 13th, 2025|

Montana Court Awards $2.9 Million in Fees to Youth Climate Plaintiffs After Landmark Constitutional Win

November 16th, 2025|

Insurance Coverage Litigation’s Modern Mayhem with Jeremy Moseley on the Emerging Litigation Podcast

September 17th, 2025|

Climate Change Law: Tension Increases Over Governmental and Corporate Responsibility

August 8th, 2025|

2025 California Wildfires Prompt Wave of Suits

March 11th, 2025|

22 States Sue New York Over Climate Fund, Calling It an ‘Unconstitutional Shakedown’

March 3rd, 2025|

Property Insurance Coverage for Emerging Risk of Underground Climate Change 

July 8th, 2024|

Property Insurance Coverage for Emerging Risk: Underground Climate Change

January 31st, 2024|

Natural Gas Bans and Bans on Bans

September 25th, 2023|

Climate Change, Property Rights, and Conservation: Highlights from a Decade of Environmental Law (2013–2023)

June 16th, 2023|

European Court of Human Rights to Hear Case on Climate Change by Victoria Kline

April 7th, 2023|

Greenhouse Gases Cited in Suit to Invalidate Drilling Leases

April 2nd, 2023|

Conservationists Try Again to Block Drilling in Alaska’s Western Arctic

April 1st, 2023|

Emerging Litigation PodcastProduced by HB Litigation

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Interested in contributing an article? Email us at Editor@LitigationConferences.com.

2025 California Wildfires Prompt Wave of Suits

By Bret Thurman

Power companies, once again, are the primary defendants.

Ubi jus ibi remedium. Where there’s a wrong, there’s a remedy. This legal axiom is the basis of the dozens of lawsuits that have been filed against various entities who, according to the plaintiffs, share responsibility for starting the 2025 California wildfires.

The fires burned thousands of acres and damaged or destroyed thousands of homes and businesses. The blazes created vast clouds of smoke — laced with lead, asbestos, and other toxins — that shrouded much of Southern California. We may not know the full extent of the damage and injuries for at least 50 years.

Ubi jus ibi remedium basically means nothing happens by accident. That’s especially true of a widespread disaster like wildfires, and what plaintiff attorneys are working to establish. The lawsuits, most of which are pending in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura Counties, name various defendants and rest upon several legal doctrines.

Power Company Negligence

Substantial evidence indicates that Southern California Edison (SCE), one of the area’s largest electrical power providers, negligently maintained power lines, towers, transformers, and other electrical system infrastructure. SCE is a public utility which operates with a monopoly guaranteed by the California Public Utilities Commission, which has exclusive power to refuse to issue certificates of public convenience and necessity to permit potential competition to enter the market.

One of the latest “smoking guns” involves M16T1, a tower which had been inactive for more than fifty years. Shortly before the fires broke out, SCE recorded a fault on the power line which is located a few miles from Eaton Canyon.

Further evidence of SCE’s alleged negligence may be its delay in shutting off power to the area. The fires began in the first week of January, 2025. Soon, over 35 were raging through the area. Yet SCE allegedly refused to cut power to the affected area for approximately three weeks. Such evidence could convince a jury that SCE negligently caused fires, and damages could be staggering.

A California judge had ordered SCE to keep the power off in certain areas for at least 21 days, preserve critical infrastructure near the fire’s origin, and produce information concerning allegations that the company is destroying or concealing evidence. Most of this information is under seal, as the judge expressed concern about making discovery records public at such an early stage.

Many negligence lawsuits against SCE also cite violations of Section 2106 of the Public Utilities Code (exemplary damages if the negligent act or omission was willful), and Section 13007 of the Health and Safety Code (individual liability for any person who “willfully, negligently, or in violation of law” causes fire-related damage.

Landlord Actions

When a disaster occurs, many people try to take advantage of the situation for financial gain. Price-gouging gas stations are probably the best example. Immediately following the outbreak of the 2025 California wildfires, some area landlords increased rent by over 200 percent. In response, California lawmakers capped rent increases at 10 percent for thirty days. On February 25, Strategic Actions for a Just Economy, a tenant advocacy group, filed an action against six Southern California landlords who allegedly increased rent in violation of this emergency order.

Inverse Condemnation

This doctrine, which is unique to California and similar to negligence per se, holds public utility companies, such as SCE, liable for wildfire damage as a matter of law.

The City of Los Angeles’ Department of Water and Power is the primary defendant in these inverse condemnation claims. Plaintiffs argue the department’s mismanagement of water resources contributed to the fires. In an inverse condemnation claim, contributing to a problem is basically the same thing as causing that problem.

Lawsuits often point to the controversial Santa Ynez Reservoir in Pacific Palisades. Shortly before construction began in the late 1960s, water department officials cited the need for a water supply to combat fires on the south slopes of the nearby Santa Monica mountains. But officials drained the reservoir in February 2024, citing contamination concerns. With this nine-acre, 117-million-gallon reservoir out of commission, firefighters were unable to quickly contain the 2025 California wildfires.

Public Nuisance

Pursuant to California Civil Code Section 3480, a public nuisance is any activity which “affects, at the same time, an entire community or neighborhood, or any considerable number of persons, although the extent of the annoyance or damage inflicted upon individuals may be unequal.” This provision, and its equivalent in the penal code (Section 372) usually involves neighborhood nuisances, like barking dogs, loud parties, and trash piles. However, these laws could also apply to wildfire damage. Possible defendants include SCE, the Water Department, and the California Public Utilities Commission.

Insurance Claims

More than 37,000 wildfire compensation claims have been filed, with insurance companies paying out approximately $12.1 billion to affected individuals and businesses. Claims typically cover property damage, rebuilding costs, replacement of personal belongings, temporary living expenses, and medical expenses related to fire injuries. California laws now require insurance companies to make advance payments of 30% of the policy’s dwelling limit (up to $250,000) without itemized claims. Bad faith lawsuits have been filed against insurance companies for unfairly denying coverage or delaying payments.

Case in Focus:
Lutzow v. California Southern Edison

Here are some details of a case brought against Southern California Edison for damages resulting from the Eaton Fire, alleging negligence and violations of public utility regulations. The plaintiff attorneys are attorneys at Diab & Chambers — which has handle many wildfire cases — and the wildly known Texas plaintiffs’ firm, Baron & Budd.

The primary allegations in the complaint are:
- Inverse Condemnation: Plaintiffs allege that Southern California Edison (SCE) and other defendants’ electrical systems caused the Eaton Fire, resulting in the taking of Plaintiffs’ private property.
- Negligence: Defendants failed to properly design, construct, inspect, maintain, repair, manage, and operate their electrical infrastructure, leading to the fire.
- Trespass: Defendants negligently allowed the fire to spread to Plaintiffs’ properties.
- Nuisance: Defendants’ actions created harmful conditions that interfered with Plaintiffs’ use and enjoyment of their property.
- Violation of Public Utilities Code § 2106: Defendants failed to comply with the Public Utilities Act and related regulations.
- Violation of Health & Safety Code § 13007: Defendants negligently allowed the fire to be set and escape to Plaintiffs’ properties.
The laws or statutes cited include:
- California Civil Code § 1714(a)
- Public Utilities Code §§ 702, 451, 2106
- Public Resources Code §§ 4292, 4293, 4894, 4435
- Health & Safety Code §§ 13001, 13007
- CPUC General Orders 95, 165
The plaintiffs are requesting the following damages or relief:
- Repair, depreciation, and/or replacement of damaged, destroyed, and/or lost personal and/or real property.
- Loss of use, benefit, goodwill, and enjoyment of their property.
- Loss of wages, earning capacity, and/or business profits.
- Evacuation expenses and alternative living expenses.
- Erosion damage to real property.
- Past and future medical expenses.
- General damages for personal injury, emotional distress, annoyance, disturbance, inconvenience, mental anguish, and loss of quiet enjoyment of property.
- Attorneys’ fees, expert fees, consultant fees, and litigation costs.
- Punitive and exemplary damages against SCE.
- Prejudgment interest.
- Any other relief deemed proper by the court.
Conclusion

Wildfires are happening with greater frequency and intensity. Climate change is exacerbating the issue, creating dryer conditions and more intense and sustained winds, all over longer stretches of time, i.e., it will always feel like it is fire season. With that will come more litigation — directly against responsible parties — and against insurance companies. It is also going to continue to affect the insurance market and real estate, and place increasing pressure on infrastructure. Health-related claims from exposure to toxic materials are an almost certainty.

Bret Thurman is a Dallas-based legal writer who practiced law in Texas for over twenty years. His writing focuses on criminal defense, family law, consumer bankruptcy, and personal injury. He obtained his B.A. in history from Baylor University and his J.D. from the University of Texas at Austin. Bret is also an award-winning screenwriter and father of four. He can be reached at Editor@LitigationConferences.com.

Edited by Tom Hagy. Updated March 13, 2025.
March 11, 2025
Fall bellwether trials for social media addiction cases to test novel legal theories

Emerging Litigation PodcastProduced by HB Litigation

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Interested in contributing an article? Email us at Editor@LitigationConferences.com.

Fall bellwether trials for social media addiction cases to test novel legal theories

By: Justin Ward

Comparing social media to an addictive chemical like nicotine presents a challenging legal argument. Unlike substances, social media has a significant speech component, and any attempt to regulate it could raise First Amendment concerns.

Bellwether trials for two consolidated cases against some of the world’s largest social media platforms are expected to begin later this year, testing the novel application of legal theories traditionally used in cases against producers of addictive substances like nicotine and opioids.

More than 1,900 individual personal injury, school district, state attorney general, and municipal claims from nearly every state have been merged into multidistrict litigation (MDL) and Judicial Council Coordinated Proceedings (JCCP) cases in California. The courts are expected to hear a subset of these cases—the bellwether trials—before the year’s end.

The primary defendants include the parent companies of platforms with large youth audiences, such as Instagram, TikTok, Snapchat, and YouTube. Plaintiffs’ attorneys argue that these platforms are marketed to children and deliberately designed to exploit adolescent brains, which are particularly vulnerable at that stage of development.

Their complaint cites a growing body of research linking frequent social media use to negative mental health outcomes in young people, including an increased risk of suicide, eating disorders, anxiety, and behavioral problems. It also alleges that the companies were aware of these potential harms but failed to take action to mitigate the risks or warn consumers.

Whether these claims will prevail depends on a lengthy discovery process and competing testimony from expert witnesses. However, early rulings in California and other jurisdictions provide insight into how courts may interpret the law.

Legal Challenges and Early Rulings

Claims brought by school districts arguing that social media constitutes a “public nuisance” have seen mixed results. Some state and federal courts have allowed them to proceed, while others have dismissed them. California Superior Court Judge Carolyn Kuhl, who oversees the JCCP lawsuit, has dismissed public nuisance and product liability claims but has allowed the case to move forward on negligence and failure-to-warn grounds.

In October, Meta, the parent company of Instagram and Facebook, moved to dismiss the MDL, citing Section 230 of the Communications Decency Act, which protects platforms from liability for user-generated content. Judge Yvonne Gonzalez Rogers ruled that the case could proceed, though she found that Section 230 provided the company with partial immunity. Notably, Rogers and Kuhl differ in how they classify social media platforms—as products versus speech-based services—which could have significant legal implications.

First Amendment and Addiction Comparisons

Comparing social media to an addictive chemical like nicotine presents a challenging legal argument. Unlike substances, social media has a significant speech component, and any attempt to regulate it could raise First Amendment concerns.

In late January, the 9th U.S. Circuit Court of Appeals issued a preliminary injunction blocking California’s Protecting Our Kids from Social Media Addiction Act from taking effect while an appeal is pending. The panel of judges ruled that some of the plaintiffs’ claims were likely to succeed.

While the MDL bellwether trial was initially scheduled for October 2025, it has since been postponed.

Justin Ward is a Seattle-based investigative reporter specializing in politics, courts, and criminal justice. His work can be found in national and local media outlets, including USA Today, the Southern Poverty Law Center, and The Seattle Stranger. He can be reached at justinwardtexan@yahoo.com.

March 3, 2025
22 States Sue New York Over Climate Fund, Calling It an ‘Unconstitutional Shakedown’

Emerging Litigation PodcastProduced by HB Litigation

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Interested in contributing an article? Email us at Editor@LitigationConferences.com.

22 States Sue New York Over Climate Fund, Calling It an ‘Unconstitutional Shakedown’

By: Tim Zyla

The lawsuit against New York’s Climate Change Superfund Act underscores a high-stakes battle over state authority, federal oversight, and the financial burden placed on energy producers in the name of climate accountability.

A coalition of 22 states, led by West Virginia, is suing New York just over two months after Governor Kathy Hochul signed a law requiring energy producers to pay $75 billion to cover damages caused by climate change.

The lawsuit, filed in the U.S. District Court for the Northern District of New York in Albany, names New York Attorney General Letitia James, Interim Commissioner of the State Department of Environmental Conservation, and Acting Tax Commissioner of the State Department of Taxation and Finance Amanda Hiller as defendants.

The states seek declaratory and injunctive relief, arguing that New York’s fund attempts to “seize control over the makeup of America’s energy industry.” The suit claims the fund was politically motivated and seeks to impose “tens of billions of dollars of liability on traditional energy producers” while using the money to “subsidize certain New York-based ‘infrastructure’ projects, such as a new sewer system in New York City.”

Legal Arguments

The plaintiffs argue that New York’s law violates multiple constitutional provisions and oversteps federal authority:

🔹 Commerce Clause (Article I, Section 8) – The lawsuit claims the law retroactively imposes financial penalties on out-of-state companies, effectively regulating businesses beyond New York’s jurisdiction.

🔹 Clean Air Act (42 U.S.C. § 7401(a)(3)) – While states play a role in controlling air pollution, the plaintiffs assert that the federal government holds primary authority over interstate emissions standards.

🔹 Supreme Court Precedent – The lawsuit cites Okla. Tax Comm’n v. Jefferson Lines, Inc. and Kansas v. Colorado, arguing that states cannot legislate where Congress has chosen not to act or impose policies on other states.

🔹 State Tariffs Violation – The Climate Change Superfund Act functions as a form of state tariff, which Comptroller of Treasury of Md. v. Wynne identified as “one of the chief evils that led to the adoption of the Constitution.”

🔹 Due Process Clause (14th Amendment) – The law is allegedly “unreasonable” and “arbitrary” because it seeks to impose retroactive penalties on a select group of energy producers who lawfully extracted and refined fossil fuels.

🔹 Equal Protection Clause (14th Amendment) – The plaintiffs argue the law favors New York-based energy producers while penalizing out-of-state companies, making it discriminatory.

🔹 Eighth and Fifth Amendments – The lawsuit claims the law imposes excessive penalties and violates due process protections.

Additionally, the plaintiffs argue that the Clean Air Act only allows lawsuits from the state where the pollution originates, citing City of New York v. Chevron Corp.

Disputed Payment Structure

The lawsuit challenges the fund’s payment structure, which requires energy companies to pay $3 billion per year for 25 years to reach $75 billion. The plaintiffs highlight a statement from New York Assemblyman Jeffrey Dinowitz, who admitted the assessment rate was set arbitrarily, stating:

“I didn’t want it to be too little, (and) didn’t want it to be too much.”

The lawsuit also references Dinowitz’s remarks after the bill’s passage, where he claimed the law had “set a precedent for the nation to follow.” The states argue this confirms their concern that other states may adopt similar measures, creating a patchwork of conflicting state-level climate policies that could burden energy companies and disrupt national commerce.

Motion to Dismiss and Support for the Fund

A pro se West Virginia resident has filed a request for dismissal with prejudice, arguing that the states leading the lawsuit are violating the U.S. Constitution. The filing claims that the states are breaching:

🔹 Article VI, Clause 3 – Oath of state officers.

🔹 Article I, Section 10 – Prohibiting states from making agreements without Congressional approval.

🔹 Article IV, Section 1 – Full Faith and Credit Clause, requiring states to recognize New York’s laws.

The anonymous filer asserts that New York acted in the best interest of public health, whereas the suing states are representing “unnatural entities” (fossil fuel corporations) that may be harming U.S. citizens. The request also calls for a $50 million fine against each plaintiff state, with funds directed to the Climate Change Superfund.

Furthermore, the filing argues that Congress has not yet provided guidance on how states should enforce such laws, making the lawsuit premature.

The Lawsuit’s Demands

The coalition of states is requesting the court:

🔹 Declare the Climate Change Superfund Act unconstitutional and preempted by federal law.

🔹 Block New York officials from enforcing or implementing the law.

🔹 Award the plaintiffs legal fees and costs.

🔹 Grant any other relief deemed necessary and appropriate.

As this legal battle unfolds, the case could set a major precedent for how states hold fossil fuel companies accountable for climate-related costs. If upheld, the law could pave the way for other states to adopt similar measures, while a ruling against New York could curtail state-level climate initiatives and reinforce federal control over emissions regulations.

📄 Read the full complaint here: Final Superfund Complaint

Tim Zyla is a lifelong journalist working as managing editor of two daily newspapers in Pennsylvania and is an avid follower of criminal law and law enforcement. He may be reached at tim@timzyla.com.

March 3, 2025
When Litigation Financing Goes Wrong, Who Pays?
Emerging Litigation PodcastProduced by HB Litigation

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Interested in contributing an article? Email us at Editor@LitigationConferences.com.

When Litigation Financing Goes Wrong, Who Pays?

With Crushing Debt Owed to Financiers, Mass Tort Firm Files Bankruptcy

By Jennifer Holmes

The AkinMears LLP bankruptcy serves as a cautionary tale for law firms navigating the high-stakes world of litigation financing—where access to capital can be a lifeline, but financial overreach can lead to collapse.

In January 2025, Houston-based mass tort law firm AkinMears LLP filed for Chapter 7 bankruptcy, citing over $200 million in debt owed to litigation funding companies Virage SPV 1 ($116.4M) and Rocade Capital ($86M). This filing marks a significant moment in the legal industry, highlighting the financial risks law firms face when heavily relying on third-party litigation financing.

According to Bloomberg Law’s U.S. Bankruptcy Tracker, AkinMears LLP was the only U.S. law firm filing for bankruptcy in January 2025 with $50 million or more in liabilities. In total, 12 large law firms declared bankruptcy in January 2025, up from seven in January 2024 but slightly below the 17 cases recorded in January 2023.

The Role of Litigation Funders

Litigation financing has become a crucial resource for law firms pursuing large-scale mass tort cases. Virage SPV 1 and Rocade Capital are two key players in this space, specializing in providing capital to firms operating on a contingency fee basis.
- Virage SPV 1: Founded in 2013 and based in Houston, Virage Capital Management LP provides financial solutions to attorneys and law firms, deploying over $1.1 billion across various portfolios. Their funding model allows firms to cover litigation costs, operational expenses, and case acquisitions without an immediate financial burden.
- Rocade Capital: A private credit firm, Rocade Capital provides flexible growth capital to plaintiff law firms. It emerged as a major litigation finance player after partnering with Barings LLC and EJF Capital, raising approximately $470 million in 2023 to support legal funding initiatives.
These third-party litigation funding (TPLF) companies evaluate cases based on their likelihood of success. If a firm wins, the funder receives a share of the proceeds, often as a first-priority creditor. If the firm loses, the funder bears the financial loss. However, as the AkinMears case demonstrates, the system carries significant risks for all involved.

AkinMears’ Previous Financial Struggles

AkinMears LLP has faced finance-related legal disputes before. In 2015, the firm was embroiled in litigation with financier Amir Shenaq, who was hired to secure funding for mass tort cases.

According to Shenaq, he helped arrange approximately $90 million in loans for the firm, which was used to finance the acquisition of 14,000 lawsuits from other firms. However, a dispute over unpaid commissions led Shenaq to file a lawsuit, alleging that AkinMears owed him $4.2 million.

This case underscored the volatility of litigation finance arrangements and the financial strain that firms face when relying heavily on external funding.

The Risks of Litigation Financing

One of the biggest challenges in litigation finance is the unpredictable nature of mass tort cases. AkinMears’ bankruptcy suggests that a backlog of unresolved cases, missed payments to funders, and investor pressure created an unsustainable financial situation. The firm’s collapse raises broader questions about the long-term viability of litigation financing as a business model.

Key Questions Remain

Should there be greater transparency and regulatory oversight to prevent potential undue influence from litigation funders?

Should judges be informed when a mass tort case is being financed by a third party?

Are some cases being extended unnecessarily to maximize payouts for funders and attorneys?

How can law firms balance the financial advantages of litigation funding with the risks of over-leveraging?

While litigation financing provides critical resources for plaintiffs and law firms, the AkinMears LLP case illustrates the dangers of misalignment between financial strategies and legal practice. As the legal industry grapples with these challenges, law firms must carefully weigh the benefits and risks of third-party financing.

Jennifer Holmes is a former journalist turned business writer and analyst. She can be reached at Editor@LitigationConferences.com.
February 27, 2025
Mexico Bans Imports of Foreign Textiles: Does My Insurance Policy Cover That?
Emerging Litigation PodcastProduced by HB Litigation

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Interested in contributing an article? Email us at Editor@LitigationConferences.com.

Mexico Bans Imports of Foreign Textiles

Does My Insurance Policy Cover That?

By: Diana Gliedman, Dennis Nolan, Fiona Hogan

When pursuing insurance coverage, time is of the essence. If your business is affected by the recent Mexican presidential decree, you should take immediate action to review your policies, speak with your insurance brokers, notify your insurance companies, carefully document your losses, and contact an insurance professional if questions arise concerning the scope of applicable coverage.

By presidential decree, Mexico recently banned certain temporary textile imports through its Manufacturing, Maquiladora and Export Services Industry (IMMEX) import duty-deferral program and increased tariffs on many textile products. Previously, the IMMEX program allowed textiles to move temporarily into Mexico duty-free if they were intended for re-export to the United States.

The decree has left many textile and apparel companies and third-party logistics (3PL) providers scrambling. 3PL companies are unable to receive foreign textile imports in Mexico, while textile and apparel companies face mounting costs as they attempt to reroute and store products, pay unexpected duties and other costs, find alternate suppliers and warehouses, and more.

Companies affected by Mexico’s prohibition of textile imports should look to their insurance programs to recover for potential losses. Specifically, the following policies may provide insurance coverage:
- Supply Chain: Supply chain insurance provides coverage for loss resulting in a delay or disruption in the receipt of products, components, or services from a supplier. This coverage does not require physical loss or damage and can be implicated by various unexpected events such as natural disasters, industrial accidents, labor issues, production process problems, civil or military action, regulatory issues, financial issues, and closure of transportation infrastructure.
- Business Interruption (BI): This form of business income insurance provides protection against revenue losses due to the suspension or reduction of operations of a policyholder’s business. Courts have required that loss relate to physical damage. Recently, insurance companies have begun selling non-physical damage business interruption insurance, after New York Governor Kathy Hochul signed a law authorizing such coverage last September. BI coverage often includes:
Civil Authority: Civil authority clauses are often part of business income coverage that cover losses sustained due to an order or action of civil or military authority issued in connection with a covered peril.

Contingent Business Interruption (CBI): CBI is a form of business income insurance that provides protection against revenue losses resulting from a third-party supplier or distributor shutdown that affects the policyholder’s ability to produce a product or provide a service. CBI coverage generally requires that the shutdown result from a cause (e.g., flood) covered in the policyholder’s property policy.

Contingent Extra Expense: Contingent extra expense insurance provides coverage for extra expenses incurred when a customer or supplier’s business is interrupted.
- Marine Cargo/Stock Throughput: Marine cargo insurance typically covers the owner of goods in transit against physical loss or damage. Although many marine cargo policies expressly exclude losses caused by delay, some policies, including stock throughput policies, may cover such losses. Marine cargo insurance may also cover other losses caused by detours or delays in shipping, such as forwarding and warehousing expenses, or the cost of additional fees owed to the transportation company, which could be particularly relevant here.
When pursuing insurance coverage, time is of the essence. If your business is affected by the recent Mexican presidential decree, you should take immediate action to review your policies, speak with your insurance brokers, notify your insurance companies, carefully document your losses, and contact an insurance professional if questions arise concerning the scope of applicable coverage.

Diana Shafter Gliedman, a senior shareholder with Anderson Kill’s insurance recovery group, has represented policyholders in multi-party, multi-issue insurance coverage disputes with an emphasis on Comprehensive General Liability Insurance, Directors & Officers Liability Insurance, Property Insurance and Errors & Omissions/Professional Liability Insurance for over 20 years. She can be reached at dgliedman@andersonkill.com.

Dennis J. Nolan, a shareholder in Anderson Kill’s New York office, concentrates his practice in commercial litigation with an emphasis on insurance recovery. Dennis advises policyholders with respect to a broad range of insurance policies, including Marine Cargo, Cyber, Directors and Officers, Errors and Omissions, Employment Practices Liability, Marine Cargo, and Commercial General Liability policies. He can be reached at dnolan@andersonkill.com.

Fiona Hogan is an attorney in Anderson Kill’s New York office and a member of the firm’s Insurance Recovery Group. She represents policyholders in a wide range of insurance coverage disputes, including third-party matters involving coverage for products liability, tort claims, directors and officers liability, professional liability, employment practices liability, and cyber claims, as well as first-party coverage disputes for losses related to criminal acts, cyber, and property damage. She can be reached at fhogan@andersonkill.com.
February 25, 2025
Trump’s rollback of draft PFAS regulation means uncertain future for ‘forever chemicals’ torts

Emerging Litigation PodcastProduced by HB Litigation

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Interested in contributing an article? Email us at Editor@LitigationConferences.com.

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Trump’s rollback of draft PFAS regulation means uncertain future for ‘forever chemicals’ torts

By Justin Ward

Despite regulatory uncertainty at the federal level, PFAS litigation is gaining momentum, with lawsuits expanding beyond chemical companies to target manufacturers that market PFAS-containing products as ‘safe’ or ‘natural.

The proposed rule would have expanded the water treatment guidelines for poly-fluoroalkyl substances, or PFAS, the Biden Administration enacted last April for drinking water to also regulate those chemicals in industrial wastewater. The move was in response to growing alarm about the potential public health threat posed by PFAS chemicals, which are hazardous at microscopic levels and break down slowly in the environment and the human body.

Commonly found in non-stick cookware, flame-resistant clothing and fire foam, PFAS describes a class of chemicals resistant to grease, oil, heat and water. Biden’s presidency saw thousands of lawsuits against chemical companies, manufacturers that use PFAS in products, and water treatment facilities, with settlements to date totaling more than $18 billion.

While it’s still unclear what Trump’s decision to return the draft rule to the EPA means, environmentalists worry it could signal broader deregulation of water treatment and chemical manufacturing. Trump’s EPA took some action on PFAS in his first term, but he has since pledged to eliminate 10 regulations for every one implemented. Still, an environmental lawyer in the EPA told Newsweek that it’s common for incoming administrations to put pending regulations on hold and that the regulatory status quo of PFAS guidelines remains intact. That could change depending on the administration’s actions in the coming year.

John Gardella of CMBG3 specializes in PFAS and environmental law told HB he believes the drinking water MCLs “will be walked back but not eliminated – specifically, the 4ppt for PFOA and PFOS will be increased, while the Hazard Index for the other PFAS will be eliminated entirely.”

“With respect to CERCLA,” Gardella told us, “the litigation is now stayed pursuant to efforts by the administration, so they have a couple of months to try to negotiate a CERCLA exemption for passive receivers. If that is successful, it will be touted as a win by the current administration. If the exemption negotiations fail, I believe the administration’s interest will be in eliminating the PFOA and PFOS hazardous substance designation.”

If Trump does implement the proposed regulations, some analysts predict that the final rules will be notably different from the draft and their implementation will be significantly delayed. The proposed regulations were in their final stages and were only the beginning of a larger push to regulate industrial PFAS discharge. Placing Biden’s rules– affecting only 13 facilities – on hold would slow down the process of addressing PFAS at an estimated 120,000 sites where people are potentially exposed.

The Trump Administration could also revise EPA regulations passed in 2024, designating two kinds of PFAS chemicals as “hazardous substances,” which could have a trickle-down effect on states and municipal water treatment plants.

Some environmentalists have expressed cautious optimism about what Trump’s appointment of former New York representative Lee Zeldin to head the EPA might mean for the future of PFAS regulation. As a congressman, Zeldin co-founded PFAS Task Force and voted in favor of the PFAS Action Act of 2021. At the same time, Zeldin shares Trump’s zeal for deregulation and slashing agency budgets.

Despite the question marks lingering over the regulatory environment, the outlook for “forever chemicals” litigation still looks bullish, according to legal analysts. The traditional targets of PFAS torts were chemical companies and water treatment plants, but now more consumer class action lawsuits are aimed at manufacturers who advertised products containing PFAS as “safe” or “natural.”

Though federal regulation remains in limbo, filings are proceeding under state laws at a steady clip. Eleven states have passed PFAS water regulations almost identical to the proposed rules while others have passed regulations governing the use of PFAS in manufactured products.

Edited by Tom Hagy and Sarah Gannon.

February 21, 2025
California’s climate disclosure laws withstand initial US Chamber of Commerce challenge

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California’s climate disclosure laws withstand initial US Chamber of Commerce challenge

By Justin Ward

California’s climate disclosure laws have survived a major legal hurdle, signaling a strong push toward corporate transparency in environmental impact reporting.

California laws requiring large companies to disclose greenhouse emissions survived a legal challenge from the US Chamber of Commerce when a federal judge rejected two of the Chamber’s core legal claims in early February.

While the court did not dismiss the lawsuit altogether, Judge Otis Wright narrowed the scope significantly, tossing out the Chamber’s claim that the law violated the Constitution’s Supremacy Clause and its extraterritoriality argument that the unduly burdened interstate commerce outside of California’s jurisdiction.

Governor Gavin Newsom signed amended versions of the Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261) into law in October 2023. SB 253 requires companies with over $1 billion in annual revenue to conduct detailed emissions assessments, including their supply chain, and disclose that information in annual reports. Similarly, SB 261 mandates that companies with revenue over $500 million compile information about climate-related risks.

After the bill was signed, the US Chamber of Commerce and other business associations filed a complaint in the California Central District Court challenging the law’s constitutionality. They argued that the laws would “compel thousands of businesses to make costly, burdensome, and politically fraught statements” that would “stigmatize those companies and shape their behavior.”

The plaintiffs also contended that the laws represented a “defacto regulatory scheme” that usurped federal authority and imposed state law on business entities outside of California’s jurisdiction. Judge Wright found these arguments unconvincing.

First, the court found that these claims were not sufficiently ripe for consideration, as they apply to rules that have not been written or enacted. The California Air Resources Board (CARB), tasked with developing the regulations under SB 253 and SB 261, has not imposed any regulations. Amendments to the laws pushed back the rulemaking deadlines to 2026.

Even if the claims were ripe, Wright argued that the legislation does not regulate emissions and, therefore, would not be preempted by federal laws like the Clean Air Act: “It imposes no liability for failure to reduce emissions; only for failure to disclose climate-related financial risk and the measures adopted to reduce such risk.”

The court also found that the US Chamber of Commerce failed to offer any evidence showing that the law would be discriminatory against other states or overly burdensome to interstate commerce.

With the supremacy and extraterritoriality claims dismissed, the last remaining cause of action is the Chamber’s allegation that the disclosure requirements constitute “compelled speech” in violation of the First Amendment.

The Chamber of Commerce alleged that the laws would “compel companies to publicly express a speculative, noncommercial, controversial, and politically-charged message that they otherwise would not express” to “shame those companies into reducing their emissions” and “facilitate public-pressure campaigns to coerce companies into reducing their emissions of greenhouse gases.”

The court found that the laws regulate speech and allowed the case to proceed on those grounds but dismissed the extraterritoriality claim without prejudice, meaning the plaintiff’s lawyers may amend their complaint to show plausible evidence that they burden interstate commerce. The supremacy claim was dismissed with prejudice.

February 20, 2025
AI Litigation Risks in Employment by Gerald L. Maatman Jr., Alex W. Karasik, and George J. Schaller

The Authors

Gerald L. Maatman Jr.Duane Morris LLP

Chair Duane Morris’ Workplace Class Action group, Jerry has nearly four decades’ experience practicing law and has represented companies, executive teams, and boards across the country in class action litigation. He defended and won the largest systemic enforcement action ever brought in the history of the U.S. Equal Employment Opportunity Commission, the first  Attorney General prosecution of a Wall Street company for workplace discrimination and harassment, and the largest wage & hour class and collective actions ever brought in Florida and New York. He received his JD from Northwestern University School of Law, where he has been an adjunct professor for more than 30 years.

Alex W. KarasikDuane Morris LLP

Alex is a core member of Duane Morris’ Workplace Class Action group. He defends businesses in employment law matters ranging from bet-the-company class actions to high-stakes single-plaintiff lawsuits and administrative charges. He represents clients in a broad range of industries, including restaurants, hotels, sporting venues, retailers, automotive manufacturers, logistics companies and staffing entities. Alex received Master of Communication Management and Bachelor of Arts degrees from the University of Southern California and his J.D. from Notre Dame Law School.

George J. SchallerDuane Morris LLP

George practices in the area of employment law with a focus on employment-related class action litigation. He defends businesses in matters ranging from nationwide class and collective actions to single-plaintiff lawsuits and administrative charges. He represents clients in across various industries, including restaurants, logistics companies, financial services companies, and staffing entities. He is a 2021 graduate of the University of Illinois Chicago School of Law.

Explore more from Duane Morris LLP!

Journal (JEIL):Artificial Intelligence Litigation Risks in the Employment Discrimination Context. By Gerald Maatman Jr., Alex Karasik, and George Schaller

CLE OnDemand Webinar: AI Nuts & Bolts Survival Guide: Artificial Intelligence – Discrimination in Employment Context. Gerald Maatman Jr., Alex Karasik, and George Schaller

CLE OnDemand Webinar: Discovery Strategies in Wage and Hour Class and Collective Actions Before and After Certification of Putative Class. Gerald Maatman Jr., Noel P. Tripp

Artificial Intelligence Litigation Risks in the Employment Discrimination Context

AI is here to stay. Whether companies choose AI technology for any “employment decision,” companies must keep themselves up to date on any issued guidance and must actively monitor AI tools to prevent any possible discriminatory outputs.

Abstract:

AI, and generative AI in particular, took the employment world by storm in 2023, quickly becoming one of the most talked about and debated subjects among corporate counsel across the country. Companies will continue to use AI as a resource to enhance decision-making processes for the foreseeable future. As these processes are fine-tuned, those who seek to harness the power of AI must be aware of the risks associated with its use. This article analyzes two novel AI lawsuits and highlights recent governmental guidance related to AI use. As the impact of AI is still developing, companies should recognize the types of claims apt to be brought for use of AI screening tools in the employment context and the implications of possible discriminatory conduct stemming from these tools.

Download the article now!

Emerging Litigation PodcastProduced by HB Litigation and Law Street Media

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

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April 25, 2024
Protecting Policyholders as AI Is Developed for Insurance Claims Handling by Marshall Gilinsky and Madison Marlow

The Authors

Marshall GilinskyAnderson Kill P.C.

Marshall Gilinsky is a shareholder of Anderson Kill and practices in the firm’s Insurance Recovery and Commercial Litigation Departments. Marshall is co-chair of the firm’s Sexual Harassment and Abuse Insurance Recovery Group, and a member of the firm’s Banking and Lending Group and Hospitality Industry Practice Group.

During his 20-year career representing policyholders, Marshall has recovered hundreds of millions of dollars for his clients, successfully litigating disputed claims under a variety of insurance products, including property and business interruption insurance, commercial general liability (CGL) insurance, errors and omissions (E&O) insurance, directors’ and officers’ (D&O) insurance and life insurance. Marshall has represented clients on numerous high-stakes, complex insurance claims arising out of prominent losses such as 9/11, Hurricane Katrina, Superstorm Sandy and the “Big Dig” in Boston. He also focuses extensively on assisting clients that own and manage captive insurance companies, especially with respect to resolving coverage disputes between the captive and its reinsurers.

Madison MarlowAnderson Kill P.C.

Madison Marlow is an attorney in Anderson Kill’s New York office. She focuses her practice on insurance recovery, exclusively on behalf of policyholders.

Prior to joining Anderson Kill full time, Madison worked at the firm during her law school years as recipient of the Gene Anderson Clerkship and as a summer associate. She was also an Alexander Fellow to the Honorable Susan D. Wigenton at the United States District Court for the District of New Jersey, where she held a full time judicial internship during her Fall 2022 academic semester.

Emerging Litigation PodcastProduced by HB Litigation and Law Street Media

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Protecting Policyholders as AI Is Developed for
Insurance Claims Handling:

Ensuring “Decency and Humanity” in the Digital Age

Adherence to “decency and humanity” in the claims-handling function must not be curtailed. In an age increasingly dominated by AI, it becomes even more crucial that these principles guide the integration of technology in insurance company operations.

Abstract:

The integration of artificial intelligence (AI) within the insurance industry raises concerns that insurance companies might use the technology to unfairly curtail or deny policyholders’ claims. Drawing on the historical example of the Colossus software, this article outlines the potential consequences of diminished human oversight in AI-driven claims handling. In the past, technology was used to boost insurance companies’ bottom lines while undervaluing policyholders’ claims. We may be seeing a similar situation unfold in real time with recent investigations into and lawsuits against certain health insurance companies for their alleged algorithm-driven claim denials. This article highlights the need for watchdogs and regulators to demand that AI tools under development afford “explainability” and protect policyholder rights. Insurance companies must stand by their fundamental duty of good faith to policyholders, and courts must maintain long-standing precedent that demands “decency and humanity” in insurance company claims operations.

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April 23, 2024