CURRENT MONTH (March 2025)
Antitrust Law
FTC Refocuses Resources to Continue Work for Labor Market
By Barbara Sicalides, Tracey Diamond, and Samantha Weber, Troutman Pepper Hamilton Sanders LLP
In what may be a surprise to those who thought that restrictions on the use of noncompetes would go away with the change in administration, on February 26, the Federal Trade Commission (“FTC”) announced that the agency will form a Joint Labor Task Force that will “prioritize rooting out and prosecuting deceptive, unfair, and anticompetitive labor-market practices that harm American workers.” FTC Chair Andrew Ferguson issued a memorandum reminding everyone that the FTC’s authority includes protecting American consumers in their role as workers.
Chair Ferguson’s memorandum directed the FTC’s Bureau of Competition, Bureau of Consumer Protection, Bureau of Economics, and Office of Policy Planning to focus all three arms of the agency on addressing “widespread” deceptive, unfair, and anticompetitive labor practices. His memorandum made clear that such labor practices depress workers’ earnings across every industry and are “often overlapping and mutually reinforcing,” and that the FTC’s dual consumer-protection and competition mandate makes it uniquely suited to address these purported worker harms.
The Task Force was directed to collaborate in the investigation of no-poach, nonsolicitation, and no-hire agreements; wage-fixing agreements; noncompete agreements; labor market monopsonies; collusion or unlawful coordination on diversity, equity, and inclusion (“DEI”) metrics; unfair and deceptive conduct harming gig economy workers; misleading job advertising; deceptive business opportunities; misleading franchise offerings; harmful occupational licensing requirements; and job scams. To address these issues, the Task Force was instructed to do the following:
- Prioritize investigation and prosecution of deceptive, unfair, or anticompetitive labor market practices.
- Harmonize the bureaus’ methods and procedures for uncovering and investigating deceptive, unfair, or anticompetitive labor market conduct.
- Establish an information-sharing protocol across the bureaus to exchange best practices for identifying and investigating deceptive, unfair, or anticompetitive labor market conduct.
- Promote research on deceptive, unfair, or anticompetitive labor market practices and disseminate those findings throughout the agency and to the public.
- Identify opportunities to advocate for legislative or regulatory changes that would remove barriers to labor market participation, mobility, and competition.
- Engage in public outreach to workers regarding the law and encourage workers to report deceptive, unfair, or anticompetitive labor market conduct to the FTC.
- Coordinate, to the fullest extent possible, all conduct investigations and enforcement actions.
The work of the task force is consistent with prior FTC efforts to protect workers, but the focus appears to have shifted away from the promulgation of rules. Instead, Chair Ferguson has expressed a commitment to use the agency’s resources for public and legislative advocacy, as well as investigation and enforcement actions to protect workers.
For more information, please see Business Law Today’s forthcoming full-length article on this topic.
Banking Law
OCC Clarifies Bank Authority to Engage in Certain Cryptocurrency Activities
By Rachael Aspery and Amy Greenwood-Field, McGlinchey Stafford PLLC
On March 7, 2025, the Office of the Comptroller of the Currency (“OCC”) published a new Interpretive Letter 1183 that reaffirms a range of cryptocurrency activities are permissible in the federal banking system.
Interpretive Letter 1183 provides confirmation that “crypto-asset activities,” including custody of crypto-assets and participation in independent node verification networks such as distributed ledger and stablecoin activities, when conducted in a safe, sound, and fair manner and in compliance with applicable law, are permissible for national banks and federal savings associations. The letter also rescinds the requirement for OCC-supervised institutions to receive supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.
In publishing Interpretive Letter 1183, the OCC announced that it rescinds its prior Interpretive Letter 1179 from November 18, 2021, which outlined a supervisory nonobjection process for banks that seek to engage in the cryptocurrency activities addressed in Interpretive Letters 1170, 1172, and 1174. Interpretive Letter 1179 had clarified that the activities addressed in the aforementioned Interpretive Letters were legally permissible for a bank to engage in, provided the bank could demonstrate, to the satisfaction of its supervisory office, that it had controls in place to conduct the activity in a safe and sound manner. Consistent with longstanding OCC precedent, Interpretive Letter 1179 provided that a proposed activity could not be part of the “business of banking” if the bank lacks the capacity to conduct the activity in a safe and sound manner.
The OCC determined that Interpretive Letter 1179 is no longer necessary since the OCC staff have continued to develop knowledge and expertise with respect to crypto-asset activities. The OCC takes the position that rescinding Interpretive Letter 1179 is intended to enhance transparency and encourage responsible innovation while reducing the burden on banks and the OCC. In light of rescinding Interpretive Letter 1179, the OCC stated in Interpretive Letter 1183 that it will examine the activities described in Interpretive Letters 1170, 1172, and 1174 as part of its ongoing supervisory process.
Interpretive Letters 1170, 1172, and 1174 remain in place as they were originally issued and generally cover the following topics:
- OCC Interpretive Letter 1170 (July 22, 2020), addresses whether banks may provide cryptocurrency custody services;
- OCC Interpretive Letter 1172 (September 21, 2020), addresses whether banks may hold dollar deposits serving as reserves backing stablecoins in certain circumstances; and
- OCC Interpretive Letter 1174 (January 4, 2021), addresses whether banks may (1) act as nodes on an independent node verification network (i.e., a distributed ledger) to verify customer payments and (2) engage in certain stablecoin activities to facilitate payment transactions on a distributed ledger.
Banks are expected to have strong risk management controls in place to support novel banking activities in addition to their controls for more traditional banking activities and products, and the OCC maintains this position in the news release that accompanied Interpretive Letter 1183. Interpretive Letter 1183 was published with the intent to reduce the burden on banks to engage in crypto-related activities while maintaining a strong federal banking system, and to ensure consistent treatment by the OCC, regardless of the underlying technology utilized.
Consistent with the updated position surrounding crypto-asset activities, the OCC also announced its withdrawal from participating in the Joint Statement on Crypto-Asset Risks to Banking Organizations (January 3, 2023), and the Joint Statement on Liquidity Risks to Banking Organizations Resulting from Crypto-Asset Market (February 23, 2023).
Business Crimes & Corporate Compliance
Corporate Transparency Act Update: Freedom’s Just Another Word for Nothing Left to File—Unless You Are a Non-U.S. Person
By William E. H. Quick, Polsinelli PC
Visit Business Law Today’s March 2025 in Brief: Corporations, LLCs & Partnerships to read the full update on the Corporate Transparency Act.
Consumer Finance Law
Seventh Circuit Finds Calls and Text Messages for Free Services Do Not Constitute “Telephone Solicitations” Under the TCPA
By Kevin Liu, Pilgrim Christakis LLP
On March 17, 2025, the Seventh Circuit affirmed the dismissal of a Telephone Consumer Protection Act (“TCPA”) class action, holding that calls and text messages about free nutritional services did not constitute “telephone solicitations” under the TCPA.
In this case, Plaintiff James Hulce alleged that although he was registered on the national do-not-call registry, Defendant Zipongo Inc., dba Foodsmart, placed approximately twenty calls and text messages to him regarding free nutritional services offered under his healthcare plan. Hulce contended that these communications were “telephone solicitations,” which violated 47 C.F.R. § 64.1200(c)(2) (interpreting the TCPA and prohibiting telephone solicitations to those registered on the national do-not-call list).
Telephone solicitations is expressly defined under the TCPA as “the initiation of a telephone call or message for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, which is transmitted to any person . . . .” 47 U.S.C. § 227(a)(4) (emphasis added). Foodsmart argued that its communications were not “telephone solicitations” because they were for free nutritional services; they did not “encourage,” “persuade,” or “urge” anyone to purchase goods or services. Meanwhile, Hulce argued for a much lower bar, that the term encourage simply meant make a purchase “more likely to happen.” The Seventh Circuit sided with Foodsmart, finding that, “read in context, the natural reading of [the term] ‘encourage’ means ‘to persuade’ or ‘urge’ someone to pay for a service.”
Hulce further argued that the communications were actually solicitations since they were “commercial messages” and “profit-seeking”—because although the services were offered for free to Hulce, there was no dispute that Foodsmart would then bill Hulce’s healthcare provider. However, the Court disagreed, noting that certain definitions elsewhere in the TCPA, such as that for unsolicited advertisement, expressly include a commercial—i.e., for-profit—component, while the definition for telephone solicitations conspicuously does not. Thus, the Court “decline[d] to conflate ‘commercial’ with ‘encouraging the purchase’ given Congress’s distinct use of these terms in separate TCPA provisions.”
The Seventh Circuit concluded that the term telephone solicitation means “the initiation of a call or message for the purpose of persuading or urging someone to pay for a service.” Accordingly, it found that “Foodsmart’s calls and messages do not fall within the definition of ‘telephone solicitation’ because Foodsmart did not initiate them with the purpose of persuading or urging anyone to pay for its services. Indeed, while Foodsmart’s purpose was to encourage Hulce to use its services, its purpose could not have been to encourage Hulce to pay for services that were free to him.” And notably, “[a]lthough the communications may have resulted in [Hulce’s healthcare provider] ultimately paying Foodsmart, the communications and any encouragement within them were solely directed at Hulce.”
Judge Brennan dissented. He found that the language of the definition of telephone solicitation mandates that the “purpose of encouraging” requirement of the definition must be viewed from the perspective of the caller, rather than the recipient: “The fundamental inquiry of the ‘telephone solicitation’ is the caller’s purpose, not what effect the call has on the recipient. Put another way, the question is whether the caller attempted to encourage the purchase of a service, not whether the recipient of the call was the individual encouraged to make that purchase.” (citation omitted). Thus, in his view, “the text of § 227(a)(4) and its surrounding context . . . prohibit telephone solicitation of a consumer on the do-not-call registry when that contact encourages the purchase of a good or service—regardless of whether the call’s recipient is the purchaser.”
EDVA Grants Summary Judgment in Favor of Defendant in Putative Class Action Involving Allocation of Mortgage Payments
By Jon Cornfield, McGlinchey Stafford PLLC
On February 24, 2025, the Eastern District of Virginia granted summary judgment in favor of Defendant LoanCare, LLC, on a putative class action alleging that LoanCare violated fair debt collection provisions of the West Virginia Consumer Credit and Protection Act, W. Va. Code § 46A-2-122 et seq. (“WVCCPA”).
In sum and substance, plaintiffs Gary and Lisa Tederick alleged that LoanCare improperly and unlawfully misapplied mortgage principal payments to the interest of the loan. According to the Court, under the language of the loan and the plain language of the WVCCPA, however, plaintiffs could not state a violation of the Act, and therefore, summary judgment was granted.
In 2002, plaintiffs Gary and Lisa Tederick built their home in Hedgesville, West Virginia. On March 4, 2004, the Tedericks refinanced their home by taking out a loan from Mid-States Financial Group, Inc., using a note backed by a deed of trust held by Fannie Mae. The terms of the loan required the Tedericks to make scheduled monthly payments of $875.36 beginning May 1, 2004.
The terms of the loan required that any interest was to be “charged on unpaid principal until the full amount of Principal has been paid.” The note further stated that “[e]ach monthly payment will be applied as of its scheduled due date and will be applied to interest before Principal,” and the Tedericks were entitled to “make payments of Principal at any time before they are due,” known as a “Prepayment.” Notably, the Tedericks could not designate a payment as a Prepayment if they had not made all the monthly payments due under the note. Under the terms, the note holder was also authorized “to apply [a] Prepayment to the accrued and unpaid interest on the Prepayment amount before applying [the] Prepayment to reduce the Principal amount of the Note.”
Nonetheless, throughout the life of the loan, the Tedericks frequently made Prepayments, often writing one check containing their monthly payment amount, along with a Prepayment amount, and writing in the memo line that a Prepayment amount was included in the total. Between 2005 and 2020, the Tedericks wrote these dual checks 180 times before their monthly payment due date. Unbeknownst to the Tedericks, for at least 152 of those payments, the servicer applied the scheduled monthly payment, then the Prepayment, as opposed to the Prepayment first.
Around April 2019, LoanCare became the subservicer of the Tedericks’ mortgage loan and began accepting and applying their loan payments. At that time, the Tedericks had learned of the issue with their dual payments, and they contacted LoanCare to inform them that previous servicers had misapplied their Prepayments and requested that LoanCare correct the account to accurately reflect the amount of interest on the loan. According to the Tedericks, a customer service representative assured the Tedericks that the issue had been rectified. This was not the case; LoanCare continued to apply payments in the same manner as previous servicers, and the Tedericks sued.
According to the Court, a simple question was at issue: Could the Tedericks obtain relief under the WVCCPA?
The Court first examined the language of the WVCCPA. The Tedericks argued that LoanCare violated Sections 46A-2-127(d) and 46A-2-128 of the Act.
In examining the specific language of the Act, the Court stated:
The dispositive text of Section 127 [of] the WVCCPA prohibits debt collectors from using “any fraudulent, deceptive or misleading representation or means to collect claims or to obtain information concerning consumers.” W. Va. Code § 46A-2-127. The statute lists instances in which a debt collector would be liable under the Act. Subsection (d) prohibits “[a]ny false representation or implication of the character, extent or amount of a claim against a consumer, or of its status in any legal proceeding.” W. Va. Code § 46A-2-127(d). Thus, the Tedericks must be the victim of a “false representation or implication” at the hands of LoanCare. W. Va. Code § 46A-2-127(d). In other words, LoanCare must have incorrectly applied the Prepayments. Section 128 states that no debt collector may use unfair or unconscionable means to collect or attempt to collect any claim. W. Va. Code § 46A-2-128. . . . The Court concludes that LoanCare’s conduct, even if they misapplied the Prepayments, does not rise to the level of a “false representation.”
The Court next examined the purpose of the WVCCPA and further concluded that the Tedericks’ claims could not continue. According to the Court, the purpose of the WVCCPA is “to protect consumers from unfair, illegal, and deceptive acts or practices by providing an avenue of relief for consumers who would otherwise have difficulty proving their case under a more traditional cause of action.” (quoting Boczek v. Pentagon Fed. Credit Union, 725 F.Supp.3d 542, 546 (N.D. W. Va. 2024)).
Moreover, according to the Court, the question under the act was not whether LoanCare misapplied the Tedericks’ Prepayments, resulting in LoanCare receiving unearned interest, but whether LoanCare meant to misapply the payments. According to the Court, nothing in the record suggested that LoanCare engaged in “‘fraudulent, deceptive or misleading representations or means to collect or attempt to collect claims or to obtain information concerning consumers.’ W. Va. Code § 46A-2-127. Likewise, there is nothing ‘unfair or unconscionable’ about the way LoanCare applied the Prepayments”—W. Va. Code § 46A-2-128—and it had, in fact, applied payments in an effort to comply with the language of the Fannie Mae Servicing Guidelines.
In summary, even if LoanCare had misapplied payments (which is a matter of debate), the Tedericks still could not proceed with their claim because, under the WVCCPA, they could not show that the conduct arose to “fraudulent, deceptive, or misleading” conduct required under the law.
Health & Life Sciences
Key Issues in Advising Health Care Professionals with Respect to Psychedelics
By Daniel Shortt, Salzhauer & Shortt, P.C.
With the recent increase in health care professionals interested in learning more about the legality of integrating psychedelics such as ibogaine and psilocybin into their practice, it is important to understand the complex legal and ethical landscape. Below is an analysis of the key areas relevant to this inquiry.
State Law Regarding the Legality of Psychedelics
In most states, the use, possession, and distribution of psychedelics, such as psilocybin, are generally prohibited under their Controlled Substances Act (“CSA”). The exceptions to this are Oregon and Colorado, which have legalized programs allowing certain licensed persons to administer psychedelics for therapeutic purposes. Recently, Washington State has also established psilocybin therapy services pilot programs, through the University of Washington’s Department of Psychiatry and Behavioral Sciences. Psychedelics are classified as Schedule I substances, meaning they are considered to have a high potential for abuse and no accepted medical use. The Washington program will offer psilocybin therapy services to specific populations, such as veterans and first responders, under pathways approved by the Food and Drug Administration (“FDA”). Healthcare providers seeking guidance should be made aware of such programs in their home states as well as development in research permitted by the federal government including the FDA.
Ethical Considerations and Scheduled Substances
Health care professionals must adhere to strict ethical and legal standards when dealing with controlled substances. Generally speaking, the use of controlled substances must be for legitimate medical purposes and in the ordinary course of professional practice. Any deviation, such as using psychedelics outside of approved research or therapeutic programs, could result in disciplinary actions.
Religious Exemptions
The federal CSA does provide limited allowances for the use of certain controlled substances in religious practices. For example, some indigenous groups have a longstanding exemption for the sacramental use of peyote, a Schedule I substance. Other religious organizations seeking exemptions must petition the Drug Enforcement Administration and demonstrate that the prohibition of their use constitutes a substantial burden on their sincere religious exercise under the Religious Freedom Restoration Act. However, courts have generally been reluctant to grant exemptions for religious use of psychedelics, emphasizing the government’s compelling interest in public health and safety. Regardless, if a health care professional is part of a religious group, it is relevant to their use of psychedelic substances.
Conclusion
While interest in plant medicine grows, the legal and ethical framework remains restrictive. Health care professionals must operate within the bounds of state and federal law, ensuring compliance with all regulations to avoid professional and legal repercussions. In advising these clients, it may be helpful to focus on what may change in the future. Many health care professionals want to get in on the ground floor, so to speak, and those interested in this field should closely monitor developments in state programs and federal approvals to identify lawful opportunities for involvement.
Labor & Employment Law
Noncompete Consideration Voided upon Forfeiture of Equity Leaving Restrictive Covenants Unenforceable
By Lisa Stark, Delaware Corporate Counsel
In North American Fire Ultimate Holdings, LP v. Doorly, C.A. No. 2024-2023-KSJM (Del. Ch. Mar. 2025), the Delaware Court of Chancery found that plaintiff, North American Fire Ultimate Holdings, LP (“North American”), could not enforce the noncompetition provisions of an equity incentive agreement against defendant Alan Doorly, a former employee of a North American portfolio company, Cross Fire & Security, Inc. (“Cross Fire”), because the equity granted under the agreement which the Court found to be the sole consideration for the noncompete provision was automatically forfeited upon the defendant’s termination as an employee of Cross Fire for cause.
Defendant Doorly worked for Cross Fire for approximately twenty years. In connection with Cross Fire’s 2021 acquisition by North American, Doorly executed an Interest Option Grant Agreement (the “Option Agreement”), pursuant to which he agreed to the relevant restrictive covenants and was granted equity 300,000 units (“Units”) under the Option Agreement. While still employed with Cross Fire, Doorly allegedly created a competing business and shared corporate opportunities and confidential information with the competing business. After being terminated for cause, Doorly allegedly solicited Cross Fire’s employees and misused Cross Fire’s confidential pricing and other information to persuade its clients to terminate their relationship with Cross Fire. After being terminated for cause, Doorly’s Units were automatically forfeited under the terms of the Option Agreement.
On a motion to dismiss, the defendant argued that the noncompete and other restrictive covenants could not now be enforced for a lack of consideration. According to Doorly, the consideration for the restrictive covenants was eliminated when North American declared the Units forfeited. North American argued that Doorly’s obligation to execute a joinder to a limited partnership agreement, and agreement that the Units did not create additional employment rights, among other things, constituted consideration for the Option Agreement. The Court rejected North Anerican’s argument, noting that the cited sources of consideration were all obligations imposed on the defendant, not consideration for defendant’s agreement to the restrictive covenants. The Court agreed with defendant Doorly that there was no consideration for the contract that could support its enforcement and dismissed plaintiff’s complaint.
