Justia Government & Administrative Law Opinion Summaries

Zyla Life Sciences, LLC (Zyla) sells FDA-approved indomethacin suppositories, while Wells Pharma of Houston, LLC (Wells Pharma) sells compounded indomethacin suppositories that are not FDA-approved but are produced in a registered compounding facility. Zyla filed suit against Wells Pharma under the unfair-competition laws of six states, arguing that Wells Pharma's sales violated state laws that mirror the Federal Food, Drug, and Cosmetic Act (FDCA) by requiring FDA approval for new drugs.The United States District Court for the Southern District of Texas granted Wells Pharma's motion to dismiss, holding that the state laws were preempted by federal law. Zyla appealed the decision.The United States Court of Appeals for the Fifth Circuit reviewed the case and reversed the district court's decision. The Fifth Circuit held that state laws mirroring federal requirements are not preempted by the FDCA. The court relied on the Supreme Court's decision in California v. Zook, which established that state laws incorporating federal law do not create a conflict and are not preempted. The court also distinguished this case from Buckman Co. v. Plaintiffs’ Legal Committee, noting that Buckman involved state-law claims of fraud on a federal agency, which is a uniquely federal concern, unlike the parallel state regulations at issue here.The Fifth Circuit concluded that the state laws in question do not conflict with the FDCA and do not interfere with federal enforcement discretion. Therefore, the district court's order granting Wells Pharma's motion to dismiss was reversed, Wells Pharma's cross-appeal for attorney's fees was dismissed as moot, and the district court's order denying Zyla's motion for leave to amend was vacated. The case was remanded for further proceedings. View "Zyla Life Sciences v. Wells Pharma" on Justia Law

Badlia Brothers, LLC, a check-cashing business, cashed 15 checks issued by the State of Maryland. These checks had already been paid by the State before Badlia presented them for payment. Some checks were deposited using a mobile app, creating "substitute checks," and were then fraudulently or negligently presented to Badlia. Others were reported lost or stolen, leading the State to issue stop payment orders and replacement checks, which were also cashed by Badlia. Badlia accepted the checks without knowledge of prior payments and sought payment from the State, which refused.Badlia filed complaints in the District Court of Maryland, claiming the right to enforce the checks as a holder in due course. The court consolidated the cases, ruled that the State enjoyed qualified immunity, and dismissed the cases. The Circuit Court for Baltimore City reversed, holding that a check is a contract, and thus, the State had waived sovereign immunity. On remand, the District Court found that Badlia was a holder in due course entitled to enforce the checks. The Circuit Court affirmed, and the State petitioned for certiorari.The Supreme Court of Maryland reviewed the case and held that a check is a contract for purposes of the State’s waiver of sovereign immunity under § 12-201(a) of the State Government Article. The court affirmed the Circuit Court's decision, concluding that the State has waived sovereign immunity for claims by a holder in due course seeking payment on an authorized State-issued check. View "Comptroller v. Badlia Brothers, LLC" on Justia Law

The case involves two charitable organizations, Catholic Medical Mission Board, Inc. (CMMB) and Food for the Poor, Inc. (FFP), which were issued cease and desist orders and civil penalties by the Attorney General of California for allegedly making false or misleading statements in their charitable solicitations. The Attorney General found that both organizations overvalued in-kind donations and misrepresented their program efficiency ratios, leading to misleading donor solicitations.The Superior Court of Los Angeles County reviewed the case and found that the challenged statutory provisions, sections 12591.1(b) and 12599.6(f)(2) of the Government Code, were unconstitutional under the First Amendment as they constituted prior restraints on speech. The court vacated the civil penalties and issued permanent injunctions against the Attorney General, preventing the enforcement of these provisions. The court also reformed section 12591.1(b) to exclude violations of section 12599.6 from the Attorney General’s cease and desist authority.The California Court of Appeal, Second Appellate District, reviewed the case. The court affirmed the trial court’s constitutional rulings but vacated the permanent injunctions, stating that the trial court abused its discretion by granting them without requiring the plaintiffs to plead and prove entitlement to such relief. The appellate court remanded the case to allow the plaintiffs to amend their complaints to seek injunctive relief and to prove they are entitled to it. The court also affirmed the trial court’s reformation of section 12591.1(b) and vacated the postjudgment orders awarding attorney fees, directing the trial court to reconsider the fees in light of the appellate court’s rulings. View "Catholic Medical Mission Board, Inc. v. Bonta" on Justia Law

The case involves two charitable organizations, Catholic Medical Mission Board, Inc. (CMMB) and Food for the Poor, Inc. (FFP), which were issued cease and desist orders and civil penalties by the California Attorney General for allegedly overvaluing in-kind donations and making misleading statements in their solicitations. The Attorney General found that both organizations used inflated domestic market prices for donated medicines, which could not be distributed within the U.S., and misrepresented their program efficiency ratios to donors.The Superior Court of Los Angeles County reviewed the case and found that the challenged statutory provisions, sections 12591.1(b) and 12599.6(f)(2) of the Government Code, were unconstitutional as they constituted prior restraints on speech. The court vacated the civil penalties and issued permanent injunctions against the Attorney General, preventing the enforcement of these provisions. The court also reformed section 12591.1(b) by adding language to exclude violations of section 12599.6 from the Attorney General's cease and desist authority.The California Court of Appeal, Second Appellate District, reviewed the case and concluded that the trial court abused its discretion by granting the permanent injunctions without requiring the plaintiffs to plead and prove their entitlement to such relief. The appellate court vacated the injunctions and remanded the case to allow the plaintiffs to amend their complaints and prove their entitlement to injunctive relief. The appellate court affirmed the trial court's reformation of section 12591.1(b), allowing the Attorney General to issue cease and desist orders for violations unrelated to speech. The appellate court also vacated the postjudgment orders awarding attorney fees and directed the trial court to reconsider the fees in light of the remand. View "Catholic Medical Mission Board v. Bonta" on Justia Law

Fiorisce, LLC, a limited liability company, filed a qui tam lawsuit against Colorado Technical University (CTU) under the False Claims Act (FCA), alleging that CTU misrepresented compliance with federal credit hour requirements to fraudulently obtain federal student aid funds. Fiorisce claimed that CTU's online learning platform, Intellipath, provided insufficient educational content and falsified learning hour calculations to meet federal standards. Fiorisce's principal, a former CTU faculty member, created the company to protect their identity while exposing the alleged fraud.The United States District Court for the District of Colorado reviewed the case. CTU moved to dismiss the complaint, arguing that the FCA’s public disclosure bar precluded the suit because the allegations were substantially similar to previously disclosed information. The district court denied CTU’s motion, finding that Fiorisce’s specific claims about misrepresentation of credit hours and the use of Intellipath were not substantially the same as prior disclosures. The court also suggested that Fiorisce might qualify as an original source of the information.CTU appealed the district court’s denial of its motion to dismiss to the United States Court of Appeals for the Tenth Circuit, seeking interlocutory review under the collateral order doctrine. The Tenth Circuit concluded that the collateral order doctrine did not apply, as the public disclosure bar did not confer a right to avoid trial and could be effectively reviewed after final judgment. The court emphasized that expanding the collateral order doctrine to include such denials would undermine the final judgment rule and dismissed CTU’s appeal for lack of jurisdiction. View "Fiorisce, LLC v. Colorado Technical University" on Justia Law

The E-Rate program, established under the Telecommunications Act of 1996, subsidizes internet and telecommunications services for schools and libraries. The program is funded by contributions from telecommunications carriers, managed by the Universal Service Administrative Company, and regulated by the FCC. The "lowest corresponding price" rule ensures that schools and libraries are not charged more than similarly situated non-residential customers. Todd Heath, an auditor, alleged that Wisconsin Bell overcharged schools, violating this rule and leading to inflated reimbursement requests from the E-Rate program.Wisconsin Bell moved to dismiss Heath's suit, arguing that E-Rate reimbursement requests do not qualify as "claims" under the False Claims Act (FCA) because the funds come from private carriers and are managed by a private corporation, not the government. The District Court and the Seventh Circuit rejected this argument. The Seventh Circuit held that the government "provided" E-Rate funding through its regulatory role and by depositing over $100 million from the U.S. Treasury into the Fund.The Supreme Court of the United States held that E-Rate reimbursement requests are "claims" under the FCA because the government provided a portion of the money by transferring over $100 million from the Treasury into the Fund. This transfer included delinquent contributions collected by the FCC and Treasury, as well as settlements and restitution payments from the Justice Department. The Court affirmed the judgment of the Seventh Circuit and remanded the case for further proceedings. View "Wisconsin Bell, Inc. v. United States ex rel. Heath" on Justia Law

In 2015, Jesus Rodriguez-Morelos began offering Certified Nursing Assistant (CNA) classes, falsely claiming they were affiliated with the nonprofit organization United with Migrants. He charged students for these classes, which were not state-approved, and used the nonprofit's name and tax-exempt document without authorization. Complaints about the classes led to an investigation by the Colorado Department of Regulatory Agencies (DORA), revealing that Rodriguez-Morelos was unlawfully receiving money for the unapproved classes.Rodriguez-Morelos was charged with several crimes, including identity theft under section 18-5-902(1)(a), C.R.S. (2024). A jury convicted him on all charges. On appeal, the Colorado Court of Appeals affirmed the theft and criminal impersonation convictions but vacated the identity theft conviction. The court concluded that the identity theft statute's definition of "personal identifying information" pertains to individuals, not organizations, and thus did not apply to Rodriguez-Morelos's use of the nonprofit's name and document.The Supreme Court of Colorado reviewed the case and affirmed the Court of Appeals' decision. The court held that the identity theft statute's reference to "personal identifying information" applies only to information concerning single, identified human beings, not organizations. Therefore, Rodriguez-Morelos's actions did not constitute identity theft under the statute. View "People v. Rodriguez-Morelos" on Justia Law

Coinbase Global, Inc., a trading platform for digital assets, petitioned the Securities and Exchange Commission (SEC) to create rules clarifying the application of federal securities laws to digital assets like cryptocurrencies and tokens. Coinbase argued that the current securities-law framework does not account for the unique attributes of digital assets, making compliance economically and technically infeasible. The SEC denied Coinbase’s rulemaking petition, stating that it disagreed with the petition’s concerns and had higher-priority agenda items. Coinbase’s U.S. subsidiary, Coinbase, Inc., then petitioned the United States Court of Appeals for the Third Circuit to review the SEC’s denial.The SEC’s denial of Coinbase’s petition was challenged on the grounds that it was arbitrary and capricious. Coinbase argued that the SEC’s decision to apply securities laws to digital assets through enforcement actions constituted a significant policy change that required rulemaking. Coinbase also contended that the emergence of digital assets represented a fundamental change in the factual premises underlying existing securities regulations, necessitating new rules. Additionally, Coinbase claimed that the SEC’s explanation for its decision was conclusory and insufficiently reasoned.The United States Court of Appeals for the Third Circuit reviewed the case and found that the SEC’s order was conclusory and insufficiently reasoned, making it arbitrary and capricious. The court granted Coinbase’s petition in part and remanded the case to the SEC for a more complete explanation. However, the court declined to order the SEC to institute rulemaking proceedings at this stage. The court emphasized that the SEC must provide a reasoned explanation for its decision, considering all relevant factors and providing a discernible path for judicial review. View "Coinbase Inc v. Securities and Exchange Commission" on Justia Law

A disabled woman, T.M.B., was sexually assaulted by an employee of West Mont, a nonprofit organization contracted by the State of Montana to provide community-based services for developmentally disabled individuals. T.M.B. sued both the State and West Mont, alleging they owed her a nondelegable duty of care. The District Court granted summary judgment in favor of both defendants, concluding neither owed a nondelegable duty of care for the employee’s criminal acts. T.M.B. appealed.The District Court of the First Judicial District, Lewis and Clark County, found that the State had satisfied its statutory obligations by contracting with West Mont to provide services and did not owe a nondelegable duty to T.M.B. because she was not under state custody or control. The court also found that West Mont did not owe a nondelegable duty, as there was no statute or rule explicitly stating such a duty existed for state contractors operating community homes.The Supreme Court of the State of Montana reviewed the case. It affirmed the District Court’s decision regarding the State, agreeing that the State did not have a close, continuing relationship with T.M.B. that would impose a nondelegable duty. However, the Supreme Court reversed the decision regarding West Mont, finding that the relationship between West Mont and T.M.B. was sufficiently close and continuing to impose a nondelegable duty under Restatement (Second) of Agency § 214. The court held that West Mont had a duty to protect T.M.B. from harm due to her dependence on their care and supervision. The case was remanded for further proceedings consistent with this opinion. View "T.M.B v. West Mont" on Justia Law

Alpine Securities Corporation, a securities broker-dealer and member of the Financial Industry Regulatory Authority (FINRA), faced sanctions from FINRA in 2022 for violating its rules. FINRA imposed a cease-and-desist order and sought to expel Alpine from membership. Alpine challenged the constitutionality of FINRA in federal court, arguing that FINRA's expedited expulsion process violated the private nondelegation doctrine and the Appointments Clause.The United States District Court for the District of Columbia denied Alpine's request for a preliminary injunction to halt FINRA's expedited proceeding. The court held that FINRA is a private entity, not subject to the Appointments Clause, and that the SEC's ability to review FINRA's decisions satisfied the private nondelegation doctrine.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court found that Alpine demonstrated a likelihood of success on its private nondelegation claim, as FINRA's expulsion orders take effect immediately without prior SEC review, effectively barring Alpine from the securities industry. The court held that this lack of governmental oversight likely violates the private nondelegation doctrine. The court also found that Alpine faced irreparable harm if expelled before SEC review, as it would be forced out of business.The court reversed the district court's denial of a preliminary injunction, instructing it to enjoin FINRA from expelling Alpine until the SEC reviews any expulsion order or the time for Alpine to seek SEC review lapses. However, the court did not grant a preliminary injunction on Alpine's Appointments Clause claims, as Alpine did not demonstrate irreparable harm from participating in FINRA's expedited proceeding itself. The case was remanded for further proceedings consistent with the appellate court's findings. View "Alpine Securities Corporation v. Financial Industry Regulatory Authority, Inc." on Justia Law