A Closer Look

Are AI prompts, and their generative outputs, discoverable in litigation? A handful of recent district court cases suggest the answer depends on whether the AI prompts and outputs constitute attorney work product.

In Tremblay v. OpenAI, Inc., 2024 WL 3748003 (N.D. Cal. Aug. 8, 2024), the court held that AI prompts written by lawyers can constitute opinion work product when used for litigation-related purposes. The court explained that AI “prompts were queries crafted by counsel and contain counsel’s mental impressions and opinions about how to interrogate [an AI tool], in an effort to vindicate Plaintiffs’ copyrights against the alleged infringements.” In so doing, the court squarely rejected defendant’s argument that AI prompts and outputs only rise to the level of fact work product as opposed to opinion work product. That distinction is important, as opinion work product is offered near-absolute protection from disclosure whereas fact work product is discoverable upon a showing of substantial need for the materials and an inability to secure a substantial equivalent without undue hardship.Continue Reading A Closer Look: The Discoverability of Artificial Intelligence Prompts

On April 17, 2025, the Supreme Court issued its opinion in Cunningham v. Cornell University, No. 23-1007, 604 U.S. ___ (2025), a case addressing the pleading standard for prohibited-transaction claims under § 406(a) of the Employee Retirement Income Security Act of 1974 (ERISA).  Section 406(a) proscribes certain transactions between plans and “parties in interest” absent a statutory exemption enumerated under ERISA § 408.  The core question on appeal was whether plaintiffs must allege, as an element of a prohibited-transaction claim under § 406(a), that an exemption under § 408 does not render the challenged transaction lawful.

In a decision that is expected to have wide-ranging implications, the Court held that exemptions under § 408 provide affirmative defenses to liability under § 406(a).  Consequently, plaintiffs need not allege that any of the exemptions set forth in § 408 are unavailable to state a plausible claim for relief.  Rather, the burden falls on plan fiduciary defendants to plead and prove that an exemption under § 408 nullifies a plaintiff’s claim.Continue Reading A Closer Look:  Supreme Court Rejects Heightened Pleading Standard for Prohibited-Transaction Claims under ERISA § 406(a)

Last month, a New Jersey federal judge applied Third Circuit precedent to hold that the California Invasion of Privacy Act (“CIPA”) does not impose liability for commonplace use of website marketing/analytics pixels under the well-established party exception.  Cole v. Quest Diagnostics, Inc., 2025 WL 88703 (D.N.J. Jan. 14, 2025).Continue Reading New Jersey Court Applies CIPA’s Party Exception to Pixel Wiretap Complaint

Companies whose agreements with consumers contain an arbitration clause that delegates certain decisions to an arbitrator to resolve should be mindful of a recent Fourth Circuit decision clarifying what disputes may be resolved by a court and what disputes may be resolved by an arbitrator.

In Modern Perfection, LLC v. Bank of America, N.A., — F. 4th –, 2025 WL 77181 (4th Cir. 2025), plaintiffs entered into two contracts with a financial institution:  a deposit agreement that contained an arbitration provision, and a promissory note related to a loan program that did not.  Plaintiffs filed a lawsuit against the financial institution, and the institution sought to enforce its arbitration provision. Continue Reading A Closer Look: Fourth Circuit Upholds Unambiguous Delegation Clause post- Coinbase

In a significant decision for businesses who are attempting to revise their consumer arbitration clauses to address the prospect of mass arbitration, the Ninth Circuit affirmed the district court’s denial of Live Nation and Ticketmaster’s motion to compel arbitration, based largely on the content of the mass arbitration provisions of their arbitration agreement.  Heckman v. Live Nation Ent., Inc., – F.4th –, 2024 WL 4586971 (9th Cir. Oct. 28, 2024).  The court concluded that the “dense, convoluted and internally contradictory” arbitration rules cross referenced in Ticketmaster’s arbitration provision, along with other elements of the provision, rendered it unenforceable.  The court also held, on an alternate basis, that the Federal Arbitration Act (FAA) did not even apply to the mass arbitration procedure at issue because it is “not arbitration as envisioned by the FAA.”Continue Reading A Closer Look: Ninth Circuit Holds Arbitration Agreement with Certain Mass Arbitration Protocols Unenforceable

The Third Circuit recently clarified when court-ordered discovery is necessary to determine whether a dispute should be subject to arbitration.  In Young v. Experian Information Solutions Inc., — F.3rd —, 2024 WL 4509767, at *4 (3d Cir. Oct. 17, 2024), plaintiff sued the consumer reporting agency for violations of the Fair Credit Reporting Act after Experian issued an erroneous credit report.  Experian filed a motion to compel arbitration based on a later-signed agreement that plaintiff had with an Experian affiliate.  The district court denied Experian’s motion without prejudice, and granted leave for Experian to re-file a motion to compel arbitration after the parties engaged in limited discovery on the issue of arbitrability.  Experian appealed.Continue Reading A Closer Look:  Third Circuit Clarifies When Court-Ordered Discovery Into Issues of Arbitrability Is Necessary.

With the growing popularity in cryptocurrency investments, class actions related to crypto assets have soared.  These lawsuits raise a host of novel legal questions, including how established personal jurisdiction principles apply to crypto companies.  A Colorado federal court recently provided guidance on this question, dismissing a lawsuit involving crypto wallet Atomic Wallet for lack of personal jurisdiction.  See Meany v. Atomic Protocol Sys. OU, 2024 WL 4135762 (D. Colo. Sept. 10, 2024).Continue Reading A Closer Look: Court Applies Established Personal Jurisdiction Principles to Dismiss Crypto Wallet Companies In Class Action Filed After $100 Million North Korean Crypto Hack.

In a case of first impression, the Ninth Circuit recently held that when there is ambiguity about the scope of a putative or certified class, American Pipe statute of limitations tolling should generally apply to potentially excluded class members.  This question is likely to arise where a proposed class definition is narrowed during the course of litigation such that certain putative members may no longer fit within the definition.  Should those now-excluded bystander plaintiffs argue that American Pipe tolling applies to their claims, courts in the Ninth Circuit are now instructed to resolve that ambiguity in favor of such bystander plaintiffs.Continue Reading A Closer Look: Ninth Circuit Extends American Pipe Tolling to Potentially Excluded Class Members in Face of Ambiguous Class Definitions

In two recent decisions, federal courts of appeals confirmed they are prepared to give close scrutiny to a class settlement that offers a hefty payday to plaintiffs’ counsel with very little genuine benefit to any class.Continue Reading A Closer Look:  Appellate Courts Closely Scrutinize Settlements

Companies in the food, beverage, pharmaceutical, and other industries continue to face litigation regarding their products’ labeling, including as to whether certain representations on labels are deceptive or misleading.  In the Second Circuit and elsewhere, these lawsuits tend to turn on what an objective “reasonable consumer” would understand the representation at issue to mean, and whether that “reasonable consumer” would likely be misled under the circumstances.  In Bustamante v. KIND, LLC, 2024 WL 1917155 (2d Cir, May 2, 2024), the Second Circuit confirmed how important expert testimony can be to that question, and how efforts to exclude expert testimony can ultimately be the difference between winning and losing. Continue Reading A Closer Look: The Importance of Expert Testimony for “Reasonable Consumer” Claims