Alyssa P. Cavanaugh and Jay A. Dubow, an associate and a partner in Troutman Pepper Locke’s White Collar Litigation + Investigations Practice Group, were published in the March 2026 The Investment Lawyer for their article, “SEC Enforcement: 2025 Year in Review.”

State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.

State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.

Contact our State AG Team at StateAG@troutman.com.

Multistate AG News

State AGs Settlement With WeChat Requiring Proactive Anti-Fentanyl Money Laundering Controls

By Troutman Pepper Locke State Attorneys General Team

A bipartisan coalition of seven state attorneys general (AG) reached a settlement with the Chinese-owned messaging and payment platform WeChat under which the company committed to take steps to combat the use of its platform in fentanyl-related money laundering. The agreement focuses on improving law enforcement cooperation, preserving and producing user data in response to law enforcement requests, and proactively detecting illicit activity on the service. The settlement is part of a broader enforcement campaign by state AGs to push online platforms to adopt proactive measures to monitor illicit activity on their services and improve cooperation with law enforcement.

Read more

State AGs Reject Federal Live Nation Deal and Press Ahead

By Chris Carlson, Clayton Friedman, Ashley L. Taylor, Jr., and William LaRosa

State attorneys general (AGs) from across the political spectrum have refused to join the U.S. Department of Justice’s (DOJ) midtrial settlement with Live Nation. The bipartisan multistate coalition vowed to “keep fighting this case without the federal government,” underscoring that state AGs are increasingly prepared to part with the DOJ and take the lead in complex enforcement actions.

Read more

Single State AG News

Algorithmic and Surveillance-Based Pricing in State AGs’ Crosshairs

By Troutman Pepper Locke State Attorneys General Team, David Navetta, Karla Ballesteros, and Brianna Dally

On March 16, 2026, New York Attorney General (AG) Letitia James rallied in support of the “One Fair Price Package” — a pair of bills aimed at curbing algorithmic and surveillance pricing in New York. Together, the bills would prohibit the use of personalized algorithmic pricing based on consumer data, ban electronic shelf labels in large food and drug retailers, and create robust enforcement mechanisms and private rights of action. The announcement from New York comes shortly after New Jersey Governor Mikie Sherrill backed legislation to ban what she has called “surveillance” pricing, and after California Attorney General Rob Bonta announced an investigative sweep focused on businesses that use consumer data to individualize prices for their goods or services earlier this year.

Read more

AG of the Week

Phil Weiser, Colorado

Phil Weiser has served as Colorado’s 39th AG since January 2019 and was reelected in 2022. Early in his tenure, he worked with the legislature to strengthen the Colorado Consumer Protection Act, expanding the office’s authority to address scams and unfair or deceptive practices.

Before his election, Weiser was dean and the Hatfield professor of Law at the University of Colorado Law School, where he founded the Silicon Flatirons Center for Law, Technology, and Entrepreneurship and co-chaired the Colorado Innovation Council.

At the federal level, he served in senior roles at the U.S. Department of Justice and on the National Economic Council, focusing on technology, innovation, and competition policy, and earlier as senior counsel in the Antitrust Division.

Weiser clerked for Justices Byron R. White and Ruth Bader Ginsburg of the U.S. Supreme Court and for Judge David Ebel of the U.S. Court of Appeals for the Tenth Circuit.

He lives in Denver with his wife, Dr. Heidi Wald, and their two children.

Colorado AG in the News:

  • Weiser, joined by 20 AGs and the governor of Kentucky, is urging the Federal Highway Administration to withdraw a proposal that would require EV chargers funded with federal dollars to be made with 100% U.S. components. They argue that the proposal is unlawful and impractical, would halt or delay federally funded charging projects, and would undermine existing investments, and that the current 55% domestic content standard better balances support for American manufacturing with timely deployment of a national EV charging network.  
  • Weiser and a coalition of AGs are suing U.S. Department of Housing and Urban Development (HUD) over new guidance that threatens to cut funding and impose unlawful conditions on state and local fair housing agencies for enforcing state protections — such as those based on sexual orientation, gender identity, language, criminal history, and source of income — arguing that these actions violate the U.S. Constitution and the Administrative Procedure Act and would severely weaken fair housing enforcement and increase discrimination.  
  • Weiser joined a multistate coalition suing the Trump administration over newly expanded Integrated Postsecondary Education Data System (IPEDS) reporting requirements — adopted to monitor universities’ compliance with the Supreme Court’s Students for Fair Admissions decision — arguing that the rushed, unauthorized data demands are unlawful, excessively burdensome, threaten student privacy, and convert a statistical system into an improper civil rights enforcement tool.

Upcoming AG Events

  • April: NAAG | Annual Meeting | Charleston, SC  
  • April: AGA | International Delegation | TBD  
  • May: RAGA | ERC Retreat | Sea Island, GA  

For more on upcoming AG Events, click here.

Troutman Pepper Locke’s State Attorneys General team combines legal acumen and government experience to develop comprehensive, thoughtful strategies for clients. Our attorneys handle individual and multistate AG investigations, proactive counseling and litigation, and manage ancillary regulatory issues. Our successful approach has been recognized by Chambers USA, which ranked our practice as a leader in the industry.

We previously published this alert about California’s Fair Investment Practices by Venture Capital Companies Act (FIPVCC), which contains diversity reporting requirements for venture capital and other investment funds that have a nexus to California and, until yesterday, had an April 1, 2026, compliance deadline. Yesterday the California Department of Financial Protection and Innovation (DFPI) announced that it plans to initiate rulemaking in response to comments by various stakeholders relating to the FIPVCC. To that end, implementation and enforcement of the FIPVCC are being suspended pending completion of the rulemaking and until final regulations are in place. DFPI is no longer requiring covered entities to submit registrations or file reports by the April 1, 2026, deadline. Once the rulemaking is completed, further guidance is expected. In the interim, no action is required.

California’s Fair Investment Practices by Venture Capital Companies (FIPVCC) law is now in effect and imposes significant new registration and annual reporting obligations on venture capital funds and other asset management vehicles with a California nexus. Venture capital companies that invest in or finance startup, early-stage, or emerging growth companies where the fund is headquartered in, operates in, invests in, or solicits or raises capital from investors in California must (1) register with the California Department of Financial Protection and Innovation (DFPI) beginning March 1, 2026, and keep that information current; and (2) submit an anonymized demographic and investment activity report by April 1, 2026, and annually thereafter. Noncompliance can trigger DFPI enforcement actions and civil penalties of up to $5,000 per day (with the potential for higher penalties for knowing or reckless violations), making it critical for affected funds to determine now whether they are subject to FIPVCC and to prepare for these reporting obligations.

  1. Are your investment vehicles venture capital companies? Under the FIPVCC, an entity is a “venture capital company” if it fits at least one of the following categories:
    1. On at least one occasion during the annual period (for this purpose, the annual period is the last year measured by the anniversary date of the initial capitalization of the entity) at least 50% of its assets (other than short-term investments pending long-term commitment or distribution to investors), valued at cost, are venture capital investments in operating companies where it has management rights (or derivative investments of those venture capital investments, which would be an acquisition of securities in the normal course in exchange for an existing venture capital investment either upon exercise or conversion of the existing venture capital investment or in connection with a public offering or merger/reorganization to which the existing venture capital investment relates);  
    2. Qualifying as a “venture capital fund” under SEC Rule 203(l)-1 (i.e., a private fund that represents to investors that it pursues a venture capital strategy and holds at least 80% of capital in equity of nonpublic qualifying portfolio companies); or  
    3. Qualifying as a “venture capital operating company” under ERISA (again focused on majority holdings of venture‑type investments with management rights).  
  2. If an entity is a venture capital company described above, then the analysis moves to whether the entity primarily engages in investing in or providing financing to startup, early‑stage, or emerging growth companies, and if the entity meets the California nexus test. The first step of this part of the analysis is straightforward, and the California nexus test is met if the entity meets any of the below criteria:
    1. Is headquartered in California;  
    2. Has a significant presence or operational office in California;  
    3. Makes venture capital investments in businesses located in, or with significant operations in, California; or  
    4. Solicits or receives investments from California residents (including California limited partners).  

Based on the above, many venture funds and other investment vehicles are subject to FIPVCC reporting (covered entities). Your counsel can help to confirm on a fund‑by‑fund basis, but at a high level, entities that (1) follow a venture/early‑stage investment strategy, and (2) have a California nexus, are very likely subject to FIPVCC reporting requirements. Covered entities must do the below:

  1. Commencing March 1, 2026 – Each covered entity must register with the DFPI, identifying the entity and providing contact details (e.g., entity name, individual point of contact, and contact information including address and website). This information must be kept up to date in subsequent years. Here is the link for registering with the DFPI.  
  2. By April 1, 2026 (and annually thereafter) – Each covered entity must submit a substantive, anonymized demographic report summarizing founder‑level survey responses and investment activity for the prior calendar year. Importantly, the survey must be sent to all companies into which the covered entity made a venture capital investment in the prior year, not just those with a California nexus. The link to the survey can be found here, and the link for the report can be found here.  

If a covered entity fails to submit the required April 1 report, DFPI is required to send a notice giving the entity 60 days to submit the report without penalty. If the entity still fails to report after that 60‑day cure period, DFPI may seek a court order compelling compliance and impose civil penalties of up to $5,000 per day, with the possibility of higher penalties for knowing or reckless violations. A similar 60‑day cure concept applies if the basic identifying information is not kept current by April 1.

If you think your fund(s) might be subject to FIPVCC reporting, please reach out; Troutman Pepper Locke’s team of attorneys is available to help your fund(s) determine if FIPVCC reporting is required.

This three-part series reviews how the Food and Drug Administration’s (FDA) January 2026 guidance, “General Wellness: Policy for Low Risk Devices”[1] (the General Wellness Guidance), affects companies offering “wellness tracker” products.

The General Wellness Guidance may leave some organizations questioning when a wellness tracker is an FDA-regulated “device” as opposed to a general wellness product outside the scope of FDA regulation but subject to other legal risks. Part Two of our series distills the General Wellness Guidance into four key takeaways:

  1. FDA will not regulate low-risk general wellness products as devices.
    Low-risk general wellness products either fall outside the definition of “device” entirely, or FDA will exercise enforcement discretion. Whether your product is regulated as a device depends on its intended use, judged objectively from labeling, marketing, and other statements, and whether it is “low-risk” as defined in the General Wellness Guidance.  
  2. Noninvasive physiologic trackers may now qualify as general wellness products.
    The 2026 update to the General Wellness Guidance indicates that certain noninvasive products measuring physiologic parameters (like blood pressure) can be treated as general wellness products if they are truly intended for wellness use and avoid diagnostic or treatment claims.  
  3. You can tell users to talk to a doctor — within narrow limits.General wellness products may prompt users to consult a health care professional when outputs fall outside normal thresholds, so long as they do not make disease‑specific, diagnostic, or treatment‑oriented statements.  
  4. FDA cybersecurity rules may not apply — but privacy and security obligations still do.
    Because they are not regulated as devices, low‑risk general wellness products do not have to comply with the requirements of FDA’s 2026 guidance, “Cybersecurity in Medical Devices: Quality Management System Considerations and Content of Premarket Submissions”[2] (Cybersecurity Guidance).[3] However, as covered in Part One, they may still be subject to HIPAA and other federal and state privacy and security laws, and they still present meaningful cybersecurity and incident response risk.  

I. FDA will not regulate low-risk general wellness products as devices.

The General Wellness Guidance revises and replaces a 2019 guidance published under the same title but keeps the same core position: low‑risk general wellness products are subject to enforcement discretion and will not be regulated as devices under the federal Food, Drug, and Cosmetic Act (FDCA).[4] The General Wellness Guidance thus addresses two key questions: (1) whether a product is a “general wellness product”; and (2) whether it is low-risk.

In determining whether a product is a general wellness product, the General Wellness Guidance continues to focus on the product’s intended use: it must be intended either for (1) a use that relates to maintaining or encouraging a general state of health or a healthy activity, or (2) a use that relates the role of a healthy lifestyle with helping to reduce the risk or impact of certain chronic diseases or conditions and where it is well understood and accepted that healthy lifestyle choices may play an important role in health outcomes for the disease or condition.

To determine whether a general wellness product is low risk, FDA considers whether a product is invasive, implanted, or contains technology that poses a safety risk without specific regulatory controls. If so, the product will not be considered low risk, and the General Wellness Guidance will not apply. This approach has not changed from the 2019 version of the General Wellness Guidance.

II. Noninvasive physiologic trackers may now qualify as general wellness products.

The most significant change in the 2026 General Wellness Guidance compared to the 2019 version concerns products used to sense, estimate, infer, or output physiologic parameters (such as blood pressure, oxygen saturation, blood glucose, and heart rate variability). Whereas the 2019 version of the General Wellness Guidance was silent as to these products, the 2026 update clarifies that these products may be general wellness products if they are intended solely for wellness use and they:

  • Are noninvasive.  
  • Do not involve technology that poses a safety risk.  
  • Are not intended for diagnosis, cure, mitigation, prevention, or treatment of a disease.  
  • Are not intended to substitute for an FDA-approved or FDA-cleared device.  
  • Do not include claims, functionality, or outputs that guide clinical management.  
  • Do not include values that mimic those used clinically, unless validated.  

In determining that products measuring physiologic parameters can qualify as general wellness devices, FDA has appeared to change its approach from as recently as last year. In July 2025, FDA sent a warning letter to a wearable product manufacturer for its blood pressure insights functionality, stating that blood pressure measurements are inherently associated with hypo- and hypertension diagnoses, and thus the manufacturer’s product was not a general wellness product and would require prior FDA approval or clearance.[5] Then, in September 2025, FDA released a safety communication stating that blood pressure measuring devices “are required to receive FDA marketing authorization to be lawfully marketed in the United States” and “do not fall within the FDA’s policy for general wellness products because they are not intended solely for general wellness use and are not low risk.”[6] Whereas its 2025 communications suggest that blood pressure measuring devices categorically could not qualify as general wellness products, the 2026 updated General Wellness Guidance states that they can.

In changing course, FDA appears to be adhering more faithfully to its policy by focusing on the intended use of a potential general wellness product. Importantly, though, FDA has always determined, and continues to determine, a product’s “intended use” based on an objective standard.[7] FDA will look to a firm’s regulatory filings, product labeling, advertising and promotion, and any other statements as indicative of a product’s intended use. While the updated General Wellness Guidance states that blood pressure measuring products are not categorically excluded from general wellness products, it is still possible that, under the circumstances, the product at issue in FDA’s July 2025 warning letter would not qualify as a general wellness product and would require marketing authorization. Therefore, companies must diligently monitor all statements about their products to ensure their objectively intended use matches what the company in fact intends.

III. You can tell users to talk to a doctor — within narrow limits.

The updated General Wellness Guidance clarifies that products may inform users to consult a health care professional when outputs fall outside normal thresholds and still qualify as general wellness products if the following conditions are met:

  • Notifications make no reference to a specific condition or disease.  
  • Outputs are not categorized as abnormal, pathological, or diagnostic.  
  • No recommendations are included concerning clinical thresholds, diagnosis, or treatment.  
  • No ongoing monitoring or alerts for medical management are provided.  

FDA differentiates between these kinds of alerts and ongoing monitoring or treatment recommendations that indicate a product is intended for something other than general wellness use.

New Examples

The 2019 version of the General Wellness Guidance provided six examples to illustrate when general wellness products would not be considered devices or would be subject to enforcement discretion. The 2026 update provides three additional examples to help illustrate application of the General Wellness Guidance to products that measure physiologic parameters:

New Example 7: A wrist-worn wearable product intended to assess activity and recovery that outputs multiple biomarkers like hours slept, sleep quality, pulse rate, and blood pressure using noninvasive technology.

New Example 8: A wearable product intended to provide blood glucose estimations for monitoring nutritional impacts using a minimally invasive microneedle technology.

New Example 9: A noninvasive wearable product intended for monitoring electrolyte imbalance, lactate, and hemoglobin. This product is advertised toward elite athletes and is labeled for use in an exercise/fitness context only and disclaims for use diagnosing any condition.

According to the General Wellness Guidance, both the products in examples 7 and 9 would be considered low-risk general wellness products because they do not refer to a specific disease or condition and the noninvasive technologies do not pose a safety risk. These examples reflect a shift in FDA’s position because as described above, devices that measure certain physiologic parameters like blood pressure would have required marketing authorization under FDA’s prior practice. In contrast to examples 7 and 9, example 8 would not be a low-risk general wellness product because even minimally invasive technology is “invasive” and thus not low risk.[8]

IV. FDA cybersecurity rules may not apply — but privacy and security obligations still do.

In February 2026, FDA issued its Cybersecurity Guidance, superseding 2025 and 2023 final guidances. Under the 2026 requirements, manufacturers must design, develop, and maintain processes that provide “reasonable assurance” of cybersecurity, including post-market updates, patches, and a plan to monitor, identify, and address vulnerabilities. FDA interprets this requirement to mean that manufacturers should provide a detailed cybersecurity management plan (CMP) as part of the premarket submission for cyber devices.[9] FDA intends to review the CMP as part of its safety and effectiveness review, treat cybersecurity risks like any other safety risk, and may reject premarket submissions that do not provide adequate information or a “reasonable assurance” of cybersecurity.

However, as discussed above, the General Wellness Guidance removes low-risk general wellness products from the scope of FDA regulation. Because FDA determined that low-risk general wellness products are not regulated as devices, these products will not be subject to premarket and post-market regulatory requirements under the FDCA. Even if FDA regulations do not apply, significant privacy, security, regulatory, and litigation risks still exist.

As discussed in the first article of this series, the Federal Trade Commission (FTC) has actively pursued enforcement actions against manufacturers of general wellness products that fail to implement reasonable security measures. In addition, sector-specific health laws may apply when a general wellness product integrates with covered entities (e.g., health care providers or health plans). In those circumstances, the manufacturer may become a “business associate” and be subject to HIPAA’s security requirements.

Manufacturers must also navigate a patchwork of state laws, as all 50 states and U.S. territories impose data breach notification obligations. While security measures are not always explicitly required by statute, building in robust security significantly benefits companies given these universal notification requirements. Finally, inadequate security can give rise to product liability and other litigation risks, including claims alleging negligence in data security and harm resulting from a breach — with an increased likelihood of class action exposure following data incidents.

The General Wellness Guidance means that many wellness trackers can avoid device-level cybersecurity obligations — but not cybersecurity risk. In the third and final article in this series, we will turn to those risks directly and walk through practical cybersecurity and incident response considerations for wellness tracker companies.

[1] U.S. Food & Drug Admin., Guidance for Industry: General Wellness: Policy for Low Risk Devices, (Jan. 2026), https://www.fda.gov/regulatory-information/search-fda-guidance-documents/general-wellness-policy-low-risk-devices.

[2] U.S. Food & Drug Admin., Guidance for Industry: Cybersecurity in Medical Devices: Quality Management System Considerations and Content of Premarket Submissions, (Feb. 2026), https://www.fda.gov/regulatory-information/search-fda-guidance-documents/cybersecurity-medical-devices-quality-system-considerations-and-content-premarket-submissions.

[3] During the publication process of Part One of our series, FDA issued a new version of the cybersecurity guidance, superseding its June 2025 version. The new cybersecurity guidance is substantially the same but replaces references to Quality System (QS) with Quality Management System Regulation (QMSR), placing greater emphasis on risk management throughout the product lifecycle.

[4] The term “device” is defined in 201(h) of the FD&C Act to include an “instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is …intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man … or intended to affect the structure or any function of the body of man…” and “does not include software functions excluded pursuant to section 520(o) of the FD&C Act.”

[5] https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/whoop-inc-709755-07142025.

[6] https://www.fda.gov/medical-devices/safety-communications/do-not-use-unauthorized-devices-measuring-blood-pressure-fda-safety-communication.

[7] See 21 C.F.R. § 801.4; see also https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/whoop-inc-709755-07142025.

[8] The General Wellness Guidance defines “invasive” as “penetrates or pierces the skin or mucous membranes of the body.” General Wellness Guidance at 6 n.9.

[9] Section 524B of the FDCA defines “cyber device” as a device that meets all of the following criteria (1) includes software validated, installed, or authorized by the sponsor as a device or in a device; (2) has the ability to connect to the internet; and (3) contains any such technological characteristics validated, installed, or authorized by the sponsor that could be vulnerable to cybersecurity threats.

Reprinted with permission from the March 16, 2026, edition of the New York Law Journal© 2026 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.

Construction payment disputes in New York are complex and slow to resolve, with the current arbitration mechanism under the Prompt Payment Act rarely used due to its finality and review limitations. Abroad, countries like the UK and Ontario successfully use statutory adjudication—quick, interim decisions that help maintain cash flow and project progress. Adopting a similar model in New York could improve dispute resolution by providing faster, cheaper, and more practical interim rulings, though it would require careful adaptation to local industry and legal norms.

Construction projects run on two things: timely and proper completion of work, and payment. But payment is often more complicated than it sounds. From the payor’s perspective—owners and upstream contractors and subcontractors—payment is earned incrementally as work is completed, and there may be legitimate bases to withhold or reduce it.

From the payee’s perspective—downstream contractors, subcontractors, and vendors—delayed or disputed payment can stall a project before anyone fully appreciates the damage being done. These competing perspectives yield disputes that are among the most consequential—and most complex—in the industry. They involve complex contracts, voluminous records, and technical questions that can take years to resolve through litigation or arbitration.

New York’s construction industry knows this conflict well. The state’s construction pipeline—exceeding $84 billion in combined public and private spending in 2024 alone—generates a corresponding volume of payment disputes, yet the mechanisms available to resolve those disputes quickly and affordably remain limited.

The New York Prompt Payment Act, N.Y. Gen. Bus. Law §§756–758, represents the legislature’s principal effort to address payment delays and provides an expedited pathway to the resolution of these disputes. However, the statute’s arbitration mechanism has significant structural limitations that have discouraged its use. The experience of other jurisdictions—most notably the United Kingdom and Ontario—suggests that a statutory adjudication model may deserve closer examination as a means of addressing those limitations in New York.

The Prompt Payment Act and Its Limitations

Under the Prompt Payment Act, a party alleging a prompt payment failure has the right to pursue expedited arbitration before the American Arbitration Association after a payment dispute cannot be resolved informally. Specifically, under §756-b, an aggrieved party may serve a complaint alleging a payment failure, triggering a mutual obligation to attempt resolution; and if that effort fails, the party may refer the matter to expedited AAA arbitration no fewer than fifteen days after verified delivery of the complaint. Notably, under §756-b parties are unable to contract out of the right to pursue expedited arbitration.

On paper, this is a meaningful tool. In practice, however, the arbitration pathway has seen limited use. The reason is structural: an award issued under §756-b is final and binding, subject only to the narrow grounds for vacatur or modification set forth in N.Y. C.P.L.R. §7511. Construction disputes rarely turn on simple facts.

A payment claim may implicate change order disputes, schedule impacts, scope disagreements, and backcharges—all of which require careful factual development. Payees who submit those disputes to expedited arbitration risk an adverse, binding, and nearly unreviewable decision issued before the full record has been developed. Moreover, because the expedited arbitration is a tool designed only for the payee, the payor derives little, if any, benefit.

The Statutory Adjudication Model

The United Kingdom confronted a similar problem in the 1990s and adopted a different solution. The Housing Grants, Construction and Regeneration Act 1996, c. 53 (HGCRA), grants any party to a qualifying construction contract the right to refer a dispute to adjudication at any time. An adjudicator must be appointed within seven days, and a decision must issue within twenty-eight days—extendable by agreement. The decision is binding and immediately enforceable, but it is interim in a critical respect: it stands only until the dispute is finally determined by litigation, arbitration, or agreement.

Parties can—and regularly do—pursue a different outcome in subsequent proceedings. Where the payee prevails, prompt payment will be required and cash flow will resume. Where the payor prevails, the enforcement of withholding rights will be vindicated and put to rest a dispute that might otherwise impair the progress of the work. While there are inevitable advantages and disadvantages, the UK experience over nearly three decades has demonstrated that the model works: adjudication has become the dominant method of resolving construction payment disputes in the UK, with tens of thousands of adjudications having been conducted since the statute took effect.

Ontario adopted a comparable model through amendments to its Construction Act, R.S.O. 1990, c. C.30, which took effect in 2018 and 2019. The Ontario Dispute Adjudication for Construction Contracts (ODACC) administers the adjudication process, providing rules, nominating adjudicators, and maintaining a roster of qualified neutrals. Like the UK model, Ontario’s adjudications produce interim binding decisions that can be revisited in arbitration or court. The Ontario model has been credited with reducing payment delays and providing a structured pathway for claims that might otherwise go unresolved.

Benefits and Limitations

The case for statutory adjudication rests on three principal arguments: speed, cost, and (interim) finality. First, a twenty-eight-day decision cycle is dramatically faster than even the most expedited arbitration. Second, the simplified process—typically involving written submissions without full discovery—reduces costs substantially compared to commercial arbitration or litigation.

Third, the interim binding character of the decision delivers a practical advantage that a lengthy arbitration cannot: a successful claimant receives payment during the project, and a successful respondent gains a preliminary vindication of its decision to withhold payment. Of course, the result need not be all-or-nothing; statutory adjudication can just as easily produce a mixed outcome in which the payee and payor each prevail in part.

The limitations are also real. Critics argue that the compressed timeline is poorly suited to technically complex disputes. An adjudicator deciding a multimillion-dollar claim in twenty-eight days, on the basis of written submissions alone, may lack the full picture needed to reach a fair result. The party against whom a decision issues may be required to pay a sum that subsequent proceedings ultimately determine was not owed.

There are also at least three structural concerns that warrant further reflection. One, well-resourced parties who are repeat players in the adjudication process may enjoy structural advantages over smaller participants navigating the process for the first time.

Two, the process could lend itself to abuse by way of voluminous claims that detract from the project and undermine the underlying public policy goals—a risk that requires careful consideration of the realities and economies of scale relating to modern construction projects. Three, because construction projects ultimately involve numerous parties throughout the contractual chain of privity, questions regarding joinder and impleader loom large.

Lessons From Abroad — And Their Limits

None of this is to suggest that statutory adjudication is imminent in New York, or that importing a foreign model wholesale would be straightforward. The UK and Ontario frameworks developed in response to specific political and industry conditions that may not map cleanly onto New York’s construction landscape, which is shaped by its own mix of public procurement rules, union labor markets, and a well-developed commercial arbitration culture.

The more modest point is that the comparative experience is instructive about the tradeoffs involved in any attempt to reform payment dispute resolution. The UK’s near three decades of adjudication practice demonstrate that speed and enforceability are achievable—but that can be attributed, at least in part, to the UK tradition of courts treating adjudicators’ decisions as presumptively valid.

That deliberate policy choice from our colleagues across the pond warrants further debate based on laws, public policy, and norms here in New York. The UK system accepts that some interim disputes may be incorrectly decided, in whole or part, and that future options to correct such a determination may be limited. Whether or not that risk is acceptable in New York’s construction industry is a question that will need to be asked as part of any serious conversation about statutory adjudication in the Empire State.

Ontario’s experience adds a further data point: institutional infrastructure matters. The ODACC’s role in maintaining a qualified adjudicator roster and administering the process has contributed meaningfully to the model’s credibility. Ad hoc adjudication without that infrastructure may risk producing inconsistent results and invites collateral litigation over process rather than merits.

Most immediately relevant to New York is the basic tension within the Prompt Payment Act itself. The statute already reflects a legislative judgment that payment disputes deserve expedited resolution. The fact that the mechanism is rarely used—because the binding, nearly unreviewable character of an expedited award is too great a risk—is itself an argument that the current tool is poorly calibrated. The statutory adjudication framework could address that problem by separating the obligation to comply from the finality of the underlying determination. If New York is ready for that conversation, the experiences of other jurisdictions offer a useful baseline.

Conclusion

New York’s construction industry is large, sophisticated, and well-acquainted with dispute resolution. It is also underserved by the mechanisms currently available for mid-project disputes. The UK and Ontario have demonstrated that statutory adjudication can provide a faster, cheaper, and more project-sensitive alternative—without foreclosing the parties’ right to a full and fair final determination.

For now, the debate over whether to import such a model to New York remains largely academic. But the practical dormancy of the Prompt Payment Act’s arbitration mechanism is itself telling—a gap between legislative intent and industry practice that, at minimum, invites further reflection.

According to a recent Microsoft blog post, Microsoft 365 E7 (the Frontier Suite) will be available for license as of May 1, 2026. Microsoft is positioning E7 Frontier as the next‑generation approach to enterprise AI, with more robust governance and in-app agentic capabilities. E7 Frontier bundles (i) Microsoft 365 E5 (the full productivity, security, and compliance stack, including Entra, Defender, Intune, and Purview); (ii) Microsoft 365 Copilot (Wave 3) for agent‑driven AI in Word, Excel, PowerPoint, Outlook, and chat; and (iii) Agent 365, which provides centralized visibility, identity‑aware access, lifecycle management, and governance for AI agents.

E5 with the Copilot add‑on is estimated to cost about $90 per user per month. By contrast, E7 is priced at $99 per user per month, less expensive than licensing E5, Copilot, and Agent 365 à la carte.

Key eDiscovery and Information Governance Implications

As AI agents and autonomous workflows scale, organizations should anticipate and plan for the following challenges:

  • New discoverable data: Prompts and AI outputs (including document and meeting summaries) may become subject to retention and eDiscovery.
  • Non-obvious data locations: AI artifacts may be stored in a variety of back-end repositories, increasing the risk of preservation and collection gaps.
  • Amplified oversharing risk: Because agents inherit user permissions, unduly permissive access controls can expose or recombine sensitive or privileged information.
  • Governance blind spots: “Shadow agents” and unclear ownership may sit outside established retention, legal hold, and audit controls.

Organizations adopting Copilot, with or without the increased capabilities available in Agent 365, should consider proactively classifying AI interactions as a distinct content type, defining appropriate retention and legal hold rules, clarifying ownership and oversight of AI agents, and aligning eDiscovery workflows to capture relevant prompts, responses, and related artifacts. When approached thoughtfully, organizations can enable AI at scale while strengthening, rather than undermining, governance and risk management.

Struggling with how to get the most out of your Microsoft 365 environment, securely and defensibly? eMerge can help you turn Microsoft Copilot and other AI tools into governed, high‑value assets rather than liabilities breeding unmanaged risk. Our team can design end‑to‑end eDiscovery workflows to identify, preserve, and collect AI‑related data, and we can help you classify information and remediate ROT (redundant, obsolete, and trivial) so that your AI workflows are grounded in trusted, high‑quality sources.

To explore how we can support your Microsoft 365 and AI strategy, please contact eMerge Information Governance.

Construction disputes often arise from long-running projects involving multiple participants with varying roles governed by their separate contracts. Those contracts frequently contain inconsistent dispute resolution processes — some requiring litigation, others mandating arbitration.

As a result, parties must carefully consider which participants to include, what claims to assert, and where those claims should be brought before initiating any formal proceeding. The Fourth Circuit’s recent decision in Design Gaps Inc. v. Distinctive Design & Constr. LLC, 162 F.4th 452 (4th Cir. 2025), underscores that failing to plan strategically on these issues at the outset can forfeit a claimant’s ability to pursue certain claims or obtain relief from key parties altogether.

Background

Arbitration

Design Gaps Inc. arose from a home renovation project gone wrong. The homeowners hired a contractor to renovate their home, which in turn subcontracted with Design Gaps, a custom cabinetmaker and designer, to perform work relating to cabinets that would be installed as part of the renovation. After relations with Design Gaps broke down due to what the homeowners viewed as extensive delays, the homeowners “walked away from their contracts” with Design Gaps and hired a new contractor to complete that work. The homeowners and general contractor shared certain copyrighted drawings prepared by Design Gaps with the new contractor.

Numerous disputes arose between the homeowners, general contractor, and cabinetmaker subcontractor arising out of various breaches of contract and intellectual property-related claims. Consequently, the homeowners and general contractor initiated an arbitration against the subcontractor for damages related to hiring a replacement subcontractor to finish the work. Counterclaims followed against the arbitral claimants as well as crossclaims against various nonparties, including the replacement subcontractor and the individual owners of the general contractor and replacement subcontractor. The arbitrator dismissed the crossclaims because none of the nonparties were subject to an arbitration agreement. The arbitrator then ruled against the subcontractor on the merits concerning the remaining counterclaims and issued a final award in favor of the homeowners and general contractor. The award was later confirmed in state court.

Post-Arbitration Litigation

Despite the award being confirmed, the subcontractor filed a new lawsuit in the U.S. District Court for the District of South Carolina against the same arbitral parties and nonparties, alleging identical and substantially similar claims. In response, both the arbitral parties and nonparties moved to dismiss the case on grounds that the claims and issues related to those claims were already adjudicated in the arbitration. The trial court agreed, dismissing the claims, and the appeal to the Fourth Circuit followed.

Appeal

On appeal, Design Gaps argued that the trial court improperly dismissed its complaint against the defendants who were not parties to the arbitration because those parties had no standing to say that the claims against them in litigation were already adjudicated in arbitration. The Fourth Circuit disagreed, holding that applicable claim preclusion principles extended to the nonparties considering that they had substantial ties to the claims and issues presented in the arbitration. Accordingly, Design Gaps was not allowed to have a second chance to re-litigate issues decided in the arbitration against the arbitral nonparties.

Why the Design Gaps Decision Matters

Design Gaps, Inc. offers important reminders for both contract drafting and litigation strategy. First, ensuring alignment of dispute resolution procedures among contracts can help avoid having to both litigate and arbitrate disputes arising out of the same project. Ensuring a single forum to resolve all project-related disputes can help save costs and avoid inconsistent results. Second, before initiating formal dispute resolution, it is critical to evaluate all the potential parties for inclusion, all potential claims to pursue, and the appropriate forum for each stakeholder. Where the various relevant contracts require different dispute forums, claimants should also consider whether they may request a stay of any litigation pending the resolution of an arbitration that involves substantially similar issues. Failing to strategically consider these issues prior to a lawsuit could later prove to be fatal to a claimant’s ability to pursue certain claims or obtain relief from key parties altogether.

Troutman Pepper Locke attorneys are well positioned to advise clients on construction contract drafting and negotiations, as well as in navigating construction project disputes with all types of project stakeholders.

Data center developers, including hyperscalers, are responding to the rapid expansion of artificial intelligence (AI) and migration of data into the cloud by expediting and scaling up the construction of data centers in the U.S., especially in Texas.

This growth brings with it challenges for the developers and their partners, including how to reliably power these projects, and the scale of this challenge will only grow as new generations of microchips are rolled out. More companies are looking at off-grid energy solutions at their data center sites to avoid or minimize issues associated with grid power. Hyperscalers also face practical issues, including access to water and supply chain pressures.

This report explores five key dynamics affecting the rollout of off-grid data centers in the U.S., and considers what this means for hyperscalers, energy project developers, and financiers. The focus is predominantly on Texas because of its deregulated retail electricity market, and because its behind-the-meter market is more advanced than most of the rest of the U.S. However, many of the trends related to energy generation, community reactions, and infrastructure investments are relevant in other markets.

This report includes insights from external data center and energy experts, as well as the legal professionals from Troutman Pepper Locke’s energy and real estate teams.

Click here to read the report.

The administration has now made clear what comes after the courts curtailed the use of emergency economic powers for broad tariff programs: Section 301 of the Trade Act of 1974 (Section 301). The new investigations are designed to recreate (through traditional trade law) the same kind of wide‑ranging, flexible tariff architecture that had previously rested on emergency authorities such as the International Emergency Economic Powers Act (IEEPA).

In announcing the global “structural overcapacity” investigation, USTR expressly framed the effort as part of a “shift back to traditional trade authorities” and away from emergency economic powers. Following the recent Supreme Court decision limiting the executive branch’s reliance on those emergency authorities for tariff actions, the administration has increasingly leaned on legacy trade statutes, including Section 122 of the Trade Act (Section 122), which was recently used to impose a temporary global import surcharge. Because Section 122 is time‑limited, these new Section 301 investigations are best understood as an effort to build a more durable, litigation‑resistant legal foundation for long‑term trade measures. As commentators have already observed, the policy goal is not subtle: to replicate the old IEEPA‑based structure under Section 301.

Against that backdrop, USTR has now launched two unprecedented Section 301 initiatives that reach deep into global supply chains: one focused on “structural excess capacity” across key manufacturing sectors, and another aimed at trading partners that allegedly fail to ban imports made with forced labor.

New Section 301 Investigations

Structural Overcapacity: 16 Economies, Core Industrial Sectors

On March 11, USTR announced a sweeping Section 301 investigation into whether the policies of 16 major trading partners create “structural excess capacity” that burdens or restricts U.S. commerce. The investigation covers a broad set of economies — including close allies and key manufacturing hubs in Europe and Asia — and focuses on government‑supported overcapacity in:

  • Steel and other metals.  
  • Automobiles and parts.  
  • Batteries and critical minerals-based technologies.  
  • Semiconductors and advanced electronics.  
  • Industrial machinery, robotics, and advanced manufacturing equipment.  
  • Chemicals, plastics, and construction materials.  
  • Solar modules and other renewable energy components.  

The theory is that sustained, policy‑driven overbuilding — backed by subsidies, state‑linked financing, and preferential regulation — depresses global prices, undercuts U.S. producers, and deters private investment, thereby “burdening or restricting” U.S. commerce within the meaning of Section 301.

If USTR finds such practices “unreasonable or discriminatory,” it can recommend measures including additional duties, product‑specific tariff hikes, quantitative import restrictions, or other trade restrictions tailored to the sectors and partners at issue.

Forced Labor: Sixty Partners’ Import Regimes Under Scrutiny

On March 12, USTR separately initiated 60 Section 301 investigations into whether certain trading partners have failed to adopt and effectively enforce prohibitions on the importation of goods made with forced labor. Here, USTR is leveraging a statutory provision that identifies a “persistent pattern of conduct that permits any form of forced or compulsory labor” as an “unreasonable” practice under Section 301.

The investigations span a wide spectrum of economies — from major markets such as China to close U.S. allies and key emerging markets in Asia, Latin America, Africa, and the Middle East. Although the formal targets are foreign governments and their regimes for blocking forced‑labor imports, the practical impact will fall on:

  • Multinational companies sourcing from or manufacturing in those jurisdictions; and  
  • U.S. importers and downstream purchasers whose supply chains run through affected sectors and countries.  

As with the overcapacity investigation, USTR is positioning itself to impose tariff surcharges, product‑specific restrictions, or outright bans on goods associated with jurisdictions that are deemed to fall short.

Why This Matters: A De Facto New Tariff Architecture

These parallel investigations are not isolated enforcement actions. Taken together, they constitute an attempt to construct a new, durable tariff framework under Section 301 that can:

  • Reach a wide range of products and sectors;  
  • Flexibly dial tariffs up or down by country, sector, and product; and  
  • Persist beyond the temporal and doctrinal constraints that now apply to emergency economic powers and time‑limited tools like Section 122.  

In effect, Section 301 is being repurposed from a tool traditionally deployed against discrete foreign measures (e.g., a particular tariff or technology‑transfer requirement) into a platform for:

  • Addressing systemic industrial policies (overcapacity); and  
  • Regulating foreign approaches to human rights-linked trade issues (forced labor).  

For businesses, the consequence is a structurally more volatile trade environment in which long‑term planning must account for the possibility of overlapping 301‑based tariffs and restrictions, even in markets that have historically been stable U.S. partners.

International Pushback: A Preview of the Coming Friction

Early reaction abroad signals that these investigations will be contentious:

  • Key partners are already challenging USTR’s data and methodology. For example, Singapore has publicly questioned the overcapacity data USTR released, pointing out that even U.S. government statistics show a bilateral trade deficit, and arguing that the overcapacity narrative is not justified on the facts.  
  • Countries will seek to differentiate themselves from higher‑risk peers. Economies that see themselves as responsible rule‑followers are unlikely to accept being grouped with more problematic actors and will push aggressively for exclusions or narrower findings.  
  • Litigation and retaliation risks are real. Trading partners can be expected to consider WTO challenges and to explore their own defensive or retaliatory measures, particularly if tariffs extend into politically sensitive sectors.  

In short, the political and diplomatic pushback has already begun, and the process is likely to grow messy as multiple allies and partners contest both the legal theory and the empirical basis for USTR’s actions.

Key Procedural Milestones

While details differ by investigation, the Section 301 processes share common features: electronic dockets, relatively compressed timelines, and opportunities for business input. For the structural overcapacity investigation covering 16 economies, the docket opened on March 17, 2026, with written comments and hearing requests due by April 15, 2026. Public hearings are currently scheduled for May 5–8, 2026, and rebuttal comments are due seven days after the final hearing date. For the 60 forced labor investigations, written comments and hearing requests are likewise due by April 15, 2026, with public hearings scheduled to begin on April 28, 2026, and continue through May 1, 2026; rebuttal comments are again due seven days after the final hearing date. USTR is expected to move quickly once the records are developed, especially as the administration seeks to transition from short‑term Section 122 surcharges to longer‑lived Section 301 measures.

Practical Takeaways for Companies

Companies with global manufacturing, sourcing, or export footprints should treat these investigations as the opening move in a more expansive Section 301 strategy — not as isolated, one‑off cases.

Map Exposure to Covered Economies and Sectors

  • Identify where your supply chains intersect with:
    • The 16 economies under overcapacity review; and  
    • The 60 economies subject to forced labor investigations.
  • Focus on high‑risk sectors: metals, autos, batteries, semiconductors, industrial machinery, chemicals, construction materials, solar and renewables, and any sectors with known forced‑labor sensitivities.  

Integrate Trade and Environmental, Social, and Governance (ESG)/Forced Labor Compliance

  • Align trade, sanctions/export controls, and ESG/forced labor teams so that:
    • Data used for forced‑labor due diligence can also support Section 301 advocacy; and  
    • You can credibly demonstrate that your supply chains do not benefit from the overcapacity or forced‑labor practices at issue.

Consider Proactive Engagement with USTR

  • Evaluate whether to submit comments or testify to:
    • Correct factual errors (e.g., trade‑balance data, product classifications);  
    • Highlight unintended consequences for U.S. jobs and investment; and  
    • Advocate for exclusions or tailored remedies that mitigate collateral damage.
  • Industry coalitions or cross‑sector submissions may carry additional weight where multiple U.S. stakeholders share the same exposure.  

Build Scenario Planning into Commercial Decisions

  • Model tariff and nontariff scenarios (e.g., 10-25% additional duties on key inputs; targeted import bans on particular Harmonized System tariff lines) and their impact on pricing, sourcing, and customer contracts.  
  • Where possible, embed flexibility into new contracts (e.g., tariff‑sharing clauses, alternative‑source provisions) to address potential Section 301 measures.  

Monitor for Overlapping Measures

  • Track not only these Section 301 proceedings, but also any consequent or parallel actions under other authorities (e.g., Section 232 national security tariffs, Section 201 safeguard measures, and enforcement under the Uyghur Forced Labor Prevention Act), as the combined effect may be greater than any single measure.  

These new Section 301 investigations represent a strategic “Plan B” for rebuilding a robust, flexible tariff regime in the wake of IEEPA’s judicial constraints. They reach deeply into core industrial and supply‑chain sectors and already are generating significant international pushback. Companies that quickly assess their exposure and engage thoughtfully with the process will be better positioned to manage the legal, commercial, and reputational risks that follow.

In Sztrom v. SEC, the U.S. District Court for the District of Columbia confirmed that the U.S. Supreme Court’s 2024 decision in SEC v. Jarkesy, which curtailed the Securities and Exchange Commission’s (SEC) ability to seek civil penalties in its administrative forum, does not eliminate the agency’s long-standing ability to pursue industry bars through administrative follow-on proceedings. The opinion underscores that, even after Jarkesy and other recent limits on agency power, the SEC may still use its in-house process to determine whether to bar previously enjoined defendants from the securities industry, with independent review limited to the courts of appeals.

Background
Michael and David Sztrom, California-based investment advisers, were sued by the SEC in 2021 in the Southern District of California for alleged violations of the Investment Advisers Act tied to advisory activity between 2015 and 2018. In 2022, they settled that case, consenting to injunctions and agreeing to pay $25,000 each in civil penalties, without admitting or denying the allegations. In May 2023, the SEC initiated a follow-on administrative proceeding under the Advisers Act, seeking to bar them from the securities industry based on the agreed-to injunctions. While the SEC’s Division of Enforcement moved for summary disposition in that administrative case, the Sztroms filed a separate action in the D.C. district court raising constitutional and statutory attacks on the follow-on proceeding. They alleged due process violations from the SEC’s combination of investigative, prosecutorial, and adjudicative functions; an Article III violation in having an administrative law judge decide their fate; a jury-trial right before they could be barred from their profession; and a denial of statutory hearing rights.

Analysis
The SEC’s motion to dismiss was granted in full. On jurisdiction, the court held that the Advisers Act’s review scheme implicitly channels challenges like the Sztroms’ jury-trial and hearing-rights claims to the courts of appeals, not district courts. Under controlling precedent, the plaintiffs can obtain meaningful judicial review only after the SEC issues a final order, at which point they may raise those arguments on petition for review. On the due process claim, the court held it was squarely foreclosed by a prior D.C. Circuit court decision, which upheld the constitutionality of agencies combining investigative, charging, and adjudicative functions.

Most significantly for post-Jarkesy practice, the court rejected the Sztroms’ Article III challenge to the SEC’s authority to adjudicate industry bars in an administrative forum. Relying on Jarkesy and prior D.C. Circuit decisions, the court emphasized the distinction between “private rights,” which generally must be adjudicated in Article III courts, and “public rights,” which Congress may assign to agencies. Unlike the civil fraud penalty regime at issue in Jarkesy, the SEC’s follow-on proceeding against the Sztroms did not involve the initial imposition of monetary penalties for common-law-type fraud claims. Instead, the SEC was exercising a remedial, public-interest function — deciding whether to impose a regulatory sanction (an industry bar) on individuals already enjoined in federal court. The court described this as a “self-consciously novel” regulatory mechanism focused on the public interest, not a traditional common-law claim. It noted that the SEC has used follow-on bar authority for decades without successful Article III challenges and that the D.C. Circuit has treated the “public interest” inquiry in such proceedings as distinct from private-rights adjudication.

By upholding the SEC’s ability to pursue industry bars in administrative follow-on cases, Sztrom confirms that Jarkesy’s Seventh Amendment and Article III limits on the SEC’s use of its administrative forum are context-specific. While Jarkesy restricts the SEC from using administrative adjudication to impose civil monetary penalties for securities fraud, Sztrom makes clear that the agency’s authority to seek nonmonetary remedial sanctions through follow-on administrative proceedings remains intact, with constitutional and procedural challenges reserved for review in the courts of appeals after a final SEC order.

The Sztroms have appealed this decision. We will continue to monitor this litigation and provide updates. We also expect others to bring similar challenges in other circuits, which could result in a split among them.