Employers nationwide can breathe a collective sigh of relief. On Friday November 15, 2024, District Judge Sean D. Jordan of the federal district court for the Eastern District of Texas granted a motion for summary judgment finding that the Department of Labor’s 2024 Rule – that would have increased the minimum salary level required to qualify executive, administrative, and professional employees for overtime exempt status to $58,565 per year ($1,128 per week) effective January 1, 2025 – is legally invalid. State of Texas v. United States Department of Labor, United States District Court for the Eastern District of Texas, Civil Action No. 4:24-CV-499.

The first phase of the DOL’s 2024 Rule (which went into effect July 1, 2024) that increased the minimum salary level from $35,568 per year ($684 per week) to $43,888 ($844 per week) was also struck down part of the Court’s decision. Judge Jordan found that the DOL’s 2024 Rule exceeded its statutory authority under the federal Fair Labor Standards Act. In reaching this decision, the Court relied on the expanded standard of judicial review of federal agency action announced in the Supreme Court’s recent Loper Bright decision.

The Court’s decision vacating the 2024 Rule pursuant to the federal Administrative Procedures Act applies nationwide. An appeal of the District Court’s ruling to the federal Fifth Circuit Court of Appeals is a possibility, so employers should continue to monitor future developments carefully. But for now, employers can continue to qualify their executive, administrative, and professional employees as overtime exempt (for purposes of the federal Fair Labor Standards Act) at the current annual salary requirement of $35,568 per year ($684 per week).

Louisiana’s Senate Bill 1, introduced during the recent 2024 Third Extraordinary Legislative Session, aims to establish specialized business courts in Louisiana through a state constitutional amendment.  The bill seeks to amend the constitution and give the legislature the authority to create “specialized” courts.  This proposed amendment must first receive two-thirds approval in both the Louisiana Senate and House. If passed, the amendment will appear on voters’ ballots on either March 29th or November 15th of 2025. The legislature would need to then attempt to pass additional laws to create specialized courts designed specifically to handle complex business disputes, such as commercial, corporate, and banking cases, streamlining the process and making it more efficient. Proponents suggest the establishment of business courts could be a significant development for the legal and business communities in Louisiana. Several other states already have similar business courts, including Delaware, New York, Michigan, North Carolina, and Georgia.

For bill text see:  SB1

For related articles see:

Louisiana legislators consider giving themselves the authority to set up ‘business’ court

This Louisiana lawmaker wants a new means of settling business disputes

Louisiana legislators consider giving themselves the authority to set up ‘business’ court • Louisiana Illuminator

Out-of-state defendants are sometimes surprised to learn that their lack of minimum contacts with the forum state is irrelevant if the lawsuit against them is filed as an adversary proceeding in a federal bankruptcy court. For example, a company or individual that has minimum contacts with the United States as a whole, but not with Louisiana specifically, is still subject to the jurisdiction of a United States Bankruptcy Court in Louisiana. A defendant’s motion to dismiss for lack of personal jurisdiction based on having no contacts with the forum state will be denied.

Federal district courts have original jurisdiction over any civil action that is “related to” a bankruptcy case. See 28 U.S.C. § 1334(b). Most, if not all, federal district courts have a Standing Order or Local Rule that refers civil actions related to a bankruptcy case to the federal bankruptcy court where the bankruptcy case is pending. When a civil action is pending in federal bankruptcy court, the Federal Rules of Bankruptcy Procedure (“FRBPs”) apply. The FRBPs incorporate most of the Federal Rules of Civil Procedure, but there are several key differences.

One difference that bankruptcy litigation novices may not be familiar with is FRBP 7004(d), which allows a summons and complaint for an adversary proceeding pending in federal bankruptcy court to be served “anywhere in the United States.” So long as the “exercise of jurisdiction is consistent with the Constitution and the laws of the United States,” the defendant is subject to personal jurisdiction in the federal bankruptcy court where the adversary proceeding is pending. Fed. R. Bankr. P. 7004(f). That is materially different from Federal Rule of Civil Procedure 4’s provision that service of a summons establishes personal jurisdiction over a served defendant only if that defendant “is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located,” i.e., a defendant with minimum contacts in the forum state. Fed. R. Civ. P. 4(k)(1)(A). The key question for a minimum contacts analysis in federal district court — is the defendant subject to jurisdiction of the forum state? — is completely irrelevant in federal bankruptcy court. With nationwide service of process, the forum is the United States. “So minimum contacts with the United States (Fifth Amendment due process) suffice; minimum contacts with a particular state (Fourteenth Amendment due process) are beside the point.” Double Eagle Energy Services, L.L.C. v. MarkWest Utica EMG, L.L.C., 936 F3d 260, 264 (5th Cir. 2019) (citations omitted).

Defendants in adversary proceedings often have many legal defenses available that an experienced bankruptcy lawyer can help them plead and prove. But 99 times out of 100, asserting that the bankruptcy court lacks personal jurisdiction over a defendant will not accomplish anything more than showing that defense counsel has very little experience with bankruptcy litigation.

Mineral Leases in Louisiana are typically granted for a stipulated length of time, known as the primary term, and for so long thereafter as production in paying quantities continues.  As production commences and a mineral lease is extended beyond its primary term, various common issues often arise, many of which are briefly discussed below:

Lease Maintenance

When considering the maintenance of mineral lease beyond the primary term, we typically examine the production history to ensure there has been production in paying quantities to maintain the lease and review whether the lease includes a Pugh Clause and/or Automatic Depth Termination Provision. 

Production in Paying Quantities – In order to effectively maintain a mineral lease beyond its primary term with production of oil or gas, such production must be in paying quantities.[1]  If production is not in paying quantities, a mineral lease will automatically terminate in the absence of some other method of maintenance, like additional operations.  Production is in paying quantities when it is sufficient to “induce a reasonably prudent operator to continue production in an effort to secure a return on his investment or to minimize any loss”.[2]  When litigated, paying quantities analyses are often fact-intensive and tedious. 

Pugh Clause – modern mineral leases will often include a “Pugh Clause”, pursuant to which unit production or unit operations will only maintain the leased premises as to the acreage contained within such unit.  It is important to note that not all Pugh Clauses are uniform in their application and each provision should be analyzed independently along with the operational and production history of the leased premises and lands unitized therewith to assess lease maintenance.

Automatic Depth Termination Provision –Automatic depth termination provisions commonly result in automatic termination of the depths below and/or above a certain point (e.g. productive strata or the deepest depth penetrated by a well on the leased premises or lands unitized therewith), based on a specific date.  These provisions are important to consider for a lessee that is interested in developing intervals that are not unitized in a common zone.   Additionally, automatic depth termination provisions and Pugh Clauses are important because they may result in partial lease termination, which can trigger release obligations, discussed below.

Further Development

Louisiana’s mineral code recognizes various implied obligations in mineral leases, one of which is the lessee’s duty to develop and operate the leased premises as a reasonably prudent operator for the mutual benefit of himself and his lessor.[3]  One iteration of this implied obligation is that, after initial production in paying quantities has been established, the lessee must further develop the premises, to the extent a reasonably prudent operator would so develop after considering (1) geological data, (2) number and location of wells drilled (3) productive capacity of wells, (4) cost of drilling operations (5) time interval between completion of the last well and the demand for additional operations, and (6) acreage involved in the disputed lease.[4]    In making further development demands, mineral lessors often seek partial cancellation of the mineral lease at issue.  Fortunately, there are a number of negotiation methods that a lessee can utilize to resolve further development demands.  Additionally, the inclusion of a Pugh Clause and/or an Automatic Depth Termination Provision further mitigates the risk of a development demand and should be considered by lessees who believe the administrative burden of managing their leasehold outside of the productive depths outweighs the benefits of maintaining their leasehold to such depths.

Further development demands are not unique to private mineral lessors.  The Office of Mineral Resources staff conducts routine reviews of many of the older mineral leases granted by the State of Louisiana to occasionally recommend to the State Mineral and Energy Board that a demand for a partial release/further development should be made.  These demands often involve older mineral leases covering large acreage with no Pugh Clause and a modest lessor royalty.  Such demands can often be resolved by meeting with the staff at the Office of Mineral Resources and/or presenting plans of development or other information to the State Mineral and Energy Board at its public meeting. 

Demand for Written Release of a Terminated Mineral Lease

After a mineral lease terminates, either wholly or in part, the mineral code authorizes the lessor to make demand on the lessee for a recordable release of the expired lease.[5]  If the lessee fails to provide the release within 30 days (if the relevant lease is beyond the primary term) from receipt of the demand, then the lessee may be liable for resulting damages and reasonable attorneys fees in bringing suit.[6]  Additionally, certain custom mineral lease forms impose a daily monetary penalty for the lessee’s failure to provide a written release when a mineral lease expires.  Accordingly, written demands for release of a purportedly expired mineral lease should be promptly addressed by the lessee.

Surface/Subsurface Rights

Mineral leases commonly grant the lessee the right to use the surface and subsurface of the leased premises for drilling one or more wells.  On occasion, unit wells are drilled from a surface location on the leased premises, but outside of the unit boundary. When a mineral lease contains a Pugh Clause and the lease expires as to the non-unitized premises containing the surface location and wellbore, the operator of the well may be without the right to use the surface location and be at risk of trespassing.  

To mitigate the risk of such rights expiring, lessees will often include a subsurface and surface servitude within a mineral lease that is stipulated to survive lease termination.  Alternatively, an operator using a non-unitized surface location should enter into a separate surface use agreement authorizing its operations in the event the associated mineral lease terminates as to the surface location.

[1] La. R.S. 31:124

[2] Id.

[3] La. R.S. 31:122

[4] Ferrara v. Questar Exploration and Production Co., 70 So.3d 974 (La. App. 2 Cir. 6/29/11)

[5] La. R.S. 31:206.

[6] La. R.S. 31:207.

Late last month, the U.S. Eastern District of New York dismissed a suit by the U.S. Environmental Protection Agency (“EPA”) against eBay claiming that it sold products that are prohibited under federal environmental statutes.[1] The Court held that eBay is not a “seller” of prohibited products under either the Clean Air Act (“CAA”) or the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”). Although the Court found that eBay could be liable as a “seller” under the Toxic Substances Control Act (“TSCA”), it held that eBay is immune to TSCA claims as a “publisher” for third-party content under Section 230 of the Communications Decency Act (“CDA”) of 1996.

Liability for Marketplace Platforms Under CAA, FIFRA, and TSCA

The EPA sought to hold eBay liable under the CAA for the sale of “aftermarket defeat products,” which bypass a vehicle’s emissions controls. See Section 203(a)(3)(B) of the Clean Air Act. Because those products were available for sale on eBay’s website, it met the definition of a “seller” under the CAA. Similarly, EPA alleged that eBay violated FIFRA’s prohibition on unlawful distribution or sale of unregistered, misbranded, and restricted use pesticides for allowing those products to be available on its platform. See Sections 3 and 12 of FIFRA.[2] Although neither statute defines the terms “sell” or “sale,” the Court applied an ordinary definition of the terms and found that to be a seller, eBay would have to actually own or possess the physical item being sold.[3] The Court determined that as a marketplace platform service, eBay did not actually own or possess the physical items.[4]

Specifically in relation to EPA’s CAA claims, the Court also analyzed eBay’s support functions for sellers like marketing, creating product listings, directing customers towards products, and ensuring customer satisfaction. EPA argued these ancillary services violated the CAA because they “cause the sale or offer for sale of” prohibited products. The Court concluded instead that although eBay creates a forum in which buyers and sellers can transact more efficiently, eBay’s services “do[] not ‘induce[] anyone to post any particular listing or express a preference for’ Aftermarket Defeat Devices.”[5]

On the other hand, the Court held that eBay could be liable under the TSCA because it restricts a wider range of conduct than either the CAA or FIFRA. Significantly, TSCA prohibits a seller from introducing or delivering any banned product “for introduction into commerce.”[6] Thus, even though eBay was not “selling” the banned paint-strippers under the Court’s interpretation, eBay’s contribution to the transaction could impose TSCA liability. But the Court ultimately found eBay is immune under Section 230 of the CDA.

CDA Immunity

Section 230 of the CDA protects online service providers and users from being held liable for information shared on the platform by users or third parties. The Court found that the CDA protections also extend to website platforms that connect buyers and sellers of physical goods, such as eBay, unless the platform “materially contributes” to a product’s unlawful status. Thus, the Court held that eBay is immune to TSCA liability under Section 230 because it is “[a]n interactive computer service” and it does not actively “assist in the development of what made the content unlawful.”[7]

EPA argued that eBay is not protected by the CDA because it only shields companies from liability for their speech and does not address transactions. But the Court rejected this argument, holding that Section 230 is interpreted broadly enough to cover eBay’s role in the transaction.[8] Although the Court only addressed CDA immunity for EPA’s TSCA claim, the immunity could be similarly applied to defeat other statutory claims.

Impacts

The decision serves as a roadblock to EPA efforts to hold marketplace platforms liable for the sale of prohibited goods when sold by third-party sellers. It also signals that courts could apply a strict reading of the “seller” provisions of environmental statutes, such as the CAA and FIFRA, to only those entities that actually “possess” a potentially noncompliant product. Thus, a third-party seller may be the only party that has a duty to ensure compliance with CAA and FIFRA restrictions for products sold on a marketplace platform. And even if an environmental statute, such as TSCA, applies more broadly to other support functions performed by a marketplace platform, a web-based platform may still be immune to claims through the CDA Section 230 immunity provisions.

[1] United States of America v. eBay Inc., 23 Civ. 7173, 2024 WL 4350523 (E.D.N.Y. Sept. 30, 2024).

[2] See also 7 U.S.C. § 136a(a); 7 U.S.C. § 136j(a)(l)(A), (a)(1)(E), (a)(1)(F).

[3] eBay, slip op. at 5, 7.

[4] Id. at 9 (citing Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010) in which the Second Circuit found that eBay was not a “seller” in the context of a trademark infringement claim).

[5] Id. at 11 (quoting Chi. Lawyers’ Comm. For C.R. Under L., Inc. v. Craigslist, Inc., 519 F.3d 666, 671-672 (7th Cir. 2008), as amended (May 2, 2008)).

[6] 15 U.S.C. § 2602(5).

[7] Ratermann v. Pierre Fabre USA, Inc., 651 F. Supp. 3d 657, 667 (S.D.N.Y. 2023); see also Fed. Trade Comm’n v. LeadClick Media, LLC, 838 F.3d 158, 173 (2d Cir. 2016).

[8] See EPA Memorandum in Opposition to Motion to Dismiss, p. 24.

In a case of first impression, the U.S. 5th Circuit recently held that the Louisiana Oilfield Anti-Indemnity Act (LOAIA) does not contain a universal well requirement.

Louisiana is only one of four states that has passed an oilfield anti-indemnity act. Enacted in 1981, the LOAIA renders “null, void and unenforceable” certain indemnification provisions in “agreement[s] pertaining to a well for oil, gas, or water, or drilling for minerals which occur in a solid, liquid, gaseous, or other state.” The Louisiana Supreme Court has explained that the LOAIA “arose out of a concern about the unequal bargaining power of oil companies and contractors and was an attempt to avoid adhesionary contracts under which contractors would have no choice but to agree to indemnify the oil company, lest they risk losing the contract.”

Traditionally, Louisiana courts have engaged in a two-step test to determine the applicability of the LOAIA. First, there must be an agreement that “pertains to” an oil, gas, or water well. Second, the agreement must be related to the exploration, development, production, or transportation of oil, gas, or water.

However, in QBE Syndicate 1036 v. Compass Minerals Louisiana, 95 F.4th 984 (5th Cir. 2024), the 5th Circuit Court, in a unanimous decision written by Judge Higginson, clarified the scope of the LOAIA and held that the rule that an agreement must pertain to a well only applies if the agreement does not otherwise pertain to “drilling for minerals.” In other words, only if a party is invoking the ‘wells for oil, gas, or water’ clause does it need to show a nexus to a well.”

The case involved the death of a contractor at the Cote Blanche salt mine in St. Mary Parish, which was owned and operated by Compass Minerals Louisiana. QBE, the insurer of two local companies that contracted to perform fire prevention and electrical support at the salt mine, brought a declaratory judgment action in the Western District of Louisiana seeking a judgment that the LOAIA invalidated the indemnity and additional insured provisions in the contract between Compass and the contractors. Specifically, QBE argued that Compass used a “drill-and-blast mining method” at the salt mine which constituted “drilling for minerals” under the LOAIA. The district court rejected QBE’s argument and ruled that the LOAIA only applied to agreements “pertaining to a well” and that it is undisputed that the mining operations at the salt mine did not involve a well.

On appeal, the Fifth Circuit recognized that prior panels have stated “in broad terms” that the LOAIA requires an agreement to pertain to a well. However, the Court noted that neither the Fifth Circuit nor the Louisiana Supreme Court has addressed the question in this case – specifically, does the LOAIA applies to only those contracts that “pertain to a well,” even if those agreements involve “drilling for minerals”? The Fifth Circuit made an Erie guess and held “[a]n agreement that ‘pertain[s] to … drilling for minerals’ need not also pertain to a well.” As such, the Fifth Circuit reversed the district court’s ruling and remanded to the district court to determine if the agreements in the case pertain to drilling for minerals.

As of October 11, 2024, entities responsible for reporting settlements, judgments or awards for Medicare beneficiaries face new monetary penalties if they fail to timely report these resolutions, activating a new final rule from December 2023.

The Medicare, Medicaid and SCHIP Extension Act of 2007 set forth mandatory reporting requirements, stating that responsible reporting entities (RREs) must provide information on a quarterly basis of settlements, judgments, and awards to Medicare beneficiaries.  This new final rule provides guidelines for imposing civil money penalties when resolutions are not timely reported.

The Centers for Medicare & Medicaid Services (CMS) will randomly audit 250 RRE submissions per quarter to determine if the submission complies with reporting requirements.  For any submission not timely reported – defined as 1 year from the date a settlement, judgment or award was made or funded, if delayed – penalties apply.  There are three tiers of penalties, each of which is adjusted annually under 45 CFR part 102:

  • $250 for each calendar day of noncompliance, where the record was reported more than 1 year, but less than 2 years, after the required reporting date;
  • $500 for each calendar day of noncompliance, where the record was reported more than 2 years, but less than 3 years, after the required reporting date; or
  • $1000 for each calendar day of noncompliance, where the record was reported 3 years or more after the required reporting date.

There is, however, a cap to the penalties imposed for each individual instance of noncompliant reporting by an RRE of $365,000, which is also to be adjusted annually under 45 CFR part 102.

The rule has a limited provision that could allow the RRE to avoid penalties, specifically in the situation where the RRE documents its good faith efforts to obtain the necessary information for reporting but is unable to do so.  The RRE must demonstrate that it has made a total of three attempts to obtain the required information either from the Medicare beneficiary or their counsel.  Two of these attempts must be made either by mail or by e-mail.  The third attempt may be made via telephone, e-mail or some other reasonable method, which is undefined.  Additionally, if the Medicare beneficiary or their counsel is contacted but refuses to provide the information, no further attempts are needed, but the RRE must document and maintain a record of that refusal for a minimum of 5 years.

With the potential for steep penalties to be imposed for noncompliance, it is critical for RREs to quickly identify claimants who are Medicare beneficiaries; obtain the necessary reporting information; document all attempts to obtain this information, and retain evidence of any refusals to provide it; and timely finalize and report all resolutions.

Federal Register: Medicare Program; Medicare Secondary Payer and Certain Civil Money Penalties

If you are a remote seller selling into Louisiana, but not collecting tax on those sales because your activities are below the filing and remittance threshold, watch your mail! The Louisiana Sales and Use Tax Commission for Remote Sellers (the “Remote Sellers Commission”) issued approximately 7,000 notices, dated on or about August 15, 2024, via certified mail around mid-August 2024.

The notices either assess, or provide notice of an intent to assess, estimated state and local sales and use tax on sales to Louisiana customers. The notices of assessment, in many instances, include the tax periods from the Spring of 2021 through the late-Spring or Summer of 2023, and the notices of intent to assess generally begin with the subsequent period in 2023 through the Spring or Summer of 2024. At this time, it is not clear whether two notices were issued to each business or whether certain businesses were only mailed a single notice. With respect to the notices of assessment, our understanding is that the corresponding notices of intent to assess were issued via certified mail in or around December 2023.

Many of the notices appear to estimate an identical amount of tax for each tax period for different remote sellers spread across the country that are engaged in different types of business. The Remote Sellers Commission is not checking to see if taxes have already been collected and remitted by a marketplace facilitator on these sales and so, in those instances, the taxes are duplicative.

In many instances, it appears remote sellers receiving such notices may be unaware that a Remote Sellers Commission account has been created for their business, when the business in fact lacks sufficient nexus with Louisiana and is not responsible for filing sales and use tax returns with the Commission. It is possible a Remote Sellers Commission account was created when the Louisiana Department of Revenue transitioned businesses that were previously registered as Direct Marketers to the Remote Sellers Commission. In other instances, it is possible that the accounts may have been inadvertently created by the business or a business’ third-party compliance vendor, which sometimes resulted in duplicate accounts.

Do not ignore these notices even if you would like to work with the Remote Sellers Commission to resolve the issues. A business that receives a notice of assessment has 60 days to appeal the assessment to the Louisiana Board of Tax Appeals (the “BTA”) or the assessment becomes final and collectible. For those notices of assessment dated August 15, for example, the deadline to file a petition with the BTA is October 14, 2024.

Any business that received a notice of intent to assess, should consider filing a protest within 30 days of the date on the notice. If a protest is not filed, a business should expect the Commission to issue a notice of assessment, which will start the 60-day appeal deadline running.

For questions or additional information, please contact: Jaye Calhoun at (504) 293-5936, Willie Kolarik at (225) 382-3441, or Divya Jeswant at (504) 293-5766.

For years, fans who want to see their favorite performers and teams have been faced with the luck of the draw or the challenge of negotiating the secondary ticket market. Therefore, ticket reselling is big business. The challenges encountered by fans purchasing tickets for Taylor Swift’s Eras Tour and the exorbitant resale prices for those tickets thrust the issue into the spotlight. It is not uncommon that a fan comes across deceptive websites that suggest they are endorsed by the performer or venue, or is sold a ticket by a speculative seller that does not have the ticket in hand. In late 2023, Senator John Cornyn introduced the Fans First Act (the “Act’) which aims to increase ticket sale transparency, protect American consumers, and stop bad actors.[1] The reaction to the bill, which has been referred to the committee on Commerce, Science, and Transportation, has been mixed. Some of the responses, as well as the results of similar efforts in Europe, are discussed below.

The Act would require sellers and resellers of tickets to disclose the total price of the ticket at the time it is first displayed to the consumer, and to provide an itemized breakdown of the face value of the ticket, taxes, and ancillary fees. The seller would also be required to provide a full refund of the full cost of the ticket when an event is cancelled. The Act would also require the Government Accountability Office to conduct a study of the ticket marketplace, including the percentage of tickets acquired by professional resellers, the average cost of tickets in relation to their face value, and an assessment of the primary and secondary market share. Finally, the Act includes strengthening of the previously enacted Better Online Ticket Sales Act and methods for enforcement by the FTC and the States.

The Act has bipartisan sponsorship and is widely endorsed by venues, performers, and fans. The Recoding Academy, best known for the Grammy Awards, played a role in crafting the legislation.[2] Fix the Tix,[3] a group of live event industry organizations, drafted a letter in support of the Act which was signed by almost 300 musicians including Cyndi Lauper, Dave Matthews, and Billie Eilish.[4] The letter claims that resellers are buying large swathes of tickets for resale at inflated prices, using deceptive advertising and URLs to trick consumers into paying higher than face value while tickets are still available from the venue, and speculatively listing tickets for sale before they have them in hand. The artists and venues claim that these actions sever the backbone of the music industry: the relationship between artists and fans.

On the other hand, there is voiced criticism of the Act. Diana Moss,[5] the Vice President and Director of Competition Policy at the Progressive Policy Institute, argues that the ticket resale market matches more fans with more artists to expand demand for events and that the resellers are the only source of competition in ticketing.[6] Dr. Moss’s view is that the Act risks strengthening Live Nation/Ticketmaster’s monopoly on the ticketing market because it would shield Live Nation/Ticketmaster from competition. Live Nation supports the Act, and claims it has long supported a “federal all-in pricing mandate” and the banning of speculative sales.[7]

Perhaps nothing illustrates fans’ frustrations than the Swifties who found it more economical to travel to Europe to see Taylor Swift perform this year. In Germany, tickets cannot be sold at more than 25% over their face value.[8] Other countries have laws that prevent concert tickets being sold over their face value.[9] In England and Wales, tickets for certain football (soccer) matches cannot be resold.[10] Critics of price caps claim that it will force the secondary market underground, which nowadays means through social media. Lloyds Bank estimated that Swift fans lost $1.27MM in ticket scams for the first leg of the UK Eras tour, with 90% of the scams originating on Facebook.[11] The 2023 Rugby World Cup was hosted in France and ticket purchasers were unable to resell through the secondary market, but could resell for face value through an official resale website.[12] Unfortunately, some of the tournament’s premier games had unsold tickets and empty seats. Fans blamed their inability to buy tickets under face value, and ticket holders complained about their inability to recoup some of their expenses for tickets they did not want to use. Similar issues were encountered in the Paris 2024 Olympics.[13] Meanwhile, reselling platforms claim that they provide a market for tickets to be bought and sold safely and securely.[14]

Whether through legislation or litigation[15], fans, performers, and organizers seek reform. Whether fans will ultimately benefit remains left to be seen.

[1] S.3457 – 118th Congress (2023-2024): Fans First Act | Congress.gov | Library of Congress. Similar legislation titled the TICKET Act passed the House in May 2024. Text – H.R.3950 – 118th Congress (2023-2024): TICKET Act | Congress.gov | Library of Congress.  

[2] House & Senate Take Critical Steps Toward Ticketing Reform: Learn How (recordingacademy.com).

[3] Fix The Tix — National Independent Venue Association (nivassoc.org)

[4] Fix The Tix Artist Letter [FINAL].docx (squarespace.com)

[5] Progressive Policy Institute Diana Moss – Progressive Policy Institute

[6] Fans Last? How the Fans First Act Hands Live Nation-Ticketmaster More Market Power (promarket.org)

[7] Senate Introduces Long-Awaited Bill Promising Changes for Ticket Buying – The New York Times (nytimes.com)

[8] Can technology fix the ‘broken’ concert ticketing system? (bbc.com)

[9] Can technology fix the ‘broken’ concert ticketing system? (bbc.com)

[10] SN04715.pdf (parliament.uk)

[11] What would be the impact of a ticket resale price cap? – SportsPro (sportspromedia.com)

[12] EXCLUSIVE: England’s World Cup semi-final against South Africa to be played out in front of thousands of empty seats… with organisers under fire for charging up to £500 for tickets | Daily Mail Online

[13] Ticket resale cap will see fans lose out, Viagogo claims (thetimes.com)

[14] StubHub Support: StubHub’s FanProtect Guarantee

[15] Office of Public Affairs | Justice Department Sues Live Nation-Ticketmaster for Monopolizing Markets Across the Live Concert Industry | United States Department of Justice

In order to classify employees as exempt from overtime pay requirements, employers may rely on the so-called “white-collar” exemptions available for administrative, executive, and professional employees. In addition to meeting the job duties test of each exemption, employers are required to pay a guaranteed minimum salary specified in Department of Labor regulations.

At the start of 2024, the minimum salary requirement for the white-collar exemptions stood at $684 per week, or $35,568 on an annual basis, reflecting an increase implemented by the Department of Labor (“DOL”) in 2019 under the Trump administration. In April 2024 the DOL issued a new rule that implemented a two-stage increase to the exempt employee salary amount – a smaller increase effective July 1, 2024, to $844 per week/$43,888 per year and a larger increase which goes into effect January 1, 2025, to $1,128 per week/$58,656 per year. The rule also provides for automatic increases to the salary threshold every three years (starting on July 1, 2027) to reflect current earnings data.

Multiple lawsuits have been filed challenging the legality of the salary increase rule, including three lawsuits filed in Texas federal courts. One these lawsuits was brought by the State of Texas, State of Texas v. Department of Labor et al., United States District Court for the Eastern District of Texas, Civil Action No. 24-cv-499. On June 28, 2024, the Court issued a preliminary injunction blocking the DOL rule (and related salary increases) from going into effect – but this ruling only blocked enforcement of the DOL rule against the State of Texas in its capacity as an employer. Although this decision did not decide the legal validity of the DOL rule on the merits, the Court’s ruling explained that the State of Texas had demonstrated a likelihood of success on the merits of these arguments as the basis for issuing the preliminary injunction.

Arguments against the validity of the DOL rule gained a significant boost from the United States Supreme Court’s decision in Loper Bright Enterprises v. Raimondo issued on June 28, 2024 – which eliminated the requirement that federal courts give broad deference to federal agencies when reviewing the validity of administrative agency rules. In the wake of the Loper Bright decision, a number of federal courts have invalidated federal agency rules, including other rules issued by the DOL. The district court in the State of Texas case cited Loper Bright in granting its limited preliminary injunction.

The State of Texas, and other business groups whose cases were later consolidated with the State of Texas action, have filed motions for summary judgment seeking a judgment on the merits of their legal challenge, and the DOL has opposed these motions. The briefing of these motions in the State of Texas case was completed on September 19, 2024, and the motions are now under submission for decision by the district court. Should the Court grant the motion for summary judgment and rule that the DOL’s rule is legally invalid, the decision may have the effect of invalidating the DOL salary increases on a nationwide basis – similar to the outcome of litigation in 2017 which blocked a salary threshold increase attempted by DOL rule under the Obama administration.

With the second DOL salary increase (to $1,128 per week/$58,656 per year) set to go into effect on January 1, 2025, employers nationwide are anxiously awaiting the outcome of the legal challenges currently pending in multiple federal courts. With the motion for summary judgment fully briefed in the State of Texas case, a ruling before the end of the year is anticipated. But there is no hard deadline for the Court to issue its ruling. And, of course, there are no guarantees that the Court’s decision (even if it invalidates the rule) will do so in a way that will block the DOL rule nationwide (although that relief has been requested). Beyond this, any district court decision will almost certainly be appealed to the federal Fifth Circuit Court of Appeals (and perhaps eventually to the United States Supreme Court). Earlier this month in Mayfield v. Department of Labor, Case No. 23-50724 (5th Cir. September 11, 2024), the Fifth Circuit Court of Appeals (which covers Louisiana, Texas, and Mississippi) recently upheld the legal validity of the DOL’s 2019 salary threshold increase; however certain language in the Court’s opinion suggests that the new 2024 increases by the DOL may not be protected by the Court’s analysis in this decision. Future developments in these cases bear close watching as we move into the final quarter of 2024.

While awaiting the outcome of this litigation, employers should be reviewing their current wage payment practices and making contingency plans for how they will adjust pay practices for employees who salaries are currently below the new threshold should the second salary increase go into effective January 1, 2025. Planning options include increasing the salaries of employees to comply with the higher salary threshold, re-classifying employees as non-exempt and paying these employees time and a half overtime (for all hours worked in excess of 40 hours per week), or taking steps to limit the number of hours worked by these employees to ensure they do not trigger overtime pay requirements.

There is good reason for employers to be optimistic that the new DOL rule may be blocked by federal courts from going into effect, but employers should remain vigilant and start making contingency plans now for how they will meet this new compliance challenge should the second salary increase go into effect on January 1, 2025. Employers should consult their labor and employment counsel in developing the best strategy for managing this legal risk.