In today’s legal and regulatory climate, class action lawsuits are no longer confined to isolated pockets of consumer protection. Their scope is expanding rapidly—reaching into areas like data privacy, wage-and-hour disputes, and broader corporate compliance. For general counsel and legal teams, this trend carries significant implications for risk management, public relations, and bottom-line liability.
The Evolution of Consumer Class Actions
Consumer class actions have historically centered around defective products, misleading advertising, or unfair business practices. But recent years have seen a shift: plaintiffs are pursuing broader, more creative theories of liability. With courts increasingly open to certifying consumer classes, companies face mounting exposure even for minor oversights or unclear disclosures. Subscription services, hidden fees, and automatic renewals are among the most common modern targets.
What's more, the rise of litigation funding and sophisticated plaintiff-side firms means these cases are not going away anytime soon. They are well-resourced, media-savvy,and often coordinated across multiple jurisdictions.
Data Privacy: A Hotbed of Class Action Activity
As states pass new privacy laws and regulators crack down on improper data handling, companies are seeing a surge in privacy-related litigation. Failure to properly inform users of data collection, lack of adequate cybersecurity protections, or even minor technical violations can lead to class actions. Plaintiffs no longer need to show direct harm; courts are increasingly allowing cases to proceed based on “increased risk” of future harm alone.
For general counsel, this means that privacy policies, third-party data sharing, and breach response plans must be rock-solid—and defensible in court.
Wage-and-Hour: Persistent and Growing
Wage-and-hour class actions remain one of the most active areas of employment litigation. In Clark County, Nevada, numerous class actions and/or collective actions are filed every week. Claims involving misclassification of employees, unpaid overtime, rest and meal break violations, and improper tip pooling are common and costly. Employers in service industries are particularly vulnerable.
Courts have become more receptive to certifying large employee classes, especially when policies are uniform or applied broadly. And recent court decisions have made it harder for employers to rely on arbitration agreements to shield themselves from class-wide claims. While there is a recent trend in other areas of the country making initial certification of collective actions more onerous, the two-step certification process with the more lenient preliminary certification standard still remains in the Ninth Circuit.
What General Counsel Should Be Doing Now
With the expanding reach of class actions, general counsel must take a proactive approach. This includes:
Ultimately,the best defense against a class action is preparation. Companies that stay ahead of compliance, communicate transparently, and respond quickly to consumer or employee complaints are best positioned to mitigate risk.
As class actions grow in creativity and reach, the role of general counsel is more critical than ever—not just as legal advisors, but as strategic guardians of the company’s reputation and long-term viability.
Disclaimer
The information provided in this article does not, and is not intended to,constitute legal advice. All information, content, and materials available in this article are for general informational purposes only. The information in this article may not constitute the most up-to-date legal information. Any links to third-party websites included in this article are only made for the convenience of the reader, and the author of this article does not recommend or endorse the contents of the third-party sites.
Readers of this article should contact their attorney to obtain advice with respect to any particular legal matter. No reader of this article should act or refrain from acting on the basis of information in this article without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein — and your interpretation of it — is applicable or appropriate to your particular situation. Use of, and access to, this article, or any of the links or resources contained herein do not create an attorney-client relationship between the reader and author.
All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed. The content of this article is provided “as is;” no representations are made that the content is error-free.
The COVID-19 pandemic brought major disruptions to the healthcare industry. From staffing shortages to shifting policies, few areas were left untouched. Now that the crisis has eased, a wave of legal disputes is emerging. Providers, insurers and patients are facing new challenges tied to contracts, regulations and changing models of care.
Understanding these evolving issues is key to reducing risk and managing conflict.
Contract disputes and force majeure
Many providers faced delays or shutdowns during the pandemic and pointed to “force majeure” clauses, which are contract terms that excuse nonperformance due to unexpected events. But not all disruptions qualify, and courts are examining these clauses closely. In some cases, providers and payers disagree on whether COVID-19 falls under this protection. To avoid future conflict, healthcare organizations should review and clarify contract terms related to emergencies.Well-defined clauses reduce the chance of drawn-out legal battles.
Regulatory changes and compliance risks
During the public health emergency, temporary rules expanded telehealth, changed reimbursement policies and eased some compliance requirements. Many of those rules are now being rolled back or replaced, creating confusion in billing and operations.
Disputes often arise when parties interpret the rules differently. Providers may continue using billing codes or workflows that are no longer allowed. Staying current with federal and state regulatory changes is essential to avoiding accidental violations.
Telehealth challenges
Telehealth use expanded rapidly during the pandemic. While it made care more accessible, it also introduced new legal risks. Disagreements now include cross-state licensing issues, coverage denials and concerns about privacy.
Healthcare providers should ensure they are properly licensed in every state where their patients live. They also need to confirm that their telehealth platforms comply with data security and HIPAA regulations.
Liability and standard of care
Pandemic conditions stretched healthcare systems, sometimes impacting patient outcomes. Some patients are now filing malpractice claims tied to delayed procedures, limited staffing or emergency care decisions made under pressure.
Courts may consider difficult circumstances, but that is not guaranteed. Providers should document care decisions carefully and follow clear protocols to help defend against liability claims.
Alternative dispute resolution
Legal proceedings can be time-consuming and costly. For many healthcare disputes, alternative dispute resolution methods like mediation or arbitration offer a faster and more private option. These approaches can be especially useful for contract and billing issues, and can help to limit class actions.
Healthcare disputes are becoming more common in the wake of COVID-19. Changing regulations, evolving care delivery and unclear contract language all contribute to the legal challenges. By reviewing existing agreements, tracking regulatory updates and seeking legal guidance early, healthcare providers and payers can stay ahead of risk and focus on patient care.
Disclaimer
The information provided in this article does not, and is not intended to, constitute legal advice. All information, content, and materials available in this article are for general informational purposes only. The information in this article may not constitute the most up-to-date legal information. Any links to third-party websites included in this article are only made for the convenience of the reader, and the author of this article does not recommend or endorse the contents of the third-party sites.
Readers of this article should contact their attorney to obtain advice with respect to any particular legal matter. No reader of this article should act or refrain from acting on the basis of information in this article without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein—and your interpretation of it—is applicable or appropriate to your particular situation. Use of, and access to, this article, or any of the links or resources contained herein do not create an attorney-client relationship between the reader and author.
All liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed. The content of this article is provided “as is;” no representations are made that the content is error-free.
Non-competes—restrictive covenants in which one party agrees to refrain from competing with another—have long been enforceable in Nevada, even in the healthcare field, so long as they are reasonably necessary to protect the legitimate business interests of the beneficiary of the non-compete and do not contravene the public interest. See Ellis v. McDaniel, 95 Nev. 455, 459, 596 P.2d 222, 225 (1979); see generally NRS 613.195. Consequently, non-competes are a relatively common tool used by Nevada businesses seeking to protect their business interests against competition from former employees.
In recent years, efforts have been made, in Nevada and elsewhere, to limit non-competes. For instance, NRS 613.195 has been amended to impose limitations on non-competes, including the prohibition of non-competes for workers paid an hourly wage. See generally NRS 613.195. In 2023, the Nevada Legislature passed AB 11, a bill that would have prohibited non-competes between hospitals and medical providers, but it was vetoed by Governor Lombardo.
In April 2024, the Federal Trade Commission (“FTC”) issued a final rule that prohibits—nationwide—most non-competes for employees (the “Rule”). See 16 CFR § 910 (2024). The Rule is scheduled to become effective on September 4, 2024 (the “Effective Date”). Once effective, employers must provide notice to their employees that their non-competes, except those that fall within the Rule’s exceptions, are no longer enforceable. Id. § 910.2(b).
The Rule includes only entities and activities that are subject to the FTC’s enforcement jurisdiction. For instance, banks and non-profits may not be subject to the Rule. See generally Non-Compete Clause Rule, 89 Fed. Reg. 38342, 50-54 (May 7, 2024). Moreover, the Rule includes some limited exceptions. It does not apply to:
Beyond its limited exceptions, FTC guidance indicates that the Rule does not inhibit the enforcement of intellectual property rights, including trade secret laws. The Rule also does not prohibit reasonable non-disclosure/confidentiality agreements, non-solicitation agreements, invention assignment agreements, or “garden leaves” that do not act as de facto non-competes. (A “garden leave” is an arrangement in which the worker technically remains an employee for a period of time, does not work during this period, but continues to be compensated).
The Rule will effect a significant change to the employment law landscape if it goes into effect. At the time of this writing, the Rule is subject to numerous legal challenges. At least one court has issued a preliminary injunction enjoining its enforcement against the plaintiff in that action while another court has denied a similar request for preliminary injunction. Compare Ryan LLC v. FTC, 2004 WL 3297524 (N.D. Tex. July 3, 2024) with ATS Tree Services, LLC v. FTC, 2024 WL 3511630 (E.D. Pa. July 23, 2024). Expect more to come on the legal front.
Given the Rule, employers should immediately evaluate existing non-competes. And, whether the Rule survives legal challenge, recent legislative and regulatory hostility towards non-competes should serve as a cue to employers to implement or shore-up other avenues to protect their legitimate business interests.
Employers should implement or reassess policies, procedures, and agreements concerning the protection of confidential and proprietary information. Without non-competes as an option for employers to protect their business interests against competition from former workers, trade secret law may become of heightened importance; an essential element of a claim for misappropriation of trade secrets is that the employer undertook efforts reasonable to maintain the secrecy of the information. See NRS 600A.030(5).
In addition, employers should consider, where appropriate, implementing or reassessing existing non-solicitation agreements and invention assignment agreements. Moreover, employers should consider whether garden leaves make business sense in appropriate circumstances.
Given recent legislative and regulatory scrutiny of non-competes, failure by businesses to explore other means of protecting their interests could lead to competitive disadvantages.
This article was originally published in the September 2024 edition of the COMMUNIQUÉ, the official publication of the Clark County Bar Association.
Remember “flat fees,” “fixed fees,” “non-refundable fees,” and “earned-on-receipt fees”? That is about all they are now—(probably fond) memories. Nowadays, “a fee paid to a lawyer in advance for services to be rendered in the future must be placed in the client trust account and may be withdrawn only as earned by the performance of the contemplated services.” This is the current state of the law as summarized in American Bar Association Formal Opinion No. 505 (5/3/23).
It does not matter what a lawyer calls it; with quite rare exceptions, a fee paid for work to be performed in the future must be placed in the trust account and disbursed to the lawyer only when the work is performed. This may require the lawyer to divide the full scope of the work into segments or stages, or for single function engagements, to collect the fee upon completion of the work.
Opinion 505 contains several instructive hypotheticals. Here they are:
Another thing that is fading fast is the high-priced termination fee contained in many retainer agreements—primarily for personal injury cases—that disincentivizes clients from terminating their lawyers. These provisions commonly provide that if the client terminates the law firm before the case is over, the firm is entitled to a quantum meruit fee calculated at $1,000 per hour for all work done on the matter by lawyers and non-lawyer personnel alike.
These types of provisions are unenforceable, and their attempted enforcement may violate the Nevada Rules of Professional Conduct. See Steve Dimopoulos, LLC v. Harris Law Firm, LLP, Case No. A-21-28630-C, Eighth Jud. Dist. Ct., Clark County, Nevada. These provisions are punitive because they: (i) interfere with the client’s absolute right to discharge the lawyer at any time with or without cause, see In re Kaufman, 93 Nev. 452, 567 P.2d 957 (1977); and (ii) seek to collect a fee from the client without regard for the Brunzell factors, see Logan v. Abe, 131 Nev. 260, 350 P.3d 1139 (2015). As such, they should be removed from your retainer agreements.
This article was originally published in the May 2024 edition of the COMMUNIQUÉ, the official publication of the Clark County Bar Association.