FLORIDA’S NEW STEM CELL LAWS: UNBURDENED BY WHAT HAS BEEN

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On July 1, 2025, Florida’s new “Stem Cell Therapy” legislation became effective, adding Fla.Stat. § 458.3245 to Florida’s Medical Practices statutes and § 459.0127 to Florida’s Osteopathic Medicine statutes. Florida’s new stem cell laws follow a similar Utah law passed in 2024, but Florida’s higher median age and population size will inevitably create a much larger market and far greater public attention.

The new Florida law allows physicians to administer “stem cell” products derived from human tissue (including birth tissue but excluding aborted fetuses) to patients for orthopedics, pain management, and wound care. The law requires product manufacturers to register with FDA and become certified by one of four listed accrediting organizations, but does not require the “stem cell” products to be FDA approved. In this way, and as I will explain in more detail below, the Florida law and federal law are at loggerheads.

This conflict between state and federal law is more than academic, and should be understood by physicians adding “stem cells” to their practices and patients seeking “stem cells” for their injuries. Fortunately, the recent history of “stem cells” in the United States is rich with data to inform those important decisions.

Twenty Years of Regulatory History, In Brief.

Following an eight-year regulatory process, the United States Food & Drug Administration (“FDA”) finalized its “stem cell” regulations in 2005. Those regulations are found at 21 CFR Part 1271, titled “Human Cells, Tissues, and Cellular and Tissue-Based Products,” (“HCT/Ps”), and  govern most medical products derived from human tissue and intended for the treatment of patients in the United States.

Part 1271 covers an expansive array of HCT/Ps – including birth tissue, skin, bone, bone marrow, and many others – and creates regulatory categories for each based on the tissue source, the type and extent of manufacturing, and the intended use. Speaking generally, FDA takes a “tiered, risk based approach” to regulating HCT/Ps: the more “homologous” the tissue is to its intended use (e.g., skin allografts for wound covering versus fat derived cells for autism), and the less processing is involved (cleaning and sizing versus chemical digestion and culture expansion), the more likely it is that FDA will allow the product onto the market without FDA approval. Critical to this discussion, FDA requires “allogeneic” HCT/Ps (meaning, tissue derived from a donor and administered to a different person) which either have a systemic effect or are “dependent upon the metabolic activity of living cells to achieve [their] primary function” to be approved before they can be marketed and administered to patients in the United States. See, 21 CFR § 1271.10(a)(4)(i).

Over the years, FDA has amplified its position on “stem cell” products derived from donated birth tissue through guidance,  consumer alerts,  web postings, and warning letters, and enforced consistently against many of the products the new Florida law allows, including  exosomes, umbilical cord blood, Wharton’s jelly, and amniotic tissue. FDA’s position is clear: when birth tissue products are marketed as either “cellular” or otherwise “dependent upon the activity of cells” to achieve their intended function, they must be approved prior to commercialization, and companies manufacturing, distributing, or using them without approval violate federal law.

Of course, the violations called out by FDA are not merely technical. In many instances allogeneic “stem cell” products have presented real risks to patients, either because they were genuinely dangerous or contained no beneficial properties. As an example, in 2019 FDA issued a  warning letter to Liveyon Labs, which had manufactured and distributed unapproved umbilical cord products which sickened numerous patients and ultimately resulted in the founder being sentenced to prison. Earlier this year, the Federal Trade Commission (“FTC”) and the attorney general of Georgia obtained a permanent injunction and $5M judgment against the Stem Cell Institute of America and its founders stemming from their false and unsubstantiated “stem cell” advertisements on a national scale. Meanwhile, there has been no shortage of press coverage, with “false hope” being a common refrain.

“Stem cells” or stem cells?

Another key takeaway from the last twenty years is that “stem cells” are not always stem cells, at least as actual stem cells are understood by biologists and implied by patients.

To a cell biologist, a stem cell is a specific type of living cell that can renew itself, develop into different cell types in the body, and multiply in the laboratory when provided with proper nutrients. Ideally, when actual, living stem cells are injected into the body, they can self-renew and “regenerate,” allowing for the repair of cartilage and the regrowth of damaged joints and organs. These characteristics are unique to stem cells, and again, they must be alive to multiply and regenerate.

However, over time, the scientific understanding of the term “stem cell” gave way it becoming marketing jargon. The federal district judge in Stem Cell Institute of America proves this point by defining “stem cell therapy” as involving “the injection of shots with products containing cells or growth factors derived from birth tissue, including amniotic tissue or fluid, placenta, Wharton’s jelly, umbilical cord blood, adipose tissue, and bone marrow.” In other words, even to a federal court judge, a “stem cell” product need not contain actual stem cells. Instead, if the product is derived from human tissue and contains any type of cell or growth factor – living or dead – the product is a “stem cell” product.

Meanwhile, no less than three studies have been published showing that the “stem cell” products widely available on the market do not contain stem cells at all.

First, in 2019, a study in the American Journal of Sports Medicine examined amniotic fluid products from seven companies and found that none contained live stem cells in spite of the presence of dead nucleated cells. This study therefore concluded that the amniotic fluid products should not be considered “stem cell” therapies, and cautioned researchers to “use caution when evaluating commercial claims that products contain stem cells.”

Second, in 2020, a study in the Cartilage journal reviewed nine products derived from amniotic membrane and arrived at the same conclusion. Here, the authors noted that although these products contained a variety of proteins and could have some beneficial effect in orthopedic applications, the actual method of action was unknown, and none contained live or otherwise viable cells which might justify calling them “stem cell” products.

Finally, in 2021, another study in the American Journal of Sports Medicine reviewed five commercially available products derived from umbilical cords, arrived at the same result, and concluded that whatever therapeutic benefit could be derived was likely due to the presence of proteins or non-viable cells. Again, however, these “stem cell” products contained no actual stem cells.

Unburdened by what has been.

To summarize, “stem cell” products derived from donated birth tissue have proliferated in the United States over the past twenty years in spite of FDA’s unambiguous position that, without approval, they violate federal law. Likewise, although these products are called “stem cell” products, they often contain no actual stem cells, and achieve a therapeutic benefit through proteins or dead cells, or simply by lubricating and cushioning. Thus, in many, many instances, off-the-shelf “stem cell” products are not really stem cell products – in spite of the risks companies take on by commercializing them.

The new Florida “stem cell” law is unburdened by this well-established history and, for the most part, disregards it. For starters, the law does not specifically define “stem cells” or require “stem cell” products to contain actual stem cells. Instead, the law defines “stem cell therapy” as a “treatment involving the use of afterbirth placental perinatal stem cells, or [HCT/Ps]…” Thus, so long as the product is derived from birth tissue or another HCT/P, the product can qualify as a “stem cell” therapy under Florida law.

Similarly, although the new Florida “stem cell” law requires manufacturers to provide doctors with an “analysis report” showing that the products contain “viable or live cells” at the time of manufacturing, the law does not require the “viable or live cells” to be stem cells and does not define “viable or live.” Consequently, the “analysis report” may include cells other than actual stem cells, and characterize them as “viable or live” when, in reality, they are  mostly dead. These are exactly the issues discussed by the studies discussed above.

The law also requires physicians to inform their patients in writing that “stem cell” products have “not yet been approved by FDA.” Physicians must also include this caveat in all of their advertising. However, given the history described above, this “informed consent” requirement might be incomplete, or worse, deceptive, for two reasons:

– The informed consent gives patients an incomplete understanding of the federal regulatory status of these products. In short, a patient might read that a product has not “yet” been approved by FDA and believe that to be the end of the matter. However, the law does not require the patient to be informed that the products actually violate FDA’s regulations, which could be even more relevant to the patient’s choice of treatment. Advising the patient of the former factor but not the latter might create an incomplete sense of security.

– The informed consent falsely assumes that an FDA approval application has been submitted for the product. The Florida laws require the informed consent to advise patients that  products “have not yet” been approved by FDA. By using the word “yet,” the law assumes that FDA approval is forthcoming, but in reality, manufacturers under the new Florida stem cell law are not even required to seek an approval. Only FDA registration is required, which is an exponentially lower barrier to market. In contrast to Florida’s “stem cell” law, Florida’s Right To Try Act, for patients with “terminal” medical conditions, requires products to have an approval application pending with FDA.

In addition to its inherent conflict with federal law, Florida’s new stem cell law is irreconcilable with preexisting Florida law – namely the Florida Drug and Cosmetic Act, which treats violations of federal law as violations of Florida law. So, for instance, if a person selling “stem cell” products in Florida violates federal law because his products lack FDA approval, he also violates Florida law. The new Florida stem cell law provides nothing in the way of reconciliation.

These gaps in the new Florida “stem cell” laws were easily foreseeable by the Florida legislature when the laws were being drafted and passed, and each presents potential risks to patients – either because patients are not receiving what they expected, or because the products are harmful. The Florida Board of Medicine now has the authority to implement the “stem cell” law through rulemaking, and it should consider these defects in the laws when choosing how to proceed.

Parting thoughts.

The best analog for the new Florida “stem cell” laws is cannabis legalization in the United States beginning with California’s Proposition 215 in 1996. Indeed, just as California “legalized” a federally banned substance within its own borders, so too has Florida with
“stem cell” products which FDA treats as adulterated, misbranded, unapproved new drugs.

Many good things have come with state legalization of cannabis, both in terms of commerce and patient access. The Florida law has similarly commendable intentions: greater access to potentially helpful therapies from licensed physicians for patients who might otherwise travel outside of the United States to receive care.

However, the cannabis industry has trudged a steep path since legalization. The United States Supreme Court has long since blessed DEA’s enforcement authority over cannabis companies operating in accordance with state law, and the government has used that authority routinely since then. Here, federal enforcement will remain an evergreen threat, so physicians should proceed with caution when incorporating “stem cells” to their practices.

Hopefully, the new Florida law will push FDA to modernize its HCT/P rules, much like the Justice Department did to its marijuana enforcement priorities beginning in 2013. Legalization in Utah is one thing, but legalization in Florida might be too big for FDA to ignore. As I argued in 2017, “FDA cannot enforce this problem away. FDA now finds itself with a distributed, decentralized drug manufacturing industry, and too few resources to know where all the participants are.” With the horse officially out of the barn, and an HHS commissioner who has promised to end FDA’s “suppression” of stem cells, FDA’s right next move might be to support state stem cell initiatives. I shared my thoughts on how it might do so in 2021, and to its credit, Florida’s new “stem cell” law includes several of the building blocks I called for at the time.

Supreme Court Justice Louis Brandeis once wrote in 1932 that “a single courageous state may, if its citizens choose, serve as a laboratory, and try novel social and economic experiments without risk to the rest of the country.” Florida endeavors to do precisely that with its new stem cell law. But there is no shortage of cases since that time endorsing the federal government’s efforts to crack down on entirely intrastate activity, and that risk is very real for Florida’s stem cell experiment. Whether FDA and Florida go to battle or find a middle ground is to be determined, but for the time being practitioners and patients must be mindful of what has been when deciding on treatments now available under Florida’s “stem cell therapy” law.

Florida’s New Flood Disclosure Law: What Tenants, Landlords, and Buyers Need to Know

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Starting October 1, 2025, Florida’s Flood Disclosure Law (CS/CS/SB 948, 2025 Legislature) took effect, bringing sweeping changes to landlord-tenant, real estate sales, condominium, cooperative, and mobile home park transactions. The law creates and amends several provisions of the Florida Statutes to ensure that tenants, buyers, and lessees are given clear notice about flood risks before entering into agreements.

All statutory revisions pursuant to Florida’s Flood Disclosure laws include a uniform definition ‘flooding’, described as a general or temporary condition of partial or complete inundation of the property caused by any of the following:

(a) The overflow of inland or tidal waters.

(b) The unusual and rapid accumulation of runoff or surface waters from any established water source, such as a river, stream, or drainage ditch.

(c) Sustained periods of standing water resulting from rainfall.

New Requirements for Residential Leases (Newly Created – Fla. Stat. § 83.512)

The new Florida law includes new provisions requiring flood disclosures in residential leases. Under these new provisions:

→ Landlords must provide a separate flood disclosure form before executing a rental agreement of one year or longer.

→ The disclosure must:

      • Warn tenants that standard renters’ insurance does not cover flood damage
      • State whether the landlord has knowledge of past flooding,
      • State whether the landlord has filed flood-related insurance claims
      • State whether has received assistance from the Federal Emergency Management Agency (“FEMA”) for the dwelling unit

→ Tenant Remedy: If a landlord fails to comply with the law’s disclosure requirement and the tenant suffers a “substantial loss” (defined as 50% or more of the market value of personal property), the tenant may:

      • Terminate the lease by written notice within 30 days after the date of damage or loss
      • Recover prepaid rent for periods after termination

Note: A tenant will remain liable for any rent delinquencies, unpaid rent or other sums owed to Landlord before termination.

Flood Disclosures for Residential Sales (Amendments to Fla. Stat. § 689.302)

In the context of residential sales, Florida’s Flood Disclosure laws now impose new responsibilities on sellers of residential real estate. These include:

→ Sellers of residential real property must now provide a flood disclosure form at or before signing a sales contract

→ The disclosure warns that homeowners’ insurance does not cover flood damage and requires sellers to state whether:

      • They have knowledge of prior flooding
      • They have filed insurance claims for flood damage
      • They have received federal flood assistance from FEMA

Condominium and Cooperative Sales (Amendments to Fla. Stat. §§ 718.503 & 719.503)

Florida’s flood disclosure laws also expand on developer obligations to buyers in the following ways:

→ Developers must include a flood disclosure statements in purchase agreements for condominium and cooperative units

→ Developers must specifically caution Buyers that standard homeowners’ insurance excludes flood coverage.

→ Developers must disclose any knowledge of prior flooding, flood-related claims, or FEMA assistance relating to the property or common elements.

Mobile Home Parks (Amendments to Fla. Stat. § 723.011)

Similar to residential leases, the Flood Disclosure laws also amend the provisions applicable to rental mobile home lots. Under the amendments:

→ Mobile home park owners must provide a separate flood disclosure before a lease is signed or at the time of occupancy.

→ The disclosure must:

      • Warn renters that standard renters’ insurance does not cover flood damage
      • State whether the park owner has knowledge of past flooding
      • State whether the park owner has filed flood-related insurance claims
      • State whether park owner received assistance from the Federal Emergency Management Agency (FEMA) for the dwelling unit

→ Lessee Remedy: If the park owner fails to disclose truthfully and the lessee suffers a substantial loss (defined as 50% or more of the market value of the mobile home and personal property), the lessee may:

      • Terminate the lease with written notice within 30 days.
      • Obtain a refund of prepaid rent after termination.

Note: A lessee will remain liable for any rent delinquencies, unpaid rent or other sums owed to Landlord before termination.

Florida’s new Flood Disclosure provisions represent a significant shift in how flood risks must be communicated in real estate and lease transactions. By imposing uniform disclosure obligations across residential leases, sales, condominiums, cooperatives, and mobile home parks, the Florida Legislature has signaled a strong commitment to transparency and consumer protection. For landlords, sellers, developers, and park owners, compliance will require careful attention to statutory disclosure requirements and deadlines, as well as accurate reporting of prior flood history and claims. For tenants and buyers, the law provides important remedies in the event of nondisclosure, reinforcing their right to make informed decisions about properties vulnerable to flooding.

Note to Businesses with Arbitration Clauses in Their Consumer Agreements: Get the Clause Approved

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By Miguel J. Chamorro

Sometimes consumers rush to court to sue a business when they should have instead gone to arbitration. Consumers may overlook that the business’s terms and conditions required them to arbitrate their claims. The result is an embarrassing and often costly order by the court compelling the consumer to arbitration. But what happens when the consumer does seek arbitration, and the arbitration cannot proceed because the arbitral body did not approve the agreement’s arbitration clause? Short answer: the consumer can go straight to court. This time, it’s the business that gets embarrassed. And it’s a situation that comes up with some frequency, as shown by a spate of recent decisions in which businesses overlooked the need to have their chosen arbitral body approve the arbitration clauses of their consumer agreements.

The Federal Arbitration Act, 9 U.S.C. § 1, et seq. (the “FAA”), requires courts to “place arbitration agreements on an equal footing with other contracts and enforce them according to their terms.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). Litigants who skip arbitration are likely to face the FAA’s two “parallel devices for enforcing an arbitration agreement: a stay of litigation in any case raising a dispute referable to arbitration, § 3, and an affirmative order to engage in arbitration, § 4.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 (1983). But these devices may be unavailable to a business whose agreements require consumers to arbitrate against them if the business does not comply with the registration requirements of the arbitral body (e.g., the AAA, JAMS, or NAM). This failure is considered a “default” under section 3 of the FAA, which contemplates staying a court case until arbitration is completed, provided the litigant seeking the stay “is not in default in proceeding with such arbitration.” See Bedgood v. Wyndham Vacation Resorts, 88 F.4th 1355, 1369 (11th Cir. 2023) (holding that to determine whether a party has defaulted under section 3, a court must “decide if, under the totality of the circumstances, the party has acted inconsistently with the arbitration right.”) (quotation omitted). And sometimes pro-arbitration businesses “default” under section 3 because they did not satisfy the arbitral body’s registration requirements.

The registration requirements of arbitral bodies are not to be trifled with, especially as it relates to consumer cases.

As noted in Merritt Island Woodwerx, LLC v. Space Coast Credit Union, 137 F.4th 1268 (11th Cir. 2025), Rule 12 of the AAA’s Consumer Arbitration Rules (“Business Notification and Publicly Accessible Consumer Clause Registry”) requires a business that intends for the AAA to administer consumer arbitrations to register its consumer arbitration clause with the AAA’s Consumer Clause Registry. To register the clause, the business must submit its arbitration agreement to the AAA for an administrative compliance review and pay a related fee. The AAA, upon receiving the arbitration agreement, will review the agreement “for material compliance with due process standards contained in the Consumer Due Process Protocol.” R-12(b), AAA Consumer Arb. Rules. Only after the AAA reviews the arbitration clause submitted by the business and determines that it will administer the business’s consumer-related disputes will the AAA include the business in its Consumer Clause Registry. See R-12(d), AAA Consumer Arb. Rules. Amendments to an already-registered arbitration agreement must be resubmitted for review (likely for another fee). See R-12(c), AAA Consumer Arb. Rules. (Note: A company can undertake the registration after it has already commenced an arbitration case for an expedited review fee, which will not include the subsequent registration of the arbitration agreement with the Registry. See R-12(f), AAA Consumer Arb. Rules.)

In Merritt Island and again in Mullen v. Gas POS Inc., 2025 WL 1921765 (M.D.Ga. July 11, 2025), and Holden v. Sys. & Servs. Techs., Inc., 2025 WL 2457633 (S.D. Fla. July 22, 2025), a business failed to satisfy its registration requirements and therefore defaulted as contemplated by section 3 of the FAA. Thus, the consumers in those cases could proceed with court cases against the business despite mandatory arbitration clauses in their agreements saying otherwise. The holdings of these cases have their genesis in Bedgood v. Wyndham Vacation Resorts, 88 F.4th 1355 (11th Cir. 2023).

In Bedgood, three plaintiffs who had agreed to arbitrate any claims arising out of their timeshare agreements filed arbitration petitions with the AAA. Bedgood, 88 F.4th at 1359-60. But then something unexpected happened: the AAA rejected their arbitration petitions because the defendant had failed to register the arbitration clause of its consumer agreement as required by the AAA’s consumer rules. Id. at 1361. Consequently, the AAA declined to administer the case, and the plaintiffs then filed suit in court, prompting the defendant to file a motion that is well known to FAA practitioners: to stay the case and compel arbitration. Id.

On appeal, the Eleventh Circuit held that the defendant was not entitled to either a stay or an order compelling arbitration because the defendant was in “default” under Section 3 of the FAA (“Stay of proceedings where issue therein referable to arbitration”) and it was also not a “party aggrieved” under section 4 of the FAA (“Failure to arbitrate under agreement; petition to United States court having jurisdiction for order to compel arbitration; notice and service thereof; hearing and determination”). Id. at 1365-66. In short, the consumers could not arbitrate their cases against the business, and the business was at fault for it. Thus, the legal dispute could be adjudicated in court.

Evidently, the news did not spread enough because substantially similar facts were at issue two years later in the Merritt Island, Holden, and Mullen cases.

In Merritt Island, two plaintiffs—the holders of checking accounts at a credit union—filed petitions with the AAA pursuant to arbitration clauses in their Master Services Agreements with the credit union. Merritt Island, 137 F.4th at 1270-71. The AAA declined to administer the plaintiffs’ claims because the credit union “ha[d] not submitted its consumer dispute resolution plan for review or paid the fee.” Id. The plaintiffs then filed suit in court. Id. Two days after the complaint was filed, the credit union submitted its arbitration clause to the AAA for review, paid the filing fee, and obtained the AAA’s approval to administer the claim. Id. at 1272. But it was too late. The Eleventh Circuit held that the credit union had defaulted under Section 3 and was not “aggrieved” by account holders’ failure to arbitrate. 9 U.S.C. § 4. Id. at 1275-76. The credit union’s “post-filing conduct cannot cure the prior non-compliance.” Id. at 1276. Thus, the account holders “were within their rights … to proceed to—and remain in—litigation.” Id.

In Mullen v. Gas POS Inc., 2025 WL 1921765 (M.D.Ga. July 11, 2025), an employee first commenced arbitration against his former employer before the AAA, pursuant to his employment agreement. After the AAA informed the employee that the employer had not complied with the AAA’s requests to abide by the AAA’s Employment Due Process Protocol, the AAA stated that it would not administer any claims involving the employer until the employer notified the AAA of its intent to abide by the Protocol. Id. at *1. Even though counsel for the employee informed the employer about the AAA’s refusal to administer the arbitration, the employer still made no effort to satisfy the registration requirements. Id. Three months after the AAA’s refusal notice, the employee filed suit in court. Finally, over seven months after being notified of the AAA’s refusal, the employer “asked the AAA to reconsider its position and administer the claim,” and the AAA agreed. But in a fit of chutzpa, the employer moved to compel arbitration. Id. The employer’s efforts came too late. As explained by the court:

[T]he totality of the circumstances here demonstrate that [employer] acted “inconsistently with its right to arbitrate” by failing to comply with the AAA’s protocols and/or rules and by failing “to remedy the barrier it had caused” until long after [employee] filed his complaint. Merritt Island, 137 F.4th at 1274. Thus, the Court has no authority to stay this case under 9 U.S.C. § 3.

Nor can the Court compel [employee] to seek arbitration for a second time under 9 U.S.C. § 4. Again, [employee] has already attempted to arbitrate his claims, and any lack of access to arbitration is the fault of [employer]. Accordingly, “there was no ‘failure, neglect, or refusal’ by which [employer] could have been ‘aggrieved.’” Merritt Island, 137 F.4th at 1275 (quoting Bedgood, 88 F.4th at 1366).

Mullen, 2025 WL 1921765, at *3.

In Holden v. Sys. & Servs. Techs., Inc., 2025 WL 2457633 (S.D. Fla. July 22, 2025), a borrower commenced arbitration against a loan servicer who acquired his loan agreement, which included a mandatory arbitration clause. In the now-familiar pattern, the AAA declined to administer the case because the original lender had failed to comply with the AAA’s Consumer Due Process Protocol, the borrower then filed suit in court, and the successor loan servicer—though not a signatory to the original agreement—moved to compel arbitration. Id. at *2-3. The court denied the motion, reasoning as follows:

[Loan servicer] knew, or had reason to know, that the original loan agreement … included an arbitration provision. When [loan servicer] succeeded [original lender], it likely knew it should have taken steps to ensure that the arbitration clause was enforceable through compliance with AAA’s policies. It is telling that [loan servicer] claims AAA’s notice of noncompliance is not clear about [loan servicer’s] deficiencies, but [loan servicer] does not indicate it has contacted AAA to clarify those issues or to cure those deficiencies in its compliance. [Loan servicer] has, like the Defendant in Bedgood, “made no effort to investigate—let alone remedy—its noncompliance before the AAA.” 88 F.4th at 1366. Instead, [loan servicer] relies on the fact that the provision originally belonged to another company or that this Court can ultimately order AAA to comply. But because [loan servicer’s] actions have been “inconsistent[ ] with the intention to vindicate its contractual arbitration rights,” the undersigned finds [loan servicer] has defaulted under Section 3 [of the FAA] on its right to ask the Court to stay the trial and compel the proceeding to arbitration. Merritt Island, 137 F.4th at 1276.

Holden, 2025 WL 2457633, *5 (S.D. Fla. Aug. 27, 2025) (adopting report and recommendation).

All this goes to show that a business cannot simply include arbitration clauses in its consumer agreements and expect to enforce it like any other clause. Unlike most other clauses, the arbitration clause must be approved by the arbitral body named in the arbitration clause. As the reputable businesses discussed in this article found out, there is no way around this requirement. So, if you’re a business and you favor arbitration clauses in your consumer contracts, do it right and do it from the get-go—get the clause approved beforehand.

Twitter Arbitration Clash: Second Circuit Says Fight Over Ongoing Fees is Not a Refusal to Arbitrate

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By Miguel J. Chamorro

Introduction

Every so often an employee files a demand in arbitration against its employer as required by an employment agreement, but the employer refuses to pay the arbitration fees despite the parties’ agreement or the arbitral body’s rules to the contrary. The arbitral body, under its rules, threatens to suspend or terminate the arbitration proceedings unless someone makes payment in full. What is the employee to do? While there is no ideal answer, there is a clear one: resist the temptation of going to court to compel the employer to pay. The Second Circuit Court of Appeals recently made that clear in Frazier v. X Corp., 2025 WL 2502133 (2d Cir. Sep. 2, 2025).

When Elon Musk acquired Twitter and laid off nearly 75% of its staff, the petitioner-employees “were among the casualties.” Frazier, 2025 WL 2502133, *3. Believing that they had been wrongfully terminated and denied severance, many employees filed arbitration demands against Twitter (now known as X Corp.) before Judicial Arbitration and Mediation Services (“JAMS”). Like other employees, the petitioners had signed Dispute Resolution Agreements upon being hired (“DRAs”), in which they agreed to arbitrate any employment-related disputes against Twitter before JAMS. Insofar as arbitration fees were concerned, the DRAs provided in pertinent part that, “in all cases where required by law, the Company will pay the Arbitrator’s and arbitration fees.” Id., at *2. Furthermore, JAMS’s Policy on Employment Arbitration Minimum Standards of Procedural Fairness added:

[i]f an arbitration is based on a clause or agreement that is required as a condition of employment … [t]he only fee that an employee may be required to pay is the initial JAMS Case Management Fee. All other costs must be borne by the company, including any additional JAMS Case Management Fees and all professional fees for the arbitrator’s services.

Id., at *2 (emphasis added). To be clear, JAMS’s rules include a non-waivable requirement that the employer be assigned all costs except the case initiation fees if the case is being arbitrated pursuant to agreements that an employer requires the employee to sign as a condition for employment. Id., at *2. Other arbitral bodies have similar provisions. See, e.g., American Arbitration Association’s (“AAA”) Employment/Workplace Fee Schedule; National Arbitration and Mediation’s (“NAM”) Employment Rules and Procedures, Rule No. 5(A) (“The Employer shall pay NAM’s Administrative fees and NAM’s hourly fees for the total time spent by the Arbitrator/Mediator …. The Employee shall pay NAM the Filing fee”).

Things went well at first. The employees paid the initial filing fees and expected Twitter to pay all other fees that became due throughout the duration of their cases. But then Twitter objected that the DRAs required arbitration fees to be shared equally between it and the employees, and stopped paying the fees Id., at *3. That’s when the case ran off the rails.

The fees issue heads to JAMS.

JAMS, the arbitral body, responded to Twitter’s objection by stating that JAMS’s rules and minimum standards required Twitter to pay the ongoing costs of the arbitration. Twitter replied that JAMS’s position conflicted with the DRAs’ provision that any fee disputes would be resolved by the arbitrator—not JAMS—and its interpretation of the DRAs’ fee allocation provision, which, it argued, required a 50/50 split on the payment of fees. Thus, Twitter made it clear that it would proceed accordingly but otherwise “remain[ed] perfectly willing … to arbitrate on the terms specified in the DRA[s].” Id., at *3 (quoting Appellants’ Br. 4).

Twitter’s position put the employees between a rock and the hard place. They did not want to pay any more arbitration fees than necessary. But if the fees went unpaid JAMS could stay or terminate the case—something arbitral bodies typically warn about in their rules. See, e.g., AAA Employment Arbitration Rules & Mediation Procedures, Rule 56(c)-(d); JAMS Employment Arbitration Rules & Procedures 6(c); NAM Employment Rules and Procedures, Rule No. 5(A). So, what to do?

The fees issue heads to district court.

The employees decided to take the matter to court. They filed a petition against Twitter in federal district court arguing that by refusing to pay the fees allocated to it by JAMS, Twitter refused to arbitrate as required under the DRAs. Pursuant to section 4 of the Federal Arbitration Act (the “FAA”), 9 U.S.C. § 4, they asked the court to order Twitter to arbitration in accordance with the DRAs’ terms (“in other words, to order Twitter to pay.”). Id., at *4 (emphasis added). The move seemed reasonable. After all, section 4 of the FAA provides that “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court … for an order directing that such arbitration proceed in the manner provided for in such agreement.” (Emphasis added).

The district court granted the petition and ordered Twitter to advance the fees while the arbitration was ongoing. See Frazier v. X Corp, 739 F. Supp. 3d 219 (S.D.N.Y. 2024). It held, inter alia, that “JAMS had been vested with the discretion to make the initial decision on the procedural matter of who should pay,” Id. at 227-28, and that enforcing the DRAs “meant compelling Twitter to arbitrate – and accordingly, ordering it to pay the fees JAMS had initially apportioned to it on an interim basis, so that the issue could ultimately be addressed by the arbitrators as contemplated by the DRAs.” Frazier, 2025 WL 2502133, at *5. Twitter appealed.

The Second Circuit holds that such intra-arbitration disputes are for JAMS to decide.

The Second Circuit reminds one that a court’s role under the FAA is limited to a “‘relatively narrow category’ of issues that ‘includes disputes about ‘whether the parties are bound by a given arbitration clause’ and ‘whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.’” Mulvaney Mech., Inc. v. Sheet Metal Workers Int’l Ass’n, Loc. 38, 351 F.3d 43, 45 (2d Cir. 2003) (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). Once a court determines that the parties agreed to arbitrate and that their claims are within the arbitration agreement’s scope, the court should simply direct the parties to arbitration, and at that point “the court’s analysis under 9 U.S.C. § 4 is at an end.” Frazier, 2025 WL 2502133, at *6.

In other words, Section 4 of the FAA is inapplicable to resolving procedural issues internal to an arbitration case. One “cannot use Section 4 as a vehicle to seek review of the [arbitral body’s] decision about how to proceed with the arbitration process.” Jacobs v. USA Track & Field, 374 F.3d 85, 89 (2d Cir. 2004). Once arbitration is underway, the arbitrator decides such issues (unless the agreement says otherwise). See Howsam, 537 U.S. at 84, 123 S.Ct. 588 (“‘procedural questions which grow out of the dispute and bear on its final disposition’ are presumptively not for the judge, but for an arbitrator, to decide”) (internal quotation marks omitted); quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964)).

The Second Circuit aligned itself with other circuits in deciding that courts have no role under Section 4 of the FAA to review the rulings of an arbitrator or an arbitral body (e.g., AAA, NAM, or JAMS) as to whether a party has satisfied the conditions for an arbitration case to proceed:

  • Hernandez v. MicroBilt Corp., 88 F.4th 215, 220 (3d Cir. 2023) (declining to compel arbitration when the arbitration agreement’s failure to satisfy the AAA’s “Consumer Due Process” protocol led the AAA to refuse to arbitrate the respondent’s claims)
  • Dealer Computer Services, Inc. v. Old Colony Motors, Inc., 588 F.3d 884, 887 (5th Cir. 2009) (holding that the payment of fees during an arbitration “is a procedural condition precedent” that the district court “should not review” under the FAA and that the issue is preserved for the arbitrators)
  • Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012-13 (9th Cir. 2004) (finding no “failure, neglect, or refusal” by defendant to arbitrate when defendant did not pay fees that AAA required for arbitration to proceed)
  • Bedgood v. Wyndham Vacation Resorts, Inc., 88 F.4th 1355, 1363 (11th Cir. 2023) (holding that “whether a party has complied with the [AAA]’s policies is an administrative decision that can and should be made by the [AAA].”)

As explained by the Second Circuit, “a party’s decision not to abide by the procedural determinations of an arbitrator or arbitral body is ordinarily not a ‘failure, neglect, or refusal to arbitrate’ under § 4 – it is simply an intra-arbitration delinquency that arbitral bodies, like JAMS here, are empowered to manage.” Frazier, 2025 WL 2502133, at *8 (emphasis in original). By way of analogy, a court should likewise not get involved in an arbitration dispute over whether a party has failed to abide by an arbitrator’s discovery orders—that too in an intra-arbitration dispute that a court cannot address under Section 4 of the FAA. See Frazier, 2025 WL 2502133, at *9.

In conclusion, the Second Circuit held that Twitter’s refusal to pay the fees is not a “failure, neglect, or refusal … to arbitrate” by Twitter that could be remedied under 9 U.S.C. § 4, even if it led JAMS to terminate the arbitrations. Thus, it reversed the district court’s order requiring Twitter to pay the arbitral fees. See Frazier, 2025 WL 2502133, at *9-10. JAMS or the arbitrator(s) would have to decide the ultimate impact of one party’s failure or refusal to pay ongoing fees.

So, what’s next for the employees?

Like other arbitration litigants frustrated by a respondent’s failure to pay arbitration fees, the employees in this case face three options: (1) pay all the fees themselves and hope for a favorable outcome in the case that will permit them to tax the fees as prevailing parties; (2) let the arbitration end; or (3) ironically, try litigating the entire case in court under the theory that Twitter’s refusal to pay fees is a refusal to arbitrate at all. The Second Circuit suggested the third option in a footnote in which it noted that Twitter had “repeatedly suggested” that “its refusal to pay the fees that JAMS requires opens the courthouse doors to the Petitioners.” Frazier, 2025 WL 2502133, at *10 n.10. While that may be a topic for another day, what is clear today is that you should not expect the courts to intervene if your opponent does not pay its share of the arbitration fees. That is a matter for arbitral body or arbitrator to address.

SUBROGEES BEWARE—YOU CAN BE COMPELLED TO ARBITRATE AS THIRD-PARTY BENEFICIARIES TO AN ARBITRATION AGREEMENT

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By Miguel J. Chamorro

Cases requiring non-signatories to an arbitration agreement to arbitrate are not uncommon. Cases compelling subrogees to arbitrate, not because of an insurance policy but because of another contract, are less common. In Various Insurers, Reinsurers and Retrocessionaires v. General Electric International, Inc., 2025 WL 837869 (11th Cir. Mar. 18, 2025), the Eleventh Circuit analyzed the issue.

As noted by the U.S. Supreme Court in Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009), arbitration agreements may be enforced “by or against” non-signatories through various common law theories. The following are some examples:

  • Alter ego – See, e.g., ARW Exploration Corp. v. Aguirre, 45 F.3d 1455, 1461 (10th Cir. 1995) (holding that “district court must determine whether a corporation contractually bound to arbitrate is the alter ego, under applicable principles of corporate law of a shareholder before subjecting that shareholder to binding arbitration.”).
  • Assumption – See, e.g., Thomson-CSF, S.A. v. American Arbitration Ass’n, 64 F.3d 773, 777 (2d Cir. 1995) (“In the absence of a signature, a party may be bound by an arbitration clause if its subsequent conduct indicates that it is assuming the obligation to arbitrate.”); Gvozdenovic v. United Air Lines, Inc., 933 F.2d 1100, 1105 (2d Cir. 1991) (parties manifested a clear intention to arbitrate by sending a representative to act on their behalf in the arbitration process).
  • Estoppel – See, e.g., Bridas S.A.P.I.C. v. Government of Turkmenistan, 345 F.3d 347, 361-62 (5th Cir. 2003) (applying direct benefits estoppel theory “when a nonsignatory knowingly exploits the agreement containing the adverse clause”) (quotation omitted); Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060, 1064 (2d Cir. 1993) (non-signatory affiliate who used a trade name pursuant to an agreement that contained an arbitration clause was estopped from relying on its nonsignatory status to avoid arbitrating under the agreement).
  • Incorporation by reference – See, e.g., Thomson-CSF, 64 F.3d at 777 (“A nonsignatory may compel arbitration against a party to an arbitration agreement when that party has entered into a separate contractual relationship with the nonsignatory which incorporates the existing arbitration clause”); Import Export Steel Corp. v. Mississippi Valley Barge Line Co., 351 F.2d 503, 505–506 (2d Cir. 1965) (separate agreement with nonsignatory expressly “assum[ing] all the obligations and privileges of [signatory party] under the … subcharter” constitutes grounds for enforcement of arbitration clause by nonsignatory).
  • Veil Piercing – See, e.g., American Bell Inc. v. Federation of Tel. Workers, 736 F.2d 879, 887 (3d Cir. 1984) (remanding to district court for determination of whether corporate veil should be pierced for purposes of subjecting party to arbitration).
  • Third-party beneficiary – See, e.g., InterGen N.V. v. Grina, 344 F.3d 134, 146 (1st Cir. 2003) (“a third-party beneficiary of a contract containing an arbitration clause can be subject to that clause and compelled to arbitrate on the demand of a signatory.”) (citations omitted); E.I. DuPont de Nemours & Co. v. Rhone Poulenc Fiber & Resin Intermediates, 269 F.3d 187, 195 (3d Cir. 2001) (“whether seeking to avoid or compel arbitration, a third party beneficiary has been bound by contract terms where its claim arises out of the underlying contract to which it was an intended third party beneficiary.”).

Various Insurers held that subrogees were third-party beneficiaries, and thus they must arbitrate the subrogation claims brought in court.

What was at issue in Various Insurers.

In Algeria, a power plant suffered a catastrophic turbine failure. The power plant is jointly owned by the Algerian government and a company that is in turn owned by a sovereign wealth fund belonging to the government of Abu Dhabi and a Canadian company. The power plant is operated by the Canadian company, pursuant to an Operation and Maintenance Contract designating it as the plant’s sole “Operator” and the plant’s owner as the sole “Project Owner.” Importantly, the operator also entered into a Services Contract with General Electric International as well as three other related contracts with another General Electric affiliate—and all these contracts contained arbitration provisions. See Id. *1.

In the wake of the turbine failure, various insurers, reinsurers, and retrocessionaires (collectively the “Insurers”) initiated litigation as subrogees of the plant’s owner against General Electric International and three of its affiliates (collectively the “GE Entities”) and others in court. The GE Entities moved to compel arbitration pursuant to the arbitration provision in the Services Contract between the plant’s operator and General Electric International. They invoked the plant operator’s status as a third-party beneficiary of the Services Contract. The district court granted the motion, concluding that the plant’s owner was a third-party beneficiary of the Services Contract. See Id.

On appeal, the main question presented was whether the plant’s owner and its subrogees “are bound by an arbitration clause in a contract between the operator of the Plant and various General Electric entities.” Id. at *1. For purposes of this article, the more specific question was whether there existed an agreement to arbitrate between the non-signatory Insurer subrogees and the GE Entities. That question, in turn, centered not on “whether the Services Contract contains an arbitration provision—it does—but whether that provision binds [the plant’s owner] as a third-party beneficiary (and therefore the Insurers, who are [its] subrogees).” Id. *2.1

A primer on third-party beneficiaries.

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1 The Court quoted this helpful definition of subrogation: “‘Subrogation simply means substitution of one person for another; that is, one person is allowed to stand in the shoes of another and assert that person’s rights against’ a third party.” U.S. Airways, Inc. v. McCutchen, 569 U.S. 88, 97 n.5 (2013) (citation omitted).

Parties to a contract may create rights in favor of a third party “by manifesting an intention to do so.” Beverly v. Macy, 702 F.2d 931, 940 (11th Cir. 1983). If that manifestation is apparent, the third party, as beneficiary of the contract, can be compelled to arbitrate on the demand of a signatory to the contract if that contract contains an arbitration clause. In Various Insurers, the applicable test for ascertaining “third-party beneficiary status is whether the contract reflects the express or implied intention of the parties to benefit the third party.” Id., at 3 (quoting Hencely v. Fluor Corp., 120 F.4th 412, 431 (4th Cir. 2024) (citation and internal quotation marks omitted)).2 The Court first explained the difference between an intended beneficiary, who may compel arbitration, and an incidental beneficiary, who may not, by relying upon the Restatement (Second) of Contracts § 302 (A.L.I. 1981), which provides:

(1) Unless otherwise agreed between the promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of a promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. (2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.

Id., at *3.

Here, the dispute centered on § 302(1)(b)—whether “the circumstances indicate that” the parties to the Services Contract intended to give the plant’s owner (as purported third-party beneficiary) “the benefit of the promised performance.” Various Reinsurers, at 3.

In applying § 302(1)(b) of the Restatement (Second) of Contracts, the Court explained that the “the key inquiry is whether the claimant was intended to be benefited by the contract provision in question,” Beverly v. Macy, 702 F.2d 931, 940 (11th Cir. 1983), and “[o]ne way to ascertain such intent is to ask whether the beneficiary would be reasonable in relying on the promise as manifesting an intention to confer a right on him.” Montana v. U.S., 124 F.3d 1269, 1273 (Fed. Cir. 1997) (citing § 302(1)(b) cmt. d). In evaluating the intentions of the parties, “a court may look beyond the contract to the circumstances surrounding its formation.” Beverly, 702 F.2d at 940.

Why the plant’s owner was a third-party beneficiary.

The Eleventh Circuit concluded that the language of the Services Contract between the plant’s operator and General Electric International and the circumstances surrounding its formation “readily indicate the parties’ intention to grant [the plant’s owner] the benefit of the performance promised.” Id., at *3. Consider the following indicators of “explicit rights,” Id., at *4, that were conferred upon the owner as third-party beneficiary by the contract:

First, the Services Contract provides that the plant’s operator “is responsible for operating and maintaining [the] power station … pursuant to an O&M Agreement entered into with the [plant’s owner]” and the referenced “O&M Agreement” is the Operation and Maintenance Contract between the owner and the operator “concerning the operation and maintenance of the Power Station by [its operator] in favor of [its owner].” Id. (contract citations omitted).

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2 The decision applied federal common law.

Second, the Services Contract sets out the “circumstances” under which the “supply of Parts and the execution of services by the Service Provider [General Electric International]” are to be accomplished. Id., at *4 (contract citations omitted). The first circumstance concerns “changes to a Power Train Set decided upon by either the [plant’s owner] or [the plant’s operator].” Id., at *4 (emphasis added; contract citations omitted).

Third, the Services Contract further states that the plant’s owner “may have access to [the] Operation and Maintenance reports” that the Service Provider is “responsible for prepar[ing].” Id. (contract citations omitted).

Finally, the Services Contract allows the plant’s owner “to act unilaterally in certain circumstances.” For example, “[i]n the event of an emergency that the Service Provider fails to respond to, the Services Contract provides that [the owner] on its own ‘may make any decisions without informing the Service Provider beforehand … in order to avoid or limit the damages or losses that may be suffered by persons or property.’” Id. (contract citations omitted).

“Based on this collection of direct references and explicit rights,” the Court concluded that the plant’s owner “would be ‘reasonable in relying on the [Services Contract] as manifesting an intention to confer a right on [it].’” Id., at 4 (quoting Montana, 124 F.3d at 1273). Thus, the owner’s status was unlike that of, for example, purported incidental third-party beneficiaries who “fail to point to any specific language in the [ ] contract that confer[red] rights on them,” U.S. v. South Fla. Water Mgmt. Dist., 922 F.2d 704, 711 (11th Cir. 1991), or who are not named in the contract and, at most, have only a “tenuous grant of a vague benefit” thereunder. Hogan v. SPAR Grp., Inc., 914 F.3d 34, 39 (1st Cir. 2019).3

Concluding remarks.

Various Reinsurers is certainly not alone in concluding that a non-party can be compelled to arbitrate claims based on an arbitration clause that was not that it did not sign. What makes the decision interesting—besides its exotic origins—is that the determining factor was not simply the subrogees’ status per se. Indeed, what makes Various Reinsurers interesting is its detailed findings as to why the subrogees qualified as third-party beneficiaries. In doing so, the Eleventh Circuit made a welcome addition to the jurisprudence on the common law theories that can be utilized to force a nonparty into arbitration.

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3 Notably, the entire decision on whether a subrogee may be a third-party beneficiary for purposes of arbitration may ultimately be reduced to dicta because the Court found that the arbitrator must decide his/her own jurisdiction on the question of arbitrability. The decision further amplified on the Eleventh Circuit’s position on the question of whether a court or arbitrator determines the question of arbitrability. Because the arbitration clauses at issue incorporated the Conciliation and Arbitration Rules of the International Chamber of Commerce, which are closely aligned with the Commercial Arbitration Rules of the American Arbitration Association, the Court, relying on Terminix Int’l Co., LP v. Palmer Ranch Ltd. P’ship, 432 F.3d 1327 (11th Cir. 2005), held that the arbitrator had the jurisdiction to answer the question of arbitrability. Thus, the Court ultimately left the decision of arbitrability to the arbitrator. Id. at *8.

The GLP-1 Saga Continues: FDA Ends the Tirzepatide Shortage: Frequently Asked Questions

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On December 19, 2024, FDA formally announced the end of the tirzepatide shortage in a Declaratory Order issued to Eli Lilly & Co. (“Lilly”). Lilly is tirzepatide’s patentholder and the manufacturer of the two branded versions of tirzepatide, Mounjaro® (for diabetes) and Zepbound® (for weight loss and, announced on December 20, sleep apnea).

FDA’s December 19 announcement ended a regulatory back and forth that I previously summarized here. In short, on October 2, 2024, FDA announced that Lilly had resolved the tirzepatide shortage, but five days later the Outsourcing Facilities Association (“OFA”) sued FDA on the grounds that FDA’s decision to end the tirzepatide shortage was unlawful because, inter alia, FDA failed to provide notice and seek comments from interested stakeholders. Just over a week later, FDA paused the end of the shortage and announced that it was reconsidering its position and promised to publish an updated final decision shortly. That final decision came on December 19, and today tirzepatide is no longer on FDA’s list of shortage drugs.

FDA’s resolution of the tirzepatide shortage dramatically changes how the law applies to companies making and distributing compounded copies. Please read below for some of the frequently asked questions (“FAQs”) I have received since FDA issued its Declaratory Order:

1. Q. What is the state of the law for companies still making and selling compounded tirzepatide?

A. When tirzepatide was on FDA’s list of shortage drugs, federal law allowed for the compounding of “copies” pursuant to 21 USC § 353a (for compound pharmacies) and 353b (for outsourcing facilities). However, those protections dissipated once tirzepatide was removed from the shortage list, so compounding pharmacies and outsourcing facilities can be held in violation of the law to the extent they still compound copies. FDA can deem compounded tirzepatide to be in violation of the adulteration and misbranding provisions of the FDCA, and Lilly can sue them under the Lanham Act for violating Lilly’s tirzepatide patent.

2. Q. Can I sell the rest of my inventory of compounded tirzepatide?

A. In its Declaratory Statement, FDA explained that it will abstain from taking action against compound pharmacies so long as they discontinue making and distributing compounded tirzepatide before February 18, 2025. Outsourcing facilities have an extra 30 days, or until March 19, 2025. However, FDA exercising its “enforcement discretion” during this wind down period may not not prevent Lilly from initiating its own Lanham Act cases, so in practical terms the off-ramp from compounded tirzepatide might be shorter than what FDA has established for itself.

3. Q. I market compounded tirzepatide to patients, but I am not the compounder. Does this change in the status of tirzepatide impact me?

A. Yes. FDA’s Declaratory Statement makes clear that, once the deadlines expire, it can take action against companies “compounding, distributing, or dispensing” compounded tirzepatide. For its part, Lilly would likely be able to bring Lanham Act cases against a similarly broad array of actors.

4. Q. What about patients?

A. The best interests of patients should not be disregarded in this discussion. If, for instance, your company has been prescribing compounded tirzepatide to patients during the shortage period, those patients should be advised about the inevitable discontinuation as soon as possible to ensure a smooth transition. Unfortunately, many patients may choose to forego additional treatments due to the dramatic increase in cost associated with brand name versus compounded GLP-1 drugs.

5. Q. Are any GLP-1s still on FDA’s shortage list?

A. Yes. As of the date of this post, semaglutide, dulaglutide, and liraglutide remain on FDA’s shortage list – so compounding pharmacies and outsourcing facilities can still make and dispense compounded copies. Novo Nordisk and Lilly have told FDA that these GLP-1 drugs are “available”, but FDA has yet to publicly verify this information. However, it can at any time. In its Declaratory Statement, FDA made clear that it can remove drugs from the shortage list without notice to stakeholders, so companies making compounded copies must be nimble and have backup plans.

6. Q. If I issue a three or six month prescription to a patient for compounded tirzepatide, will the patient still be able to get the prescription filled after the deadline?

A. Probably not. Even assuming a practitioner could prescribe tirzepatide for an extended time period, compounding pharmacies and outsourcing facilities are still restricted by the removal of tirzepatide from FDA’s shortage list and would continue to face legal consequences for making and dispensing compounded copies.

7. Q. What if a patient needs compounded tirzepatide due to a unique medical need?

A. Traditional compounding involves the preparation of medications that are not commercially available, for instance for patients allergic to certain ingredients in approved, mass-produced drugs. Traditional compounding is still commonplace today, see § 353a, and theoretically a patient could be allergic to an ingredient in Zepbound® and require compounded tirzepatide instead. However, if this occurred at an industrial scale, it could draw the ire of FDA or Lilly as an end-around to the rules prohibiting the compounding of “copies” of commercially available drugs.

Ultimately, whether the traditional compounding of tirzepatide could survive a challenge by FDA or Lilly would be fact dependent. The law prohibits compounding pharmacies from compounding “regularly or in inordinate amounts any drug products that are essentially copies of a commercially available drug product.” § 353(b)(1)(D). So, at the threshold, the pharmacy would need to establish that i) it does not compound tirzepatide regularly or in inordinate amounts, and ii) its compounded tirzepatide is not merely a copy of Zepbound® or Mounjaro®.

In a 2018 guidance, FDA explained that it would consider a compounded drug to be essentially a copy of a commercially available drug if it has (i) the same API, (ii) the same or similar dosage, and (iii) the same route of administration, unless “a prescriber determines that there is a change, made for an identified individual patient, which produces, for that patient, a significant difference from the commercially available drug product.” The guidance also explains that, if a change is made for an identified patient, the prescriber should document the determination on the prescription, and the notations should be specific. Of course, in a footnote to the guidance, FDA explained that it retains the authority to determine that the “significant difference” is merely a “pretext” for the compounding of copies of commercially available products, in which instance it could bring an enforcement action.

8. Q. How was FDA able to remove tirzepatide from the shortage list without notifying the public and requesting comments? Can this happen again to other shortage drugs?

A. In its Declaratory Order, FDA cited a list of reasons why it was able to remove tirzepatide from its shortage list without providing the public with notice and the opportunity to submit comments. Among other reasons, FDA explained that the law did not require notice and comment, providing notice would require the publication of the manufacturer’s trade secrets, and notice could lead to hoarding. Yes, this can happen again.

9. Q. Is there any chance that tirzepatide will return to the shortage list?

A. OFA has sued FDA based on FDA’s removal of tirzepatide from the shortage list, and that case is ongoing. More recently, Lilly has asked for permission to intervene. Regardless of whether Lilly joins the fray, OFA has an uphill battle in court. The Trump administration may wish to look into the issue, but it is not on any list of initial priorities.

10. Q. My tirzepatide is labeled “for research use only.” I should be in the clear, right?

A. No. For more insight on “research use only” GLP-1s, please see my prior article here.

Drug or biologic? An Eli Lilly lawsuit could impact weight loss drug compounders

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By Nicole DeFeudis
November 22, 2024

Eli Lilly and Novo Nordisk have filed dozens of lawsuits against compounding pharmacies marketing their own versions of popular weight loss and diabetes drugs. A new legal strategy could put Lilly one step ahead of compounders, if it’s successful.

The case may come down to one amino acid.

Lilly filed a lawsuit in September against the FDA and the Department of Health and Human Services, arguing that its next-generation “triple G” agonist retatrutide should be reclassified as a biologic, as opposed to a drug. Retatrutide’s classification has “significant implications” for Lilly, the company argued in a complaint, including which regulatory pathway the company would take, what commercial rules it’d be subject to, the potential length of retatrutide’s exclusivity, and — perhaps most importantly — whether it could be compounded.

“I believe that’s the primary motivation behind this,” said Mark Boesen, an attorney and former compounding pharmacist. Boesen has been involved with amicus, or “friend of the court,” briefs in lawsuits brought by Novo Nordisk and Eli Lilly over GLP-1 compounding, and is currently representing a med spa in a GLP-1-related case brought by Eli Lilly earlier this month.

Eli Lilly’s tirzepatide was on the FDA’s shortage list for nearly two years, opening the door for compounders to produce their own, often cheaper versions of Lilly’s brand-name Mounjaro for diabetes and Zepbound for weight loss. The drug’s shortage status is still up in the air, after the FDA faced legal pressure from a compounding trade group to put it back on the shortage list. If retatrutide is approved, Boesen said it may be in a similar position.

“If history is a guide, this thing’s going to be in short supply very, very quickly,” Boesen said of retatrutide.

Meanwhile, Eli Lilly and its GLP-1 rival Novo Nordisk have argued that compounded weight loss products may not be as safe as brand-name versions, and both companies have asked the FDA to determine that their GLP-1 products are too complex to be reproduced by a compounder. Eli Lilly asked the agency in January to classify retatrutide as a biologic, which would make it off limits to compounders.

The FDA rejected Lilly’s request, instead classifying retatrutide after determining it did not meet a requirement of being “greater than 40 amino acids in size.”

Lilly argued in its complaint that retatrutide consists of 41 amino acids, therefore meeting the requirement and making the FDA’s decision “arbitrary, capricious, and not in accordance with law.” The company asked the Indiana federal court to toss the FDA’s decision, and require the agencies to designate retatrutide as a biologic.

“I think the primary reason, if not the most significant reason, is creating a barrier for pharmacies to compound this medication if it goes into a shortage situation,” Boesen said.

Lilly declined to comment on its legal strategy, with a spokesperson stating that “retatrutide qualifies as a biologic under the governing statute.”

The FDA said it does not comment on pending litigation, and HHS did not respond to a request for comment as of press time.

Why is Lilly talking about the Chevron case?

In its argument, Lilly cited the Supreme Court’s recent decision in Loper Bright, also known as the Chevron case, which eliminated a longstanding legal doctrine that deferred to federal agencies on interpreting federal law.

“Under the Supreme Court’s recent Loper Bright decision, determining what falls within the statutory definition of ‘biological product’ is an interpretative question that courts, rather than the agency, must ultimately resolve,” Lilly wrote.

Andrew Ittleman, an attorney who has advised compounders on GLP-1-related matters, said Lilly’s case “is very relevant to the times that we’re in.”

“This case, five or six years ago, is probably unheard of, simply because I don’t think there would be a challenge to an FDA interpretation of a regulation where the issue is so squarely within the FDA’s jurisdiction,” he said.

The compounding battle wages on

Regardless of the outcome of Lilly’s case, Ittleman thinks the classification of products as a drug or a biologic will continue to be the “billion-dollar question.”

“The manufacturers are going to be incentivized to ensure that their GLP-1s meet the standard of a protein and therefore meet the standard of biologics, so that the compounders can’t be in that world anymore,” he said.

THE ROLE OF DELEGATION CLAUSES IN MOTIONS TO COMPEL ARBITRATION WHEN YOUR FAMILY MEMBER SIGNS AN ARBITRATION AGREEMENT

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It happens every so often: someone signs an agreement to arbitrate legal claims, the agreement has a solid clause delegating arbitrability issues to an arbitrator, and then a member of that person’s family files a claim in court against the other party to the agreement. The clever litigant will evaluate whether the claimant, despite being a non-signatory to the arbitration agreement, can be compelled to arbitrate its claims. Two recent decisions, one from the Eleventh Circuit Court of Appeals and another from Florida’s Third District Court of Appeal, shed light on the issues that may arise in such a situation.

Let’s begin with the more recent and shorter decision, Meikle v. U-Haul Co. of Florida 905, LLC, 2025 WL 97476 (Fla. 4th DCA Jan. 15, 2025). There, the claimant was the minor son of a mother who had rented moving equipment from U-Haul. The mother signed an agreement whereby she agreed to arbitrate any claims against U-Haul. When her son was injured by the equipment, the son filed suit in court and U-Haul moved to compel arbitration of the claim. The minor son argued that the arbitration agreement was not valid, and even if it were valid, it could not be enforced against a non-party to the rental contract. The trial court granted the motion to arbitrate. In its decision reversing, the District Court first noted that the trial court “correctly” applied the arbitration agreement’s delegation clause. Meikle, at *1. Before addressing the reason for the reversal, a primer on the delegation clauses of arbitration agreements is appropriate.

A primer on the delegation clauses of arbitration agreements.

Parties may agree to arbitrate all or some disputes, such as the merits of their claims or whether their claims are even arbitrable. See Attix v. Carrington Mortg. Servs, LLC, 35 F.4th 1284, 1288 (11th Cir. 2022). Arbitrability refers to the “gateway” or “threshold” questions about whether the merits of any claims arising from a contract, such as the “enforceability, scope, or applicability of the parties’ agreement to arbitrate their claims,” are subject to arbitration. Attix, 35 F.4th at 1295 (quotation omitted). See also Airbnb, Inc. v. Doe, 336 So. 3d 698, 703 (Fla. 2022) (quoting Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010)) (describing arbitrability as “whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.”). Unless the parties agree to delegate such functions to the arbitrator, courts decide arbitrability issues under both Federal law, see Attix, at 1395, and Florida law. See Romano v. Goodlette Office Park, Ltd., 700 So.2d 62, 64 (Fla. 2d DCA 1997) (arbitrability issues are decided by courts “unless the parties have entered an agreement stating otherwise.”) (citation omitted); § 682.02(2), Fla. Stat. (“The court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.”).

The presence of a delegation clauses doesn’t mean that a non-signatory automatically loses a motion compelling it to arbitrate.

In Meikle, the arbitration agreement delegated questions of arbitrability to the arbitrator, leading the trial court to conclude that the arbitrator had to decide whether the parties agreed to arbitrate. But the trial court seemingly overlooked the first of “three elements for courts to consider in ruling on a motion to compel arbitration of a given dispute: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether the right to arbitration was waived.” Seifert v. U.S. Home Corp., 750 So. 2d 633, 636 (Fla. 1999)).

The District Court’s reversal of the order compelling arbitration is rooted in the “undisputed” fact that the minor “was not a party to the rental contract, and a non-contracting party generally cannot be bound by an arbitration agreement.” Meikle, at *1 (citing Seifert, 750 So. 2d at 636 (“[N]o party may be forced to submit a dispute to arbitration that the party did not intend and agree to arbitrate.”)). The minor’s mother signed the agreement on her own behalf only. See id.

Readers may be surprised that Meikle concluded, without much discussion, that the arbitration agreement’s delegation clause did not apply to the non-signatory minor.1 After all, delegation clauses confer upon the arbitrator—not the court—the power to adjudicate whether a claim is arbitrable. Perhaps it was unnecessary for Meikle to address the non-applicability of the delegation clause because of one simple reason: delegation clauses may be inconsequential when one seeks to enforce an arbitration agreement against a non-signatory. This much is evident from the lengthier decision, Rubin v. Starbucks Corp., 122 F.4th 1314 (11th Cir. Dec. 16, 2024), which did address the matter, though not without the disapproval of its concurrence. See 122 F.4th at 1324-25 (Tjoflat, J. Concurring).

Does there exist a valid written agreement to arbitrate—and if so, is the agreement at issue in the action?

In Rubin v. Starbucks Corp., the claimant was the husband of a former Starbucks employee. The claimant filed suit in court based on the allegation that Starbucks sent him, upon his wife’s termination, a deficient health-insurance notice under the Employee Retirement Income Security Act of 1974, as amended by the Consolidated Omnibus Budget Reconciliation Act (COBRA). See 29 U.S.C. § 1166(a); 29 C.F.R. § 2590.606-4.2 Starbucks moved to compel arbitration, citing his wife’s employment agreement, whose delegation clause conferred upon the arbitrator “exclusive authority to resolve any dispute regarding the formation, interpretation, applicability, enforceability, or implementation of [the] Agreement.” Id. at 1318. However, the husband did not sign the agreement and had never even worked for Starbucks. Thus, the Eleventh Circuit had to determine whether the husband had to arbitrate his claims in light of his wife’s agreement. See id. at 1317-18.

The district court denied Starbucks’s motion to compel arbitration, noting that the husband “was neither a party to his wife’s employment agreement nor did he sue to enforce the employment agreement.” Id. 1318. Instead, the husband sought to enforce his own statutory right to an adequate COBRA notice. Id. at 1318 (citing 29 U.S.C. § 1166(a)(4)). The Circuit Court agreed, citing the well-established principle that “the threshold question of whether an arbitration agreement exists at all is ‘simply a matter of contract.’” Id. at 1319 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). This principle trumped Starbucks’s argument that the delegation clause granted an arbitrator the exclusive jurisdiction to determine the threshold question of whether the non-signatory husband must arbitrate his statutory claims:

Moreover, [husband] is not a party to the delegation clause. And absent an agreement between [husband] and Starbucks, “a court cannot compel the parties to settle their dispute in an arbitral forum.” Bazemore, 827 F.3d at 1329 (quoting Klay, 389 F.3d at 1200). Arbitration agreements are no more enforceable than an average contract, and we “may not devise novel rules to favor arbitration over litigation.” Morgan v. Sundance, Inc., 596 U.S. 411, 418, 142 S.Ct. 1708, 212 L.Ed.2d 753 (2022). The delegation clause, just like every other clause in the arbitration agreement, was between Starbucks and [husband’s] wife, not [husband]. We thus conclude that the terms of the arbitration agreement do not require Lubin to arbitrate his claim against Starbucks, absent another principle of law or equity.

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1 The brevity of Meikle is also rendered conspicuous by the fact that it did not address the various well-established common law doctrines for compelling nonparties to arbitrate (e.g., equitable estoppel and third-party beneficiary). It is likely that those theories were not raised at the trial level.
2 Starbucks’s termination of the claimant’s wife was a “qualifying event” that triggered the husband’s right to a COBRA notice. 29 U.S.C. §§ 1163(2), 1166(a)(4). Accordingly, Starbucks’s COBRA administrator mailed the allegedly deficient COBRA notice. See Lubin, at 1318.

Id. at 1320-21 (emphasis added).3 In other words, because the wife’s arbitration agreement was not even at issue, the husband could not be compelled to arbitrate.

The Circuit Court in Rubin moved on to analyze three common law doctrines to determine whether the husband must be compelled to arbitrate despite being a non-signatory to the arbitration agreement. It found none of them applicable. See id. at 1321-24. But the concurrence thought the end of the analysis should have been that the husband’s claim was entirely statutory.

If a claim is statutory, as in Rubin, it is unnecessary to analyze delegation clauses to determine whether a non-signatory can be compelled to arbitrate under an arbitration agreement.

Having agreed with the majority that the husband “was not a party to his wife’s arbitration agreement and that his claim arises under federal statute,” the concurrence found “it unnecessary to engage any further with principles of federal and state law that do not control this case.” Id. at 1324 (Tjoflat, J. Concurring). Calling for a much shorter decision, the concurrence reasoned as follows:

… I find it unnecessary to engage any further with principles of federal and state law that do not control this case.

This is a statutory case: Lubin sues to enforce a federal statutory right, the right to an adequate COBRA notice. See 29 U.S.C. § 1166(a); 29 C.F.R. § 2590.606-4. His claim is not the product of any bargained-for exchange with Starbucks. That is why Starbucks cannot compel him to arbitrate under an agreement that is not his own….

The Court’s holding should be read narrowly to apply only where a party to an arbitration agreement seeks to compel a non-party to arbitrate, and only where the non-party’s claim arises directly under federal law, as here. Any discussion in the Court’s opinion that could be read more broadly is unnecessary to the resolution of this dispute. Therefore, it is either dictum, which carries no precedential value, or an alternative holding, which I do not join.

For instance, I do not join the Court’s discussion of the arbitration agreement’s delegation clause. See Maj. Op. at 1319-21. The Court provides a well-reasoned explanation for why that clause does not apply in the first place: Lubin is not a party to the agreement. See Maj. Op. at 1319-20, 1320-21….

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3 The court also held that an exclusion clause within the employment agreement rendered the arbitration agreement ambiguous as to the question of whether the delegation clause applies (contrary to the requirement that delegation clauses must be “clear and unmistakable”. See Lubin, at 1320 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (quoting AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986).

Id. at 1324-25 (Tjoflat, J. Concurring; citations omitted; emphasis added). The concurrence in Rubin may thus validate the brevity of the Meikle decision, for this reason: while delegation clauses often loom large in motions to compel arbitrations, they may be inconsequential in motions against nonparties to an arbitration agreement.

The U.S. Supreme Court long ago held that “[u]nless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 649 (1986). It cannot be said that there is “clear and unmistakable evidence” that someone who did not sign an arbitration agreement nevertheless agreed to delegate arbitrability questions to an arbitrator under that arbitration. Kaplan, 514 U.S. at 944 (alterations adopted) (quoting AT & T, 475 U.S. at 649). Thus, the fact that Meikle involved a delegation clause did not mean that the claimant, who did not sign the arbitration agreement, had agreed to any such thing—much less clearly and unmistakably, which is what the U.S. Supreme Court requires.

Rubin’s other takeaways—when nonparties can be compelled to arbitration.

The concurrence in Rubin also explained that because the claim is statutory—not contractual—it was also unnecessary to analyze common law doctrines to determine whether a non-signatory can be compelled to arbitrate under an arbitration agreement. See, e.g., Rubin at 1325 (Tjoflat, J. Concurring) (“I do not join the Court’s discussion of the third-party beneficiary doctrine. Once again, the Court provides an excellent explanation for why the doctrine does not apply: Lubin sues to enforce his statutory rights, not to obtain the benefits of a contract.”) (internal citations omitted). But since the majority decision did analyze these common law doctrines, let’s address why the majority held them inapplicable.

1. Equitable Estoppel.

“[E]quitable estoppel precludes a party from claiming the benefits of some of the provisions of a contract while simultaneously attempting to avoid the burdens that some other provisions of the contract impose.” Bahamas Sales Assoc., LLC v. Byers, 701 F.3d 1335, 1342 (11th Cir. 2012). Under this doctrine, Starbucks could have forced the husband to abide by his wife’s agreement if it showed that the husband was “relying on the [employment] agreement to assert [his] claims” and that “the scope of the arbitration clause covers the dispute.” Rubin, at 1321 (quoting See Kroma Makeup EU, LLC v. Boldface Licensing + Branding, Inc., 845 F.3d 1351, 1354 (11th Cir. 2017)). See also Allied Pros. Ins. v. Fitzpatrick, 169 So. 3d 138, 142 (Fla. 4th DCA 2015) (“the plaintiffs cannot claim they are entitled to the benefit of the policy’s coverage provision while simultaneously attempting to avoid the burden of the policy’s arbitration provision.”).

However, the spouse in Rubin did not have his proverbial cake and eat it too. The Court agreed that his claim arose “under his independent statutory right to an adequate COBRA notice.” Rubin, at 1321. Since Starbucks’s notice duties under 29 U.S.C. § 1166(a)(4) and 29 C.F.R. § 2590.606-4—the basis of his claim—did “not arise out of any provision of his wife’s employment contract”, the Circuit Court held that the equitable estoppel doctrine did not apply. Id.

2. Third-Party Beneficiary Doctrine

Under Florida law, the third-party beneficiary exception to the general rule against binding a non-party arises when “a third-party beneficiary sues to enforce a contract between other parties.” Jacocks v. Cap. Com. Real Est. Grp., Inc., 310 So. 3d 71, 73 (Fla. 4th Dist. Ct. App. 2021). In other words, the doctrine “does not apply when a third-party beneficiary brings a claim other than to enforce the contract.” Rubin, at 1322 (quoting Jacocks, 310 So. 3d at 73). In Rubin, because the spouse did not sue to enforce a duty owed by Starbucks under its employment contract with his wife but instead, he sued “under federal law, alleging that Starbucks violated statutory duties that it owed him under COBRA”, the doctrine did not apply. Id. (citing 29 U.S.C. § 1166(a); 29 C.F.R. § 2590.606-4).

3. Derivative

In some cases, Florida law requires a non-signatory claimant to arbitrate when the underlying action is “derivative” of a wrong committed against a signatory to an arbitration agreement. Id. at 1322-23 (citing Laizure v. Avante at Leesburg, Inc., 109 So. 3d 752, 759-62 (Fla. 2013). Derivative claims are those where the claimant’s right to recover is predicated on, or flows from, another party’s right to recover. Laizure at 760.

The facts of Rubin are far different from cases like Laizure. There, the non-signatory heirs of a decedent were required to arbitrate a wrongful death claim because their claim was derivative of the wrong committed against the decedent, who had signed an arbitration agreement. Id. at 759–62. By its nature, a wrongful-death claim is “dependent on a wrong committed against the decedent,” not the plaintiff. By contrast, the spouse’s COBRA claim in Rubin was entirely dependent on his own statutory rights under 29 U.S.C. § 1166(a)(4). See id. at 1323-24 (citing Seifert, 750 So. 2d at 638 (“the mere fact that the dispute would not have arisen but for the existence of the contract and consequent relationship between the parties is insufficient by itself to transform a dispute into one ‘arising out of or relating to’ the agreement. … [F]or a tort claim to be considered ‘arising out of or relating to’ an agreement, it must, at a minimum, raise some issue the resolution of which requires reference to or construction of some portion of the contract itself.”).4

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4 It bears repeating that Meikle did not address any common law doctrines for evaluating whether a non-signatory can be compelled to arbitrate (as those issues may not have been before the court).

Concluding remarks.

It bears repeating that the Third District’s Meikle decision did not address any common law doctrines for evaluating whether a non-signatory can be compelled to arbitrate (as those issues may not have been before the court). That is the only apparent reason from the short decision. No such dilemma is presented by Rubin, however. There, the doctrines were addressed, but it was arguably unnecessary to address them, as explicated in the concurrence. A takeaway from these two recent decisions is this: just because a non-signatory’s claim is related to an arbitration agreement—even one with a delegation clause—does not mean that the non-signatory must be compelled to arbitrate any aspect of the claim or its arbitrability.

Florida Civil Litigation Update: Major changes to the rules of civil procedure have gone into effect. Practitioners must be aware of the consequences for noncompliance.

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January 1, 2025, marked a historic day for Florida civil litigation as the much-anticipated sweeping changes to the Florida Rules of Civil Procedure went into effect. These changes will fundamentally change how civil cases are litigated in the state.

The rule changes were first announced on May 23, 2024. Subsequent amendments to these rules were announced December 5, 2024. Here are the highlights practitioners should be aware of:

1. Rule 1.200 Case Management; Pretrial Procedure:

The rule has been rewritten in its entirety. Except to those types of cases expressly listed in the rule, within 120 days of commencement, civil cases must be assigned to one of three tracks: (1) “complex” (which proceed as provided under 1.201); (2) “streamlined”; or (3) “general”. Fla. R. Civ. P. 1.200(b). Case management orders shall be issued for each tracked case. The orders must specify the projected or actual trial period and set case management deadlines as provided for in the rules (examples include adding new parties, completion of fact and expert discovery, completion of ADR). Fla. R. Civ. P. 1.200(d). The rules provide that “deadlines in a case management order must be strictly enforced unless changed by court order.” Fla. R. Civ. P. 1.200(e)(1). However, agreed orders extending deadlines are allowed “if the extension does not affect the ability to comply with the remaining dates in the case management order;” otherwise, the parties must move to amend the case management order as provided in the rules. Id. Notices of unavailability have no effect on any deadline. Fla. R. Civ. P. 1.200(f). For streamlined and general cases, case management conferences are not required. However, the rule provides for case management conference procedures. The rule also details pretrial conference procedures.

2. Rule 1.202 Conferral Prior to Filing Motions:

Rule 1.202 governs conferral prior to filing motions and has been added to the rules. The rule provides that for all motions except those specifically exempt under 1.202(c), the movant must confer with the opposing party in a good-faith effort to resolve the issues raised in the motion. The rule also provides that the movant must file a certificate of conferral with the motion. Fla. R. Civ. P. 1.202(b). The rule provides the language for the certificate. Id. Examples of motions exempt include a motion for injunctive relief, for judgment on the pleadings, for summary judgment, to dismiss or to permit maintenance of a class action, to dismiss for failure to state a claim upon which relief can be granted, or to involuntarily dismiss an action. Fla. R. Civ. P. 1.202(c). Rule 1.202(d) was added to explain that the failure to comply with the rule’s conferral requirements “may result in an appropriate sanction, including denial of a motion without prejudice” and that the “purposeful evasion” of conferral communication “may result in an appropriate sanction.” However, the rule’s requirements do not apply when the movant or the nonmovant is unrepresented. Fla. R. Civ. P. 1.202(c).

3. Rule 1.280 General Provisions Governing Discovery:

The rule requires initial discovery disclosures to be made within 60 days of service of the complaint. Fla. R. Civ. P. 1.280(a)(3). Such disclosures include: (1) the names and contact information of each individual likely to have discoverable information—along with the subjects of that information; (2) copies or descriptions by category and location of all documents, ESI, and tangible things in the disclosing party’s possession, custody, or control that a party may use to support its claims or defenses; (3) computations of each category of damages claimed; and (4) copies of any insurance policies which may be liable to satisfy any judgment. Fla. R. Civ. P. 1.280(a)(1). The rule has been amended to require that parties must supplement their discovery responses. Rule 1.280(g). The rule’s commentary has been amended to explain that the rule is to be construed and applied in accordance with the federal proportionality standard under Fed. R. Civ. P. 26(b)(1).

4. Rule 1.350 Production of Documents and Things and Entry on Land for Inspection and Other Purposes:

Rule 1.350 governs production of documents and things and entry upon land for inspection and other purposes. The rules has been amended three ways. First, 1.350 was amended to require providing grounds for objecting “with specificity,” “including the reasons.” Fla. R. Civ. P. 1.350(b)(5). Second, the rule was amended to provide that “[a]n objection must state whether any responsive materials are being withheld on the basis of that objection.” Fla. R. Civ. P. 1.350(b)(6). Third, the rule was amended to provide that “[a]n objection to part of a request must specify the part and permit inspection of the rest.” Id. These amendments reflect language in the federal rules.

5. Rule 1.380. Failure to Make Discovery; Sanctions:

Rule 1.380 has been amended to provide an enforcement mechanism for initial disclosures and supplemental discovery obligations. Rule 1.380(d) has been added to provide that “[i]f a party fails to provide information or identify a witness as required by rule 1.280(a) or (g), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.” Rule 1.380(d) provides other sanctions “in addition to or instead of this sanction” including: payment of attorneys’ fees and informing the jury of the party’s failure. A sanction was added for a violation of the discovery certification previously added to rule 1.280.

6. Rule 1.440 Setting Action for Trial:

The rule has been amended to remove the “at issue” requirement. The rule now provides that the failure of the pleadings to be closed will not preclude the court from setting a case for trial. Fla. R. Civ. P. 1.440(a). The rule provides the procedures for fixing the trial period based off of the projected trial period in the case management conference.

7. Rule 1.460 Motions to Continue Trial:

Motions to continue trial are disfavored and should rarely be granted and then only upon good cause shown. Fla. R. Civ. P. 1.460(a). Successive continuances are highly disfavored. Id. Lack of due diligence in preparing for trial is not grounds to continue the case. Id. Motions for continuance must be in writing and must state with specificity: (1) the basis of the need for the continuance, including when the basis became known to the movant; (2) whether the motion is opposed; (3) the action and specific dates for the action that will enable the movant to be ready for trial by the proposed date, including, but not limited to, confirming the specific date any required participants such as third-party witnesses or experts are available; and (4) the proposed date by which the case will be ready for trial and whether that date is agreed by all parties. Fla. R. Civ. P. 1.460(d). The rule details efforts the courts should take to avoid continuances. Fla. R. Civ. P. 1.460(e). Orders granting continuances must state, either in writing or on the record, the factual basis for the ruling and must either set a new trial date or set a case management conference. Fla. R. Civ. P. 1.460(h).

8. Rule 1.510 Summary Judgment:

The rule has been amended decouple filing and response times from the hearing date. The rule now provides that: i) the motion will be due consistent with the deadlines in the case management order (Fla. R. Civ. P. 1.510(b)); ii) a written response to a motion for summary judgment will be due 40 days after service of the motion (Fla. R. Civ. P. 1.510(c)(5)); and iii) “any hearing on a motion for summary judgment must be set for a date at least 10 days after the deadline for serving a response, unless the parties stipulate or the court orders otherwise.” Fla. R. Civ. P. 1.510(c)(6).

Lilly v. FDA: Two Stories Collide to Make this GLP-1 Case a Tale of Our Time

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I recently learned of Eli Lilly & Co.’s (“Lilly”) recent lawsuit against FDA from Nicole DeFeudis, who interviewed me for her Endpoints News story about the case. Lilly’s lawsuit, filed in September 2024 in the Southern District of Indiana (note: Lilly is headquartered in Indianapolis), challenges FDA’s decision to regulate Lilly’s trial product “retatrutide” as a drug rather than a biologic, which Lilly claims violated federal law and FDA’s own rules. Thank you, Nicole, for the heads up.

Lilly v. FDA is a story for our time because it showcases two modern phenomena colliding into one federal court lawsuit, the outcome of which could forecast decades of future jurisprudence. With the rapid growth of GLP-1 drugs in the United States as the backdrop, the case sheds light on the complex set of laws and regulations which allow copies onto the market in spite of otherwise robust patent protections. Lilly v. FDA also presents a tantalizing legal theory made far more powerful by the recent Supreme Court decision disposing of Chevron deference (discussed below) and requiring courts to engage in de novo analyses of even the most technical issues presented to them by private companies and their regulators.

Can Lilly immunize retatrutide from compounded copies? Will the district court second guess – much less overturn – FDA’s decision to regulate this GLP-1 as a drug? Although perhaps a bit technical at first blush, these are unbelievably important questions, and how they are answered could have widespread impacts throughout U.S. law and society. The GLP-1 issue on its own is massive – with $126bn in sales (and a 30% CAGR) forecast for 2029. But if this case moves forward, it would reflect a new normal brought on by the demise of Chevron, with no issue regulated by the federal government too technical for litigation. In that case, the consequences become even greater and will be felt across all the entire economy. I unpack these and some other issues below.

Story 1: The GLP-1 phenomenon – and whether Pharma can stave off compounded copies.

In a recent JDSupra article, I explained what GLP-1 drugs are, how they are regulated, how they ended up on FDA’s “drug shortage” list, and the legal significance of being on that list. To reiterate, due to their explosive rise in popularity, GLP-1s outgrew their manufacturing capacity, so FDA placed many of them on its list of drug shortages. This was a significant step because, once a drug appears on FDA’s shortage list, compound pharmacies and outsourcing facilities can make “copies” of the shortage drugs without violating FDA rules and in spite of pharmaceutical companies’ patent protections. In this “shortage” environment, practitioners and telehealth companies could offer less expensive compounded copies to patients, which undercut the branded versions of the drugs while Lilly, Novo Nordisk and others made substantial investments into their manufacturing capacities.

More recently, FDA announced the resolution of the shortage of Lilly’s blockbuster GLP-1, tirzepatide (brand names, Mounjaro® and Zepbound®), as well as stoppage dates for compound pharmacies and outsourcing facilities making compounded copies of tirzepatide for patients. This change in status will allow Lilly to retake its legal monopoly over tirzepatide, remove cheaper compounded copies from the market, and increase prices for patients. While this may be a favorable result for Lilly, its lawsuit against FDA is a sign that it never wants to go through a similar exercise again.

At issue in Lilly v. FDA is Lilly’s study product retatrutide – which from a lay perspective looks like nothing more than the latest GLP-1 submitted to FDA for approval. While all previous GLP-1s have been approved by FDA as drugs, in its lawsuit Lilly alleges that FDA exceeded its authority, violated its own regulations, and abused its discretion when FDA refused to regulate retatrutide as a biological product over Lilly’s objections.

According to Lilly – both in its request for designation (“RFD”) to FDA and its lawsuit – retatrutide is a “biological product” pursuant to 42 U.S.C. § 262(i)(1) because it is a “protein” or product “analogous” to a protein. More specifically, Lilly argues that retatrutide is a protein pursuant to FDA’s 21 CFR § 600.3(h)(6) which defines “protein” as “any alpha amino acid polymer with a specific, defined sequence that is greater than 40 amino acids in size.” According to Lilly, retatrutide is a protein because it has a specific, defined sequence of 41 amino acids, i.e. “40 alpha amino acids and one other, non-alpha amino acid.” Complaint, at 5. However, for its part, FDA rejected Lilly’s RFD because it determined that the statute and regulation require proteins to contain a sequence of more than 40 alpha amino acids, whereas retatrutide only has a sequence of 40, and that Lilly should not receive credit for the one (1) non-alpha amino acid in its sequence.

The resulting dispute between Lilly and FDA – i.e. whether retatrutide is a biological product or drug – is important not only for Lilly, but for the future of the GLP-1 industry. As Lilly explains in its complaint, the difference between biologic and drug regulation will have “substantial ramifications for Lilly at nearly every stage of retatrutide’s development, licensure, and marketing.” Complaint, at 87. Among those “substantial ramifications” is that “biological products are ineligible for exemptions for compounded drugs under the FDCA.” Id. On at least this one point, FDA and Lilly agree. As FDA has explained in an FAQ:

Can biologics be compounded?

No. Biological products are not eligible for the exemptions for compounded drugs under sections 503A and 503B of the FD&C Act. Federal law does not provide a legal pathway for marketing biologics that have been prepared outside the scope of an approved biologics license application.

The strategy behind Lilly’s case against FDA becomes clear: to ensure that compound pharmacies and outsourcing facilities do not compound its GLP-1 products in the future, it must pivot from tirzepatide (a drug) to retatrutide (which it argues is a biological product). If Lilly is successful, expect all future GLP-1s to follow suit.

Story 2: Chevron deference is dead, and dissenting SCOTUS justices caution about this case.

The second major story here relates to the 2024 demise of Chevron deference – the legal doctrine federal courts relied on for decades to “defer” to “permissible” agency interpretations of statutes even when they disagreed. See Chevron v. Nat’l Resources Defense Council Inc., 467 U.S. 837 (1984). Under Chevron, courts could (and probably would) have simply “deferred” to FDA’s decision that retatrutide was a drug, and not a biologic, simply because its interpretation was “permissible.” But since Chevron has been overturned, the court must conduct a de novo review of the issue – and the result could be much different.

The demise of Chevron plays a significant role in Lilly v. FDA, and Lilly says as much in its complaint. See Complaint, at 2 (“But under the Supreme Court’s recent Loper Bright decision, determining what falls within the statutory definition of ‘biological product’ is an interpretative question that courts, rather than the agency, must ultimately resolve.”) Indeed, in Loper Bright v. Raimondo, 144 S.Ct. 2244 (2024), the Supreme Court rejected the “deference” framework previously required by Chevron, and ruled that courts – not agencies – must determine the “best reading” of the applicable statute. As explained by SCOTUS, “[i]n the business of statutory interpretation, if it is not the best, it is not permissible.”

Thus, prior to Loper Bright, Lilly would not have bothered to file suit. Chevron was a powerful judicial doctrine, with even greater deference owed in cases involving complex scientific issues, which the regulatory status of retatrutide unquestionably does. As a prominent example, in Teva Pharma. USA v. FDA, 514 F.Supp. 3d 66, 102 (D.D.C. 2020) (“Teva v. FDA”), Teva raised the same issue regarding Copaxone®, a glatiramer acetate product intended to treat multiple sclerosis. In that case, Teva – just like Lilly – argued that Copaxone® was a biological product because it was a protein, but the district court rejected its position on summary judgment based on Chevron. As the court described it, Chevron was “highly deferential,” with “particular deference…given by the court to an agency with regard to scientific matters within its area of technical expertise.” Id. (internal citations omitted).

Moreover, Lilly v. FDA is exactly the type of case Justices Kagan, Sotomayor and Jackson cautioned about in their dissent in Loper Bright. There, they explained that Chevron was the right rule, and that judicial deference had “become part of the warp and woof of modern government, supporting regulatory efforts of all kinds—to name a few, keeping air and water clean, food and drugs safe, and financial markets honest.” Loper Bright, 144 S.Ct., at 2294. As the dissenting justices further explained, “[s]ome interpretive issues arising in the regulatory context involve scientific or technical subject matter. Agencies have expertise in those areas; courts do not. Some demand a detailed understanding of complex and interdependent regulatory programs. Agencies know those programs inside-out; again, courts do not.” Id. To support their position, the dissenting justices specifically cited Teva v. FDA as a “concrete” example of a case better suited to be resolved by an agency than a court, because it involved the question of when an alpha amino acid polymer qualifies as a “protein” and whether it must have a specific, defined sequence of amino acids. Id., at 2296.

In spite of that dissent, here we are: the District Court for the Southern District of Indiana must now conduct a de novo review to decide who has the “best reading” of the statute, Lilly or FDA. How the court will rule is beyond the scope of this article – but the Sixth Circuit’s recent decision to overturn the FCC’s “net neutrality” rule could be predictive. See, In re MCP No. 185, 2025 WL 16388 (6th Cir. Jan. 2, 2025) (“MCP”). As the Sixth Circuit explained: “[U]nlike past challenges that the D.C. Circuit considered under Chevron, we no longer afford deference to the FCC’s reading of the statute. Instead, our task is to determine ‘the best reading of the statute’ in the first instance.” Id., at *1 (emphasis added). To determine that “best reading,” the Sixth Circuit employed “the traditional tools of statutory construction” and engaged in a deep, thoughtful, multi-dimensional analysis of the law. It deferred to neither party, and ultimately ruled against FCC. The same could happen here.

Conclusion

As Chevron fades and Loper Bright ushers in a new era of judicial empowerment, private companies find themselves on a level playing field with their federal regulators for the first time in decades. For Lilly, this is a perfectly timed pivot, which could allow it to permanently change how its GLP-1s are regulated. This confluence of circumstances is truly a story of our time.