By Mari Clifford and Scott Hall 

In a move that could reshape day-to-day people-management practices across the state, the California Legislature is advancing Assembly Bill 1221 (“AB 1221”), a sweeping proposal that would regulate how employers deploy artificial intelligence-enabled monitoring tools and how they handle the torrents of data those tools generate. After clearing two policy committees, the measure was placed on the Assembly Appropriations Committee’s “suspense” file on May 14, 2025: a key fiscal hurdle to a possible floor vote. AB 1221’s fiscal impact will be scrutinized in the Appropriations Committee, and the bill could still be amended; perhaps to narrow its scope or clarify open questions such as what constitutes a “significant update” to an existing tool. Nonetheless, the measure enjoys strong labor support and dovetails with California’s broader push to regulate AI. Even if AB 1221 stalls, its core concepts are likely to resurface.

What AB 1221 Would Require

The bill defines a “workplace surveillance tool” broadly to include virtually any technology that actively or passively captures worker data, from innocuous time-tracking widgets to sophisticated photo-optical systems. It would obligate employers (public and private, large and small, as well as their labor-contractor intermediaries) to furnish plain-language written notice at least thirty days before launching any such tool. That notice must spell out the categories of data collected, the business purpose, the frequency and duration of monitoring, retention periods, vendor identities, the extent to which the data informs employment decisions, and the process by which workers may access or correct that data.

Once a surveillance system is up and running, it may collect, use, and retain information that is “reasonably necessary and proportionate” to the purpose identified in the notice, and employers bear joint liability for security breaches involving worker data. Contracts with analytics providers therefore must incorporate robust cybersecurity safeguards, cooperation duties and deletion obligations. Vendors must return worker data “in a user-friendly format” at contract end and delete remaining copies.

AB 1221 would prohibit facial recognition, gait analysis, emotion detection and neural-data collection, but with one narrow carve-out: facial recognition may still be used solely to unlock a device or grant access to a locked or secured area. The bill also bars employers from using surveillance to infer protected traits such as immigration status, health or reproductive history, religion, sexual orientation, disability, criminal record or credit history.

Employers may not rely primarily on monitoring data when disciplining or terminating a worker. If they choose to factor that data into such a decision, a human reviewer must corroborate it. The employer must notify the worker of the decision, provide a simple request form, and give the worker five business days to ask for the surveillance and corroborating records. Any valid correction must be made, and the personnel action adjusted, within twenty-four hours. Records that play any role in discipline must be retained for five years.

Enforcement Mechanisms and Civil Exposure

AB 1221 would vest enforcement authority in the Labor Commissioner, impose civil penalties of $500 per violation, and create a private right of action that includes actual and punitive damages as well as attorneys’ fees and punitive damages. Public prosecutors could also bring suit, and plaintiffs could seek injunctive relief, heightening litigation leverage for worker-side counsel.

Points of Contention and Legislative Headwinds

Industry groups, including the California chapter of SHRM, have criticized the proposal’s breadth, warning that it could hamper legitimate safety and operational uses of technology and saddle businesses with ambiguous compliance obligations. Labor advocates counter that AB 1221 supplies essential guardrails against what they describe as an exploding “digital Taylorism” that erodes privacy and exacerbates bias.

Practical Implications for Employers

If enacted, the bill would force employers to inventory every monitoring technology—no matter how routine—and to recalibrate vendor contracts, internal policies and disciplinary protocols. Multistate employers that already comply with New York City’s automated-employment-decision rules or the EU’s AI Act would confront new obligations around thirty-day advance notice, categorical technology bans and accelerated employee-data-access timelines. Because the measure’s private right of action is untethered to data-breach harm, plaintiffs’ lawyers would gain a fresh litigation hook wherever monitoring intersects with hiring, promotion or termination decisions.

Takeaways

Employers should begin mapping every data stream generated by workplace technologies, updating privacy notices and embedding human review into any algorithmically informed employment decision. Whether AB 1221 becomes law this session or next, the legislative trajectory is clear: AI-powered surveillance is migrating from operational convenience to regulated activity, and businesses that fail to get ahead of these requirements risk both regulatory penalties and private lawsuits.

 

Coblentz partners Brandi Brown and Michael Maher addressed questions regarding legal avenues available to mitigate shifting policies on tariffs, trade, and import-export regulations and steps vintners and growers can take to address labor shortages while staying compliant with immigration and wage laws in the North Bay Business Journal article “Wine Law Experts Discuss Legal Strategies for Wineries Facing Challenges, Including Tariffs.” The article is linked here.

By Scott Hall

In a significant development for companies targeted by (or vulnerable to) litigation over website data collection practices, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of a Video Privacy Protection Act (VPPA) claim based on Meta Pixel data collection in Solomon v. Flipps Media, Inc., 2025 WL 1234567 (2d Cir. May 1, 2025). The court held that the Meta Pixel’s transmission of a Facebook user’s ID combined with a video title embedded in a URL string does not constitute “personally identifiable information” (PII) under the VPPA. The decision provides welcome clarity for companies using standard web analytics tools—particularly those offering video content—and pushes back against the increasingly expansive interpretations of the VPPA seen in some recent district court decisions.

Background and Holding

Plaintiff Detrina Solomon, a subscriber to FITE TV, alleged that the platform violated the VPPA by disclosing her Facebook ID and the titles of videos she viewed to Meta via the Meta Pixel. She argued that this combination of data constituted PII that could allegedly identify her as having watched specific videos.

The Second Circuit disagreed. Aligning with the Third and Ninth Circuits, the court adopted the “ordinary person” test for assessing whether information qualifies as PII. Under this standard, VPPA liability attaches only where the disclosed information would allow an average person—without access to specialized tools or insider knowledge—to identify a specific individual as having viewed specific video content.

The court found that neither a Facebook ID nor a video title embedded in a URL, alone or in combination, would enable an ordinary person to make that connection. As a result, the court concluded that Solomon’s allegations failed to state a plausible VPPA claim.

Implications for Businesses

The decision offers meaningful relief for companies that rely on standard website tracking tools, including those that offer video content or embed videos on their platforms. A wave of VPPA class actions has recently targeted businesses simply for using the Meta Pixel or similar technologies that transmit data like video page URLs and user identifiers. Solomon holds that such passive disclosures do not satisfy the VPPA’s PII standard in the Second Circuit.

However, companies should not take this as a green light to ignore potential risks. Data collection practices involving video content remain a focal point for privacy litigation, particularly where health, financial, or sensitive consumer data is involved.

Ongoing Litigation Risks

Additionally, while Solomon narrows the scope of VPPA claims, plaintiffs’ attorneys continue to pursue alternative theories under other federal and state laws, including wiretap statutes and pen register and trap and trace laws. These laws focus on the interception or disclosure of electronic communications (distinct from viewed video content)—an area where use of third-party analytics scripts like the Meta Pixel can still create risk exposure.

Companies using marketing pixels, event tracking scripts, or other analytics tools—especially on video-enabled pages—should continue to consult with counsel to evaluate their risk posture, ensure appropriate user disclosures are in place, and adopt reasonable technical safeguards.

Conclusion

Solomon represents a key victory for businesses, particularly in the Second Circuit, and is likely to reduce the viability (and number) of VPPA claims based on website data collection. Still, companies must remain vigilant. The regulatory and litigation landscape surrounding online tracking technologies remains dynamic, and legal risks extend beyond the VPPA. Companies must continue to be alert in the ever-evolving landscape of data privacy.

On February 27, 2025, FinCEN announced that it would not issue fines or penalties or take any other enforcement action against any companies based on any failure to file or update beneficial ownership information (BOI) reports under the Corporate Transparency Act (CTA) by the current deadlines.

Subsequently, the U.S. Department of the Treasury, of which FinCEN is a bureau, issued a press release on March 2, 2025 stating that, with respect to the CTA, not only will it not enforce any penalties or fines associated with the BOI reporting rule under the existing deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will issue proposed rulemaking to narrow the scope of the BOI reporting rule so that only certain foreign companies registered to do business in the U.S. would be required to submit BOI information.

Accordingly, penalties are not presently being issued for domestic entities that opt not to report.

If you have questions, please contact us at CTA@coblentzlaw.com.

Please note that unless the CTA itself is amended or repealed, there is some speculation that the administration’s failure to fully implement the reporting requirements set forth in the statute could be challenged in court. We will continue to monitor this situation.

Key Takeaways

• A plaintiff prevailing in a trademark infringement suit is often entitled to an award of the “defendant’s profits.” 15 U.S.C. §1117(a).
• Last week, in Dewberry Group, Inc. v. Dewberry Engineers Inc., the Supreme Court held that a court may only award profits ascribable to the named defendant itself, and not the profits of a defendant’s affiliates.
• Plaintiffs suing for trademark infringement should consider (i) which entities among the infringer’s affiliates hold the profits and (ii) what facts plaintiffs can allege to bring an affiliated entity’s profits into play.
• The Dewberry decision may cause plaintiffs to include multiple defendants when it is unclear who holds the profits from the infringement.

On February 26, 2025, the Supreme Court issued a unanimous decision in the trademark infringement case Dewberry Group, Inc. v. Dewberry Engineers Inc., No. 23–900, 604 U. S. __. The Court vacated a nearly $43 million award on the grounds that under Section 35 of the Lanham Act, which provides that a plaintiff can recover a “defendant’s profits,” a plaintiff may only recover profits of the defendant itself, not of its unrelated corporate affiliates.

Dewberry Engineers sued Dewberry Group for trademark infringement. It prevailed on the merits of its claim, and a Virginia federal court ordered Dewberry Group and its affiliates to pay $42.9 million in profits plus $3.7 million in legal fees. The Fourth Circuit affirmed. The lower courts awarded Dewberry Engineers the profits of Dewberry Group’s affiliates after finding that Dewberry Group itself, the only named defendant, had no money.1

Dewberry Group—a corporate entity that provides financial, legal, operational, and marketing services to affiliated leasing companies—argued that it was not profitable and should not have to pay the award as it did not own or lease commercial properties itself. Its affiliates are separately incorporated companies which own the rent-producing properties. All the companies are owned by the founder John Dewberry. The lower courts awarded the profits of those affiliates to reflect the “economic reality” and thereby treated the named defendant and its affiliates as a single corporate entity. The Supreme Court held that the lower courts were wrong to do so.

In its petition to the Supreme Court, Dewberry Engineers argued that the “just sum” provision of the Lanham Act supported the award. The “just sum” provision can apply when recovery of a defendant’s profits is either inadequate or excessive.2 In those cases, the court can arrive at an award that better reflects a defendant’s true financial gain. The Supreme Court, however, did not address this provision because the lower courts had not invoked it in awarding the profits. Thus, the Court expressed “no view” on the just sum provision.

The Supreme Court rejected the lower courts’ treatment of Dewberry Group and its affiliates as a “single corporate entity.” This approach disregarded “corporate formalities” and the principal of corporate separateness.3 Doing so caused the lower courts to approve an award “including non-defendants’ profits—and thus went further than the Lanham Act permits.” The Court concluded: “Dewberry Group is the sole defendant here, and under that language only its own profits are recoverable.”

The Court remanded the case after vacating the profits award, noting that it was leaving “a number of questions unaddressed,” including whether Dewberry Engineers could seek to pierce the corporate veil of the defendant and whether it could pursue the “just sum” theory on remand.

While the Court’s decision leaves many questions unanswered, it leaves room to argue various theories for seeking an award of an infringer’s profits.4 The ruling may also lead to more defendants being named in trademark infringement suits.

Please contact the Coblentz Intellectual Property team with any questions.

 

[1] As the Court writes after a sentence explaining the background facts: “If that sentence is confusing—too darn many Dewberrys—it is also a good illustration of why trademarks exist: to prevent consumers from being confused about which company is providing a product or service.”

[2] “If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case.” 15 U.S.C. §1117(a).

[3] As the Court noted, the entities in this case were affiliated “by virtue of having a common owner” but nonetheless were separately incorporated organizations and therefore separate legal units. While a court may in some circumstances “pierce the corporate veil,” especially to prevent corporate formalities from shielding fraudulent conduct, Dewberry Engineers in this case did not attempt to do so.

[4] Justice Sotomayor’s concurrence provides more of a roadmap for seeking profits of affiliates. She writes, “principles of corporate separateness do not blind courts to economic realities. Nor do they force courts to accept clever accounting, including efforts to obscure a defendant’s true financial gain through arrangements with affiliates.” She provides scenarios in which courts may consider accounting arrangements between a defendant and its affiliates in calculating the “defendant’s profits.”

In our last client alert about the Corporate Transparency Act (CTA), an injunction against enforcement of the CTA remained in effect. On February 17, 2025, the injunction was stayed, and there are currently no impediments to enforcement of the CTA. As a result, Beneficial Ownership Information (BOI) reporting requirements are once again mandatory. FinCEN has generally extended the filing deadline for reporting companies as follows: For most reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. Reporting companies formed or registered on or after February 18, 2025 must file within 30 days from the date of creation or registration. Reporting companies previously provided with extended deadlines due to disaster relief should follow the later deadlines. Unless and until there are further developments, companies must file within these timeframes. FinCEN has provided in a statement that it will “assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks,” but it is unclear what changes, if any, will result from this assessment. On February 10, 2025, the House of Representatives unanimously passed the Protect Small Businesses from Excessive Paperwork Act (H.R. 736) that would extend the filing deadline for reporting companies that were in existence before January 1, 2024, to January 1, 2026. To our knowledge, the Senate has not yet taken action on that bill. As BOI filings are once again mandatory and the potential penalties for non-compliance remain harsh, we encourage you to either file directly through FinCEN’s website, or reach out to us if you need assistance. If you have already filed and have had no changes to your beneficial ownership and/or your executive officers, you are compliant and there is no further action at this time.  If you have questions about the new changes or would like us to assist with your BOI submission, please contact us at CTA@coblentzlaw.com.

On January 21, 2025, Coblentz litigation partner Skye Langs presented for the Bar Association of San Francisco’s Real Property section on the following real estate and land use cases from 2024:

Working Families of Monterey County v. King City Planning Commission (2024) 106 Cal.App.5th 833. A Class 32 categorical exemption (also known as the “infill exemption”) under the California Environmental Quality Act (CEQA) allows for streamlined approval of certain projects that the legislature has predetermined will not have a significant impact on the environment. Among the conditions required for this exemption to apply, the project must be “substantially surrounded by urban uses.” The project opponents argued that this requires a certain population density and type of development, based on different defined terms located elsewhere in the CEQA statute and regulations. The Court disagreed. It interpreted the terms according to their ordinary meaning and concluded that the project qualified for the exemption.

Make UC a Good Neighbor v. Regents of University of California (2024) 16 Cal.5th 43. In 2023, the Court of Appeal reversed the approvals for a student housing project planned for People’s Park in Berkeley, finding that the EIR did not adequately evaluate noise from future residents or alterative locations for the project. The California Supreme Court accepted review, and while the case was pending, the legislature enacted AB 1307, which provides that (1) for residential projects, the effects of noise from project occupants and their guests on human beings are not a significant environmental impact for purposes of CEQA, and (2) public universities are not required to consider alternatives to the location of a residential or mixed-use housing project if the project meets certain criteria. In light of AB 1307, the California Supreme Court reversed, holding that occupant noise is not a CEQA impact for “residential projects,” regardless of whether the environmental review was done on a project-specific or programmatic level.

West Adams Heritage Association v. City of Los Angeles (2024) 106 Cal.App.5th 395. In another case involving residential housing near a university campus, the Court of Appeal originally held that the project did not qualify for the CEQA infill exemption because residents using the project’s rooftop decks would cause a significant noise impact. However, after the Make UC a Good Neighbor decision, the California Supreme Court instructed the Court of Appeal to vacate and reconsider its earlier decision. Upon reconsideration, the Court once again reversed the project approvals, this time on the grounds that the City had failed to make required findings about the project’s consistency with an applicable redevelopment plan. It did so even though the project opponent had failed to identify any element of the project that was, in fact, inconsistent with any applicable land use plan or policy.

Gooden v. County of Los Angeles (2024) 106 Cal.App.5th 1. The Los Angeles County Board of Supervisors sponsored environmental review in connection with a comprehensive update to its land use plan and zoning ordinances for the Santa Monica Mountains North Area.  The update aimed to protect the biological, scenic, and rural character of the region, and to align its land use plans with those of the adjacent lands regulated by the Coastal Commission.  While the plan initially contemplated heavy regulation of new vineyards in the area, the Board ultimately approved a complete ban on any new vineyards in the area.  The Court of Appeal upheld the ban, holding that it was within the scope of the project evaluated in the EIR, and it did not create any new or increased environmental impacts that were not already considered.  The project description was not unstable, and recirculation of the EIR was not required.

Holguin Family Ventures, LLC v. County of Ventura (2024) 104 Cal.App.5th 157. A winery operating on land zoned exclusively for agricultural use obtained zoning clearances in the 1980s, which allowed for a very small winery production facility and tasting room. When the County updated its zoning ordinance, the winery’s existing use was grandfathered in as a legal non-conforming use that could not expand or change without a permit. After a new owner purchased the property, it obtained permits to expand its agricultural facilities. The County later discovered that the new facilities were actually being used for wine tasting, events, and a gift store. The County issued notices of violation, which the owner appealed, arguing that it had a vested right to expand its operations. The Court disagreed, finding that its vested rights were limited to the legal nonconforming uses for the property based on its historic operations, as documented by the County and the prior owners in 2008.

Romero v. Shih (2024) 15 Cal.5th 680. This California Supreme Court case holds that an implied easement can be exclusive, and effectively exclude the servient tenement owner from most practical uses of the easement. The relatively high standards for finding an implied easement, and the fact that they require an intent to convey a portion of property to another, are sufficient to alleviate any fears such easements will be used to bypass the strict statutory requirements for adverse possession.

In light of the ongoing wildfires in Los Angeles, we want to take a moment to express our deep concern for all those affected by this devastating disaster. Our thoughts are with everyone impacted by the fires.

We wanted to share that the IRS has announced important tax relief measures in response to the recent presidential declaration related to the devastating wildfires in Southern California.

Overview of Relief Measures

The IRS has announced that residents and businesses in the affected areas (currently Los Angeles County) will be granted additional tax relief to help alleviate the financial impact of the wildfires. The current list of eligible localities is available on the tax relief in disaster situations page on IRS.gov.

This relief includes:

Extended Deadlines: Tax filing and payment deadlines for individuals and businesses affected by the wildfires have been automatically extended. This includes various tax returns and payments due on or after the declaration date. This means, for example, that the Oct. 15, 2025, deadline will now apply to:

• Individual income tax returns and payments normally due on April 15, 2025.
• 2024 contributions to IRAs and health savings accounts for eligible taxpayers.
• 2024 quarterly estimated income tax payments normally due on Jan. 15, 2025, and estimated tax payments normally due on April 15, June 16 and Sept. 15, 2025.
• Quarterly payroll and excise tax returns normally due on Jan. 31, April 30 and July 31, 2025.
• Calendar-year partnership and S corporation returns normally due on March 17, 2025.
• Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
• Calendar-year tax-exempt organization returns normally due on May 15, 2025.

Penalty Waivers: For individuals and businesses unable to file or pay their taxes on time due to the disaster, the IRS will waive penalties. This relief applies to various forms and schedules.

Deductible Casualty Losses: Taxpayers may be able to claim losses incurred due to the wildfires as a deduction on their federal tax returns. A key aspect of this relief is the ability to carry back casualty losses to the prior tax year.

Carrying Back Casualty Losses: If you experienced casualty losses due to the wildfires, you may elect to apply these losses to the prior tax year, potentially resulting in a tax refund. This is particularly beneficial if your taxable income in the prior year was higher, as it can maximize your refund.

Access to Additional Resources: The IRS may provide additional relief and/or resources to assist taxpayers in understanding their eligibility for various forms of relief, ensuring that those affected can access the support they need.

What You Should Do

• Assess Your Situation: If you or your business has been affected by the wildfires, evaluate your eligibility for the aforementioned relief measures, particularly the option to carry back casualty losses.
• Consult Your Tax Advisor: We recommend discussing your specific circumstances with your tax advisor to maximize your potential benefits and ensure compliance with new deadlines.
• Stay Informed: Keep an eye on IRS updates and announcements, as the Service may continue to provide guidance on navigating these changes.

For additional details, you can view the official IRS bulletin linked here regarding this tax relief.

Please feel free to reach out if you have any questions or need assistance in understanding how these measures may impact your tax obligations. Our team is here to support you through this challenging time.

On December 26, 2024, a Fifth Circuit Federal Court of Appeals panel officially reversed the decision from just three days ago and reinstated an injunction blocking the reporting deadline for Beneficial Ownership Information (“BOI”) report under the Corporate Transparency Act (“CTA”). We realize that this news is a bit of whiplash after the emails this week explaining that the courts had lifted the injunction. This latest development means that the government cannot enforce the CTA and BOI reporting requirements, and you are under no obligation to file these BOI reports again while the Fifth Circuit Court of Appeals decides the case. Due to continuing uncertainty around the enforcement of the CTA, reporting companies that have not yet filed BOI reports should be prepared to file on short notice if the preliminary injunction is once again stayed or overturned since a new filing deadline could be imposed on short notice. Please note, however, that you are able to file voluntarily if you would prefer to do so. If you have questions about the ruling or would like us to proceed with assisting with your BOI submission, please contact us at CTA@coblentzlaw.com.

The US Court of Appeals has lifted the injunction that previously blocked enforcement of and compliance with the Corporate Transparency Act. Accordingly, companies are now required to file a Beneficial Ownership Information Report with FinCEN, unless they are otherwise exempt.

If you are required to file for any existing companies, you may file the beneficial ownership information (“BOI”) report with FinCEN directly on the FinCEN website, https://fincen.gov/boi, or alternatively, we will do our best to assist you.

Currently the Department of the Treasury has extended the reporting deadlines as follows:

1. Pre-2024 Entities: Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial BOI reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
2. Entities Registered Between September 4, 2024, and December 2, 2024: Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial BOI reports with FinCEN.
3. Entities Registered Between December 3, 2024, and December 23, 2024: Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial BOI reports with FinCEN, an extension to the original requirement to file within 90 calendar days.
4. Disaster Relief: Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.

If you have already filed, please note that you do not need to re-file. You will only be required to file an amendment if there have been changes to the information contained in your report.

Please note that any reporting companies created on or after January 1, 2025 will only have 30 days to file their initial BOI reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

If you have questions about the ruling or would like us to assist with your BOI submission, please contact us at CTA@coblentzlaw.com.