DROPLETS

A federal court has invalidated New York's Climate Change Superfund Act, ruling that the state law is preempted by the federal Clean Air Act (CAA). The New York statute sought to require companies with significant historical greenhouse gas emissions to pay for a substantial portion of the state's costs for climate-change adaptation and resilience projects. The decision provides a powerful, though potentially temporary, defense for energy and industrial companies against similar state-level "polluter pays" laws seeking to assign liability for climate impacts. This ruling reinforces the argument that the CAA establishes a comprehensive federal scheme for regulating emissions that displaces state efforts to create distinct liability frameworks for historical emissions. Sophisticated counsel should monitor for an appeal by the State of New York; a circuit court decision on the matter would establish a more binding precedent defining the boundaries between federal and state authority over climate change regulation and costs.

The Securities and Exchange Commission is poised to fundamentally alter the landscape of shareholder activism, having submitted a proposal to the White House's Office of Information and Regulatory Affairs (OIRA) to rescind Exchange Act Rule 14a-8. This rule has for decades provided the federal framework governing how shareholders can include proposals in corporate proxy statements. If the rule is rescinded, its replacement would be a patchwork of state laws and individual company governing documents, which could create significant uncertainty and jurisdictional inconsistencies; Texas, for example, recently adopted a law allowing public companies to impose strict limits on such proposals.

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The UK's capital markets framework is undergoing significant revision, with the London Stock Exchange (LSE), the Financial Conduct Authority (FCA), and the government all issuing new rules and proposals. The LSE has updated its AIM Rules to, among other things, explicitly permit dual-class share structures and introduce 'capital access windows' for trading halts during capital raises. The FCA has streamlined the IPO process by removing waiting periods for analyst research. These changes took effect in August 2026.

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A California Court of Appeal has provided new guidance on the application of the state's employee-friendly laws to staff working remotely outside its borders. In Saberin v. Alation, Inc., the court declined to apply California's legal protections to a Texas-based employee of a California-headquartered company. The ruling reinforces the principle that the employee's physical location is the primary factor in determining which state's laws govern the employment relationship. Sophisticated counsel and clients care because the growth of remote work has created significant legal uncertainty. This decision may offer some comfort to California-based employers, suggesting they are not required to extend the state's stringent wage, hour, and leave requirements to their entire out-of-state workforce. Companies should review their remote work policies and employment agreements in light of this framework. The key development to watch is whether the California Supreme Court will ultimately weigh in to create a uniform statewide rule.

In its August 10, 2026, decision in Ralphs Grocery Company, the National Labor Relations Board found that a key part of a mandatory arbitration agreement's confidentiality clause violated the National Labor Relations Act. The Board held that employers may lawfully prohibit employees from disclosing the "content and outcome" of an arbitration, as that confidentiality is shielded by the Federal Arbitration Act. However, it ruled that a blanket prohibition on disclosing the mere "existence" of an arbitration is an unlawful "perpetual gag order" on employee rights under Section 7 of the NLRA. The decision creates a critical drafting distinction for counsel. Many standard arbitration agreements contain broad confidentiality clauses that could now be deemed partially unlawful and unenforceable. Sophisticated employers and their counsel care because this ruling requires an immediate review of standard agreements to ensure compliance. The NLRB also affirmed that an agreement compelling arbitration for "any and all" claims is lawful so long as it contains a prominent, standalone savings cla

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The California Legislature has passed SB 690, a bill expected to be signed by the governor that would provide significant relief to businesses defending against a wave of privacy lawsuits under the California Invasion of Privacy Act (CIPA). The bill eliminates the private right of action for 'pen register' and 'trap-and-trace' claims based on the use of common website analytics tools, such as cookies and pixels, that track user IP addresses and other transactional data. For companies facing demand letters or active litigation, the bill is particularly significant because it applies retroactively to claims commenced within two years of its expected January 1, 2027, operative date. While plaintiffs are expected to challenge the retroactivity provision, this development could end a substantial category of class action litigation. Counsel should note, however, that the bill does not prevent the California Attorney General from bringing such claims, nor does it impact plaintiffs' ability to sue for the alleged interception of communication content under other CIPA sections or the Federal

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A California bill awaiting the governor's expected signature significantly amends a new law restricting "stay-or-pay" provisions in employment agreements. The legislation, AB 1697, postpones the effective date of these restrictions to January 1, 2027, and renders the prior version of the law inoperative for calendar year 2026, creating a temporary compliance safe harbor.

These changes are important for employers because they expand the permissible scope of repayment obligations. The amendments remove the requirement that repayable bonuses be offered only "at the outset of employment," potentially validating retention and other mid-tenure bonus arrangements. The bill also introduces new statutory exceptions, including one permitting the recovery of advanced paid time off (up to 40 hours) under certain conditions. Another key exception shields specified recruiting and retention payments in the financial services industry, such as forgivable loans for broker-dealers and investment advisers, from the law's general prohibition.

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On August 30, 2026, Mexican President Claudia Sheinbaum's administration submitted a legislative initiative to the Senate to reform the country's Foreign Investment Law. The proposal aims to create a formal national security screening mechanism for foreign investments in sectors deemed sensitive.

While Mexico's National Commission of Foreign Investment technically has the authority to block foreign acquisitions on national security grounds, this power has been seldom used due to the absence of clear parameters and guidelines. The proposed reform would operationalize this review process, creating new regulatory hurdles and potential uncertainty for cross-border transactions. The development aligns Mexico with a global trend toward more robust foreign investment screening regimes, such as the Committee on Foreign Investment in the United States (CFIUS).

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