What's Next for AI Regulation and Litigation?

The past week's two biggest developments in the AI regulatory and litigation landscape reflect a growing chasm between the U.S. federal government response and those of the states. On the one hand, President Trump issued his previously delayed Executive Order, which reportedly was watered down after lobbying from AI interests. Although the new EO does impose some restrictions on the release of new frontier models in the name of cybersecurity, the order starts with the express premise that the Trump Administration will “refuse to stifle this innovation with overly burdensome regulation." A few days later, a bipartisan bill was introduced in the House that would try, once again, to preempt state level regulation of AI.

By contrast, the State of Florida filed a first-of-its-kind lawsuit against OpenAI and its CEO, Sam Altman, alleging 10 causes of action against defendants, including multiple violations of Florida's Deceptive and Unfair Trade Practices Act, negligence, design defect, failure to warn, and public nuisance. The gravamen of the Florida complaint is that OpenAI and its leadership released the groundbreaking ChatGPT product despite clear gaps in its safety, leading to an array of many widely reported harms, including suicides, mass shootings, and addiction. The suit follows the model of the recently successful efforts to hold social media companies accountable for allegedly designing products intended to hook young users. Florida is seeking both monetary damages and injunctive relief.

Florida's lawsuit reflects how states are taking the lead in trying to reign in AI. To date, many states have passed AI-specific regulations, with many more under consideration. Unless and until the federal government preempts these laws, which seems unlikely given the overwhelming pushback from the previous attempt at a 10-year moratorium, states are where the regulatory action will remain. 

Similarly, I expect other states will follow Florida, just as states, municipalities, and school districts have banded together in the MDL against social media companies. Additional private suits will also commence, including from families of suicide victims or from young users harmed by AI. For the plaintiffs, it will be a long road ahead. Besides challenging the basic premise that their products are somehow defective, AI companies are likely to rely upon affirmative defenses including Section 230 immunity and the First Amendment. Given the rapid growth of the AI industry, how judges and juries will resolve these novel questions may literally be a trillion-dollar question.