Justia Business Law Opinion SummariesArticles Posted in U.S. 2nd Circuit Court of Appeals
StreetEasy, Inc. v. Chertok
StreetEasy filed suit under the Anticybersquatting Consumer Protection Act, 15 U.S.C. 1125(d). This appeal arose out of the attempted resolution of a dispute between a real estate listing website and one of its co-founders over the propriety of actions taken by the co-founder when he separated from the company, and the validity of corporate actions that occurred before his departure. Because the order of dismissal failed to retain jurisdiction over enforcement of the parties' settlement agreement, or to incorporate the terms of that agreement, the district court lacked jurisdiction to enforce the agreement. Therefore, the court vacated the district court's orders enforcing the settlement agreement and holding defendant in contempt for noncompliance. Because defendant was properly sanctioned for only one of the three factual contentions identified by the district court as the basis for its sanctions award, the court vacated that award and remanded the matter for reconsideration of the appropriate amount of monetary sanctions in light of this decision. View "StreetEasy, Inc. v. Chertok" on Justia Law
Lotes Co., Ltd. v. Hon Hai Precision Industry Co.
Plaintiff filed suit under the Sherman Act, 15 U.S.C. 1,2, alleging that defendants, a group of five competing electronics firms, have attempted to leverage their ownership of certain key patents to gain control of a new technology standard for USB connectors and, by extension, to gain monopoly power over the entire USB connector industry. The court held that, under principles articulated in a line of recent Supreme Court decisions extending from Arbaugh v. Y&H Corp. to Sebelius v. Auburn Regional Medical Center, the requirements of the Foreign Trade Antitrust Improvement Act (FTAIA), 15 U.S.C. 6a, are substantive and nonjurisdictional in nature. Because Congress has not clearly stated that these requirements are jurisdictional, they go to the merits of the claim rather than the adjudicative power of the court. In so holding, the court overruled the court's prior decision in Filetech S.A. v. France Telecom S.A. The court also concluded that, although the FTAIA's requirements are nonjurisdictional and thus potentially waivable, the court rejected plaintiffs' argument that defendants somehow have waived them by contract in this case; foreign anticompetitive conduct can have a statutorily required direct, substantial, and reasonably foreseeable effect on U.S. domestic or import commerce even if the effect does not follow as an immediate consequence of defendant's conduct, so long as there is a reasonably proximate causal nexus between the conduct and the effect; the court rejected the interpretation of "direct...effect" advanced by the Ninth Circuit in United States v. LSL Biotechnologies in favor of the interpretation advocated by amici curiae the United States and the FTC and adopted by the Seventh Circuit in its en banc decision in Minn-Chem, Inc. v. Agrium, Inc.; and the court need not decide, however, whether plaintiff here has plausibly alleged the requisite "direct, substantial, and reasonably foreseeable effect" under the proper standard. Accordingly, the court affirmed on alternative grounds the judgment of the district court dismissing plaintiff's claims. View "Lotes Co., Ltd. v. Hon Hai Precision Industry Co." on Justia Law
Krys v. Pigott
Plaintiffs, Joint Official Liquidators of the SPhinX Funds, filed suit against defendants, alleging that defendants aided and abetted fraud and breached their fiduciary duty to Refco, the brokerage and financial services firm that entered bankruptcy in 2005, and whose demise led to the bankruptcies of SPhinX and its investment manager, PlusFunds. The court concluded that the claims against defendants were properly dismissed for failure of the Amended Complaint to contain sufficient allegations that defendants had actual knowledge of Refco's fraud and breach of fiduciary duty. The district court did not abuse its discretion by dismissing the claims without leave to amend where amendment could not cure the absence of factual allegations as to actual knowledge on the part of defendants sufficient to state a claim against them for aiding and abetting Refco's fraud and breach of fiduciary duty. Accordingly, the court affirmed the judgment of the district court and denied the request for leave to amend the Amended Complaint. View "Krys v. Pigott" on Justia Law
Adelphia Recovery Trust v. Goldman, Sachs & Co., et al.
Adelphia Recovery Trust, an entity created to represent the non-whole creditors of a debtor corporation that was part of a bankruptcy proceeding, appealed from a grant of summary judgment dismissing its fraudulent conveyance claim against Goldman. The court affirmed on the grounds of judicial estoppel, concluding that, in such a fraudulent conveyance claim, the Trust may recover only property owned by the parent-company debtor. The various schedules and Chapter 11 plan, which were consummated with the agreement of the Trust and its predecessors in interest in the bankruptcy proceeding, all treated the property transferred as owned by a separate subsidiary. View "Adelphia Recovery Trust v. Goldman, Sachs & Co., et al." on Justia Law
Starr Int’l Co. v. Federal Reserve Bank of New York
Starr, AIG's former principal shareholder, filed suit against the FRBNY for breach of fiduciary duty in its rescue of AIG during the fall 2008 financial crisis. The district court dismissed Starr's claims and Starr appealed. The suit challenged the extraordinary measures taken by FRBNY to rescue AIG from bankruptcy at the height of the direst financial crisis in modern times. In light of the direct conflict these measures created between the private duties imposed by Delaware fiduciary duty law and the public duties imposed by FRBNY's governing statutes and regulations, the court held that, in this suit, state fiduciary duty law was preempted by federal common law. Accordingly, the court affirmed the judgment of the district court. View "Starr Int'l Co. v. Federal Reserve Bank of New York" on Justia Law
Diebold Foundation, Inc. v. Commissioner of Internal Revenue
This case involved shareholders who owned stock in a C Corporation, which in turn held appreciated property. Commissioner appealed the district court's holding that Diebold could not be held liable as a transferee of a transferee under 26 U.S.C. 6901. The court concluded that the standard of review for mixed questions of law and fact in a case on review from the Tax Court was the same as that for a case on review after a bench trial from the district court: de novo to the extent that the alleged error was in the misunderstanding of a legal standard and clear error to the extent the alleged error was in a factual determination. On the merits, the court held that the two requirements of 26 U.S.C. 6901 were separate and independent inquiries, one procedural and governed by federal law, and the other substantive and governed by state law; under the applicable state statute, the series of transactions at issue collapsed based upon the constructive knowledge of the parties involved; and the court vacated the Tax Court's decision and remanded for further proceedings. View "Diebold Foundation, Inc. v. Commissioner of Internal Revenue" on Justia Law
New York Life Ins. Co. v. United States
New York Life challenged the IRS's determination that the company could not deduct policyholder dividend amounts until the tax year of payment. The court concluded that, with respect to the two claimed deductions, "all events" had not yet occurred to fix the company's liability in the tax years in which the company took the deductions. Accordingly, the court affirmed the judgment of the district court because the liability for the dividends was contingent and it did not satisfy the regulatory requirements for deduction of an accrued expense. View "New York Life Ins. Co. v. United States" on Justia Law
Franklin Advisers, Inc. v. CDO Plus Master Fund, Ltd.
BNY, as Trustee of an investment portfolio of collateralized loan obligations, initiated an interpleader action to resolve a contract dispute between certain shareholders and the manager of that portfolio, Franklin. At issue were the terms of the indenture and, specifically, terms governing distribution of a Contingent Collateral Management Fee, which was payable to Franklin only if distributions reached a twelve percent internal rate of return (IRR). The court granted the partial summary judgment to Franklin and the denial of summary judgment to the Shareholders, as well as the award of attorneys fees and costs. The court vacated, however, the award of statutory prejudgment interest with instruction to award prejudgment interest actually accrued on the fee owed to Franklin, to be paid from the court's account. View "Franklin Advisers, Inc. v. CDO Plus Master Fund, Ltd." on Justia Law
LJL 33rd Street Associates, LLC v. Pitcairn Properties Inc.
These appeals arose out of LJL's exercise of its contractual option to purchase Pitcairn's ownership stake in a jointly owned high-rise luxury residential building in New York City, after which the parties pursued an arbitration to determine the value of the property. Both parties subsequently appealed from the district court's judgment. In LJL's appeal, the court agreed with its contention that the arbitrator's exclusion of Pitcairn's hearsay exhibits was within the arbitrator's authorized discretion and, therefore, vacated the district court's order overturning the arbitrator's determination of the Stated Value. The court agreed with the district court's conclusion that the arbitrator acted in accordance with the terms of the arbitration agreement in refusing to determine the Purchase Price and, therefore, remanded with instructions to confirm the arbitration award in its entirety. In Pitcairn's appeal, the court found no error in the district court's dismissal of Pitcairn's claims for breach of fiduciary duties and breach of the covenant of good faith and fair dealing. Accordingly, the court affirmed the judgment. View "LJL 33rd Street Associates, LLC v. Pitcairn Properties Inc." on Justia Law
Cruz v. FXDirectDealer, LLC
Plaintiff appealed from the district court's dismissal of his amended complaint, which alleged that FXDD engaged in dishonest and deceptive practices in managing its online foreign exchange trading platform in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c), and New York General Business Law 349(h), and 350. Plaintiff also alleged breach of contract and of the implied covenant of good faith and fair dealing. The court concluded that, at this stage, some part of the underlying transaction occurred in New York State, giving plaintiff statutory standing to sue for deceptive practices and false advertising under sections 349 and 350; because the complaint alleged that FXDD failed to act in good faith and intentionally delayed trades or caused them to fail in order to enrich itself at the expense of its customers, these practices were incompatible with a promise to execute orders on a best-efforts basis and, therefore, the court vacated the dismissal of the breach of contract claim; and the court affirmed the judgment of the district court as to the RICO claim and the claim for breach of the implied covenant of good faith and fair dealing. View "Cruz v. FXDirectDealer, LLC" on Justia Law