Justia U.S. 2nd Circuit Court of Appeals Opinion Summaries

Appellants appealed from the dismissal of their first amended complaint, which asserted claims against Morgan Stanley under Section 10(b) of the Securities and Exchange Act of 1934 (Act), 15 U.S.C. 78a et seq., and New York common law. Appellants contended that Morgan Stanley, in oral and email communications with appellants' treasurer, materially misrepresented the liquidity of certain auction rate securities (ARS) and thereby fraudulently induced appellants to purchase and hold these securities at a time when Morgan Stanley knew that the market for ARS was collapsing. The court affirmed the district court's dismissal on the ground that sophisticated investors like appellants could not plead reasonable reliance on Morgan Stanley's alleged misrepresentations in light of Morgan Stanley's publicly-filed statement explicitly disclosing the very liquidity risks about which appellants claimed to have been misled.

This case arose when plaintiff filed a complaint asserting causes of action related to defendant's failure to repay certain loans. Defendant appealed from an amended judgment of the district court denying in part defendant's Federal Rule of Civil Procedure 60 motion to amend the court's August 28, 2008 judgment (original judgment), which, inter alia, requested that the court strike defendant as a party subject to the judgment because plaintiff had not moved for summary judgment against it. The court held that because plaintiff did not move for summary judgment against defendant, the district court erred in granting summary judgment against it. The court also held that the district court's determination that defendant defaulted in failing to file a timely answer to the complaint did not otherwise provide a valid basis for maintaining defendant as a party liable on the amended judgment. Therefore, the court reversed the decision of the district court insofar as it granted summary judgment against defendant and remanded with instructions to strike defendant as a party subject to the amended judgment.

Defendant appealed the denial of his petition for a writ of habeas corpus where he was convicted of crimes stemming from his involvement in a violent street gang. At issue was whether defendant received ineffective assistance of counsel where defendant alleged that trial counsel failed to advise him as to whether he should accept or reject a particular plea offer by the government. The court held that an evidentiary hearing was necessary to flesh out the sparse record before the court. Accordingly, the court vacated the judgment and remanded for further proceedings.

TradeComet brought this action against Google for alleged violations of the Sherman Act, 15 U.S.C. 1, 2, arising out of TradeComet's use of Google's "AdWords" search engine advertising platform. Google filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(3) for lack of subject matter jurisdiction and improper venue because TradeComet had accepted the terms and conditions associated with participation in its AdWords program, which included a forum selection clause requiring TradeComet to file suit in state or federal court in Santa Clara County, California, not in New York. At issue was whether a district court called upon to enforce a forum selection clause was required to enforce it pursuant to 28 U.S.C. 1404(a) whenever the clause permitted suit in an alternative forum. The court held that a defendant could also seek enforcement of a forum selection clause in these circumstances through a Rule 12(b) motion to dismiss. Therefore, in an accompanying summary order, the court affirmed the district court's dismissal of TradeComet's complaint.

Defendant appealed from a judgment of the district court for dismissing as untimely his petition for a writ of habeas corpus filed pursuant to 28 U.S.C. 2254. The district court assumed that defendant satisfied the requirements for equitable tolling of a three-month period when he was hospitalized but, nevertheless, concluded that the petition was untimely because he failed to demonstrate reasonable diligence in pursuing his claim in the two-month period between his hospital discharge and filing. The court held that no such demonstration of diligence was required where the petition was filed within one year of the total untolled time after the challenged conviction became final. Accordingly, the district court's judgment of dismissal was vacated and the case was remanded for further proceedings.

Sheet Metal Workers Local 33 et al. appealed from a judgment of the district court dismissing their putative securities class action complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. At issue was whether the securities issuer made false statements and omissions of material facts in the registration documents accompanying its initial public offering, in violation of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, 15 U.S.C. 77a et seq. The court held that the alleged misstatements were not material because the value of the transactions composed an immaterial portion of the issuer's total assets. Accordingly, the court affirmed the district court's motion to dismiss on the ground of immateriality.

Plaintiff brought a pro se action under 42 U.S.C. 1983 against defendants, alleging excessive force and other Eighth Amendment and due process violations in connection with a prison yard altercation. At issue was whether a plaintiff in a lawsuit governed by the Prison Litigation Reform Act of 1995 (PLRA), 42 U.S.C. 1997e(a), was entitled to a jury trial on disputed factual issues relating to his exhaustion of administrative remedies. The court held that the Seventh Amendment did not guarantee a jury trial on factual disputes regarding administrative exhaustion under the PLRA. Accordingly, the judgment of the district court was affirmed.

Defendant plead guilty to narcotics violations in connection with a scheme to import cocaine and was sentenced principally to a term of 235 months imprisonment. On appeal, defendant contended that his sentence was procedurally and substantively unreasonable. The court held that the government's refusal to move for a third-point reduction under U.S.S.G. 3E1.1(b) in this case was based on an unlawful reason because the government could not refuse to move on the grounds that it had been required to prepare for a Fatico hearing. In light of the court's holding, it did not reach the issue of substantive reasonableness, but did reject defendant's arguments regarding the disparity between his sentence and those imposed on his co-defendants; his lack of prior criminal record; and his medical condition. Accordingly, the sentence was vacated and the case was remanded for resentencing.

Defendant appealed from two judgments entered in the district court: (1) convicting him of possessing child pornography in violation of 18 U.S.C. 2252A(a)(5)(B) and (b)(2) (Judgment II) and (2) revoking the supervised release to which he had been sentenced on a prior conviction for violation of section 2252A(a)(5)(B) and imposing a prison term, to be followed by a life term of supervised release, for violations of his prior supervised release conditions (supervised release judgment). On defendant's appeal challenging Judgment II, defendant contended principally that the district court should have dismissed the indictment on the ground that it was procured by his probation officer acting in excess of his statutory and constitutional authority and that, absent dismissal of the indictment, certain self-incriminating statements defendant made to his probation officer, as well as evidence seized pursuant to a search warrant obtained on the basis of those statements, should have been suppressed on the ground that his statements were protected by the Fifth Amendment privilege against self-incrimination. Defendant also argued that the severity of the penalties of the supervised release judgment should be reduced if Judgment II was vacated. The court found no merit in defendant's challenges to Judgment II and therefore, affirmed both judgments.

Plaintiff, a former probationary police officer, appealed from a judgment of the district court dismissing his complaint, brought under 42 U.S.C. 1983, alleging principally that defendants, Chief of the Middletown Police Department (MPD) and other members of the MPD, violated his First Amendment right to freedom of speech by causing the termination of his employment in retaliation for his refusals to make false statements in connection with an investigation into a civilian complaint alleging use of excessive force by a MPD officer. On appeal, plaintiff argued that Garcetti v. Ceballos and Weintraub v. Board of Education did not preclude First Amendment protection for his refusals to make false statements. The court considered all of defendants' arguments in support of affirmance and found them to be without merit. Therefore, the judgment of the district court was vacated to the extent that it dismissed plaintiff's claims for retaliation in violation of the First Amendment and the matter was remanded.