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

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

Plaintiff, on behalf of Leap, filed suit against Goldman, seeking to hold Goldman liable under Section 16(b) of the Securities Exchange Act, 15 U.S.C. 78p(b), and Rule 16b-6(d), 17 C.F.R. 240.16b-6(d), for Goldman's failure to disgorge "short-swing profits" derived from writing call options on Leap stock. The court concluded that for the purposes of Section 16(b), the expiration of a call option within six months of its writing was to be deemed a "purchase" by the option writer to be matched against the "sale" deemed to occur when that option was written. The court also concluded that Section 16(b) required statutory insider status at the time of both purchase and sale, and so Goldman was not required to disgorge profits where it was a statutory insider only when the options were written, but not when they expired. Accordingly, the court affirmed the district court's dismissal of the action for failure to state a claim. View "Roth v. The Goldman Sachs Group, Inc., et al." on Justia Law

Defendant was convicted of conspiring to commit honest-services wire fraud and securities fraud, in violation of 18 U.S.C. 1343, 1346, 1348, and 1349, as well as making a false statement in violation of 18 U.S.C. 1001(a)(2). On appeal, defendant principally argued that the evidence presented at trial was insufficient to support his conviction of conspiracy to commit wire fraud in light of Skilling v. United States and that he was therefore entitled to a judgment of acquittal on the conspiracy count, or that he was entitled to a new trial on that count because the district court's instructions to the jury erroneously permitted conviction on an impermissible theory of honest-services fraud. The court concluded that the district court properly denied defendant's motion for judgment of acquittal where the evidence was sufficient to permit the jury to find that he conspired to commit honest-services wire fraud by means of having intermediary firms pay kickbacks to his father and brother in connection with Morgan Stanley's stock-loan transactions for which his father and brother performed little or no work. The district court's failure to anticipate the ruling in Skilling and instruct that the government was required to prove a scheme involving bribery or kickbacks was harmless beyond a reasonable doubt and did not affect the verdict. The court considered all of defendant's arguments on appeal and found them to be without merit. Accordingly, the court affirmed the judgment of the district court. View "United States v. DeMizio" on Justia Law

Swatch filed suit against Bloomberg for copyright infringement after Bloomberg obtained a copy of a recording of a conference call convened by Swatch to discuss the company's recently released earnings report with invited investment analysts. Bloomberg used the sound recording without authorization and disseminated it to paying subscribers. The district court granted summary judgment in favor of Bloomberg based on Bloomberg's affirmative defense of fair use pursuant to the Copyright Act, 17 U.S.C. 107. After balancing the fair use factors, the court concluded that Bloomberg's use was fair use. The court granted Swatch's motion to dismiss Bloomberg's cross-appeal where Bloomberg lacked appellate standing and the court lacked appellate jurisdiction. Accordingly, the court affirmed the judgment of the district court and dismissed the cross-appeal. View "Swatch Group v. Bloomberg" on Justia Law

Plaintiff, a former minority shareholder of Xcelera, filed securities fraud claims alleging that Xcelera insiders purchased Xcelera stock by making a tender offer through a shell corporation without disclosing any information about Xcelera's financial state. The district court dismissed plaintiff's claims and she appealed. The court held that the duty of corporate insiders to either disclose material nonpublic information or abstain from trading was defined by federal common law and applied to unregistered securities. Accordingly, the district court erred in dismissing plaintiff's insider trading claims under sections 10(b), 20(a), and 20A(a) of the Securities Exchange Act, 15 U.S.C. 78a et seq. The court vacated the dismissal of those claims and remanded for further proceedings. The court affirmed as to the dismissal of plaintiff's market manipulation claims and her section 14(e) insider trading claims. View "Steginsky v. Xcelera Inc." on Justia Law

Defendant pled guilty to conspiracy to provide material support to a foreign terrorist organization and conspiracy to bribe public officials. Defendant, a Sri Lankan native, was the principal procurement officer for the Liberation Tigers of Tamil Eelam (LTTE), a foreign terrorist organization. On appeal, the Government challenged defendant's 108 months prison sentence as substantively unreasonable. The district court had found many mitigating circumstances: defendant was motivated not by power or self-aggrandizement, but by a desire to help the Tamil people; defendant's actions had to be evaluated in context where he was caught in an ongoing civil war with serious human rights violations on both sides of the conflict; defendant did not have a criminal record; defendant had accepted full responsibility for his crimes; during the six years of his incarceration, defendant was a model inmate who earned the gratitude of other prisoners by his efforts to teach them math and other subjects; as well as other considerations. The court concluded that, in light of defendant's personal history and characteristics, the nature and circumstances of his crimes, and all of the relevant factors, the sentence imposed was not substantively unreasonable. Accordingly, the court affirmed the judgment of the district court. View "United States v. Thavaraja" on Justia Law

Plaintiffs, workers who installed, maintained, repaired, tested, and inspected fire alarm and suppression systems in public and private buildings for Simplex, filed suit claiming that Simplex did not pay them prevailing wages for their labor on public works in violation of NYLL section 220. This case raises two questions of New York law that the court certified to the state court: (1) whether a court should give deference not only to an agency's substantive interpretation of a statute arising from an unrelated proceeding but also to its decision to enforce that interpretation only prospectively; and (2) whether contracts committing parties to pay prevailing wages under section 220 need to specify - when the scope of the statute's coverage is unclear to the parties - what particular work the prevailing wages will be paid for. View "Ramos v. SimplexGrinnell LP" on Justia Law

Plaintiff, a prisoner serving a New York State sentence, filed suit under 42 U.S.C. 1983, alleging that defendants violated his constitutional rights by failing to provide him with necessary medical treatment during his incarceration at a correctional facility and by punishing him for his efforts to secure such treatment. The district court dismissed the action with prejudice. The court concluded that the district court did not abuse its discretion by imposing the sanction of dismissal with prejudice, nor did it err in its underlying finding that plaintiff acted in bad faith such that no other sanction would suffice. The court clarified that the offending conduct for which the sanction was imposed was not plaintiff's accusations that the Magistrate Judge was biased against him, but rather his offensive, abusive, and insulting language. Accordingly, the court affirmed the judgment of the district court. View "Koehl v. Bernstein" on Justia Law

Defendants appealed from the district court's denial of summary judgment on their claims of qualified immunity for purported violations of the Fourth Amendment and state tort law based upon omissions made by Investigator Riley in the application for a search warrant of plaintiff's home. In this case, plaintiff's identity, the fact that the confidential informant did not report that a woman was present in the apartment, and the fact that attempts at independent corroboration via surveillance showed no sign of criminal activity were all omissions that bear upon the reliability of the overall information provided. The court dismissed the appeal based on lack of jurisdiction where disputed material factual issues underlie the district court's denial of qualified immunity. View "McColley v. County of Rensselaer" on Justia Law

Defendant appealed his conviction for being a felon in possession of a firearm (Count 1) and possession of a controlled substance (Count 2). The court affirmed defendant's conviction on Count 1. However, the court could no say that it was an absolute impossibility for a person with his hands securely handcuffed behind his back to extract a substantial quantity of crack cocaine from his person or clothing and wedge it into the space where the quantity was found - the space between the back of the back-seat cushion and the bottom of the back-seat rest in the police car - without leaving a trace of cocaine on his fingers or clothing, but the court could say that the possibility of such an occurrence was so exceedingly remote that no jury could reasonably find beyond a reasonable doubt that it happened. Accordingly, the court reversed defendant's conviction as to Count 2. View "United States v. Clark" on Justia Law