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

A fraudulent investment scheme orchestrated by Martin Silver and a co-conspirator caused millions of dollars in losses to several entities, including two investment funds and a bank. Silver, who was a managing partner at an investment advisory firm, pled guilty to conspiracy and substantive counts of wire and securities fraud. As part of his sentence, the United States District Court for the Southern District of New York ordered him to pay over $300 million in restitution, specifying a $40,000 lump-sum payment before incarceration and subsequent monthly payments equal to 10% of his income after release. At sentencing, Silver reported significant assets, which later increased in value post-release, although his income remained small.After his release, Silver made only minimal payments as required by the restitution schedule. The government, supported by the victims, moved in the district court to compel immediate turnover of Silver’s appreciated assets for restitution and to modify his payment schedule. The district court ordered Silver to liquidate and pay the appreciated value of his assets but declined to order turnover of the full asset value or further modify the payment schedule, reasoning that the statutory requirements for such modifications were not met.The petitioners sought review in the United States Court of Appeals for the Second Circuit under the Crime Victims’ Rights Act, arguing that the district court should have ordered turnover of all of Silver’s assets. The Second Circuit held that under the Mandatory Victims Restitution Act, where a restitution judgment does not make payment due immediately and includes a fixed payment schedule, and the defendant is in compliance, the government is not entitled to enforce a turnover order for assets beyond the payment schedule. As a result, the court denied the petition for a writ of mandamus, affirming the district court’s decision. View "In re: IIG Structured Trade Fin. Fund, Ltd." on Justia Law

An attorney who began working for a luxury goods company in 2015 alleged that, soon after she was hired, a male colleague subjected her to repeated sexual harassment and, on one occasion, sexual assault. She reported the conduct internally but claimed that company officials failed to respond appropriately and, instead, retaliated against her. Over the years, she experienced alleged ongoing retaliation, including negative performance reviews, exclusion from work opportunities, and other adverse actions. In 2019, she filed a lawsuit in New York State Supreme Court alleging sexual harassment and retaliation under state and city law. The state trial court denied the employer’s request to compel arbitration, but the Appellate Division, First Department reversed and ordered the case to arbitration based on an arbitration agreement the plaintiff had signed before starting her employment.Following her termination in December 2022, the plaintiff filed a new federal lawsuit in the United States District Court for the Southern District of New York against her former employer and a supervisor, asserting claims of retaliation in violation of federal, state, and local law. She also sought leave to amend her complaint to consolidate her federal claims with the earlier claims that were pending in arbitration, arguing that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFAA) rendered the arbitration agreement unenforceable. The district court dismissed her federal retaliation claims under Rule 12(b)(6), finding she had not plausibly alleged protected activity linked to her termination, and denied her motion to amend, concluding the additional claims remained subject to the arbitration agreement.The United States Court of Appeals for the Second Circuit reviewed the case. The court held that the plaintiff’s initial complaint plausibly alleged retaliation: refusing to meet with her supervisor to discuss settling her discrimination claims pending in arbitration constituted protected activity, and the circumstances of her termination supported an inference of retaliation. However, the court affirmed the denial of leave to amend, explaining that the additional claims accrued before the EFAA’s effective date and thus remained subject to arbitration. The appellate court affirmed in part, vacated in part, and remanded for further proceedings. View "Newton v. LVMH Moet Hennessy Louis Vuitton Inc." on Justia Law

Three principals of an investment firm received approximately $141.5 million in distributive shares from the firm for the 2016 and 2017 tax years. The firm, organized as a Delaware limited partnership, did not include these distributive shares as self-employment income, asserting that the principals were "limited partners" within the meaning of the Internal Revenue Code, which exempts limited partners’ distributive shares from self-employment tax. The Internal Revenue Service audited the firm and determined that, because the principals worked full-time and exercised managerial control over the partnership, they were not limited partners. The IRS issued adjustments to increase the firm’s taxable income for both years, including the distributive shares as self-employment income.The firm challenged the IRS adjustments in the United States Tax Court, arguing both that the principals qualified for the limited partner exemption and that the Tax Court lacked jurisdiction to decide the adjustments under the TEFRA partnership-level procedures. The Tax Court found that the principals, despite their formal status as limited partners, functionally exercised managerial control and therefore did not qualify for the exemption. The Tax Court also held it had jurisdiction to review the adjustments as partnership-level items under TEFRA and upheld the IRS’s adjustments.On appeal, the United States Court of Appeals for the Second Circuit affirmed the Tax Court’s decisions. The court held that the Tax Court properly exercised jurisdiction and that the principals were not “limited partners” within the meaning of § 1402(a)(13) because they actively managed the partnership’s business. The distributive shares received by the principals were therefore subject to self-employment tax. The Tax Court’s orders and decisions were affirmed. View "Soroban Capital Partners LP v. Commissioner of Internal Revenue" on Justia Law

A medical provider specializing in reconstructive surgery, which is out-of-network for the health plans administered by the defendant insurers, obtained more than $3 million in awards through the No Surprises Act’s (“NSA”) independent dispute resolution (“IDR”) process. Despite statutory requirements, the insurers did not pay the IDR award amounts. The provider brought a lawsuit seeking a declaration that the insurers owed it the IDR award amounts and had violated the NSA by failing to pay. The insurers argued that the provider’s claims were invalid, in part due to alleged fraudulent billing practices.The United States District Court for the Southern District of New York reviewed the provider’s complaint and granted the insurers’ motion to dismiss for failure to state a claim. The district court concluded that the NSA does not contain either an express or implied private right of action to enforce IDR awards, and the Declaratory Judgment Act does not provide an independent cause of action for such enforcement.The United States Court of Appeals for the Second Circuit reviewed the district court’s decision de novo. The Second Circuit held that the NSA does not provide an implied private right of action for providers to enforce payment awards obtained through the IDR process. The court found that the structure and text of the NSA delegate enforcement authority to federal agencies and states, reflecting Congressional intent that enforcement be handled administratively rather than through private litigation. The court also rejected the provider’s argument that the Declaratory Judgment Act provided a basis for relief. Accordingly, the Second Circuit affirmed the district court’s dismissal of the provider’s complaint. View "East Coast Advanced Plastic Surgery, LLC v. Cigna Health and Life Insurance Company" on Justia Law

A lawful permanent resident originally from the Philippines, Nemis, entered the United States on a temporary work visa and adjusted to permanent residency. In 2016, he was indicted in the Southern District of New York for conspiracy to commit immigration fraud, specifically by preparing and submitting fraudulent documents in support of H-1B visa applications. Nemis pleaded guilty to conspiring to violate paragraph four of 18 U.S.C. § 1546(a), which criminalizes knowingly making or presenting false statements, or presenting required immigration documents lacking any reasonable basis in law or fact.After Nemis traveled abroad in 2018 and sought reentry, the Department of Homeland Security commenced removal proceedings, alleging he was removable due to his conviction for a crime involving moral turpitude (CIMT) or conspiracy to commit such a crime. An immigration judge ordered his removal, finding his conduct constituted a CIMT. The Board of Immigration Appeals (BIA) affirmed this decision. Nemis sought review in the United States Court of Appeals for the Second Circuit, which initially remanded the case to the BIA for proper application of the categorical approach to determine whether Nemis’s conviction under paragraph four of § 1546(a) categorically constituted a CIMT. On remand, the BIA again dismissed Nemis’s appeal.The United States Court of Appeals for the Second Circuit reviewed whether paragraph four of 18 U.S.C. § 1546(a) categorically describes a CIMT under the modified categorical approach. The court held that both knowingly making or presenting false statements and knowingly presenting required immigration documents lacking any reasonable basis in law or fact constitute CIMTs. Consequently, Nemis’s conviction rendered him removable. The Second Circuit denied Nemis’s petition for review, affirming the BIA’s determination. View "Nemis v. Blanche" on Justia Law

Chinwendu Alisigwe, a lawful permanent resident, was suspected by international law enforcement agencies of using fraudulent passports and identification documents to open bank accounts in the names of real individuals. Between 2017 and 2020, he opened thirty-six accounts, deposited millions from fraudulent schemes, transferred money to disguise its origins, and sent funds abroad. In 2019 and again in 2021, officers at John F. Kennedy International Airport stopped Alisigwe, manually searched his cellphone, and found evidence of identity theft and communications with co-conspirators.The United States District Court for the Southern District of New York denied Alisigwe’s motion to suppress evidence from the cellphone searches, reasoning that such searches require reasonable suspicion, and finding that law enforcement had reasonable suspicion both times due to ongoing investigations and evidence linking Alisigwe to fraudulent documents. The district court also imposed sentencing enhancements: an eighteen-point enhancement for intended loss under U.S.S.G. § 2B1.1(b)(1)(J), and a two-point enhancement for obstruction of justice under § 3C1.1 based on Alisigwe’s testimony at a duress hearing, which the court found to be fabricated.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court’s judgment. The main holding is that no suspicion is required before the government searches a traveler’s cellphone at the border; routine border searches of property, including cellphones, are reasonable under the Fourth Amendment. The court further held that the First Amendment does not impose an independent warrant requirement for border searches of cellphones. The court also upheld the district court’s application of sentencing enhancements for both intended loss and obstruction of justice. View "United States v. Alisigwe" on Justia Law

An association composed of parents, students, and concerned citizens filed suit under 42 U.S.C. § 1983, challenging student speech policies adopted by a New York school district. The association claimed that these policies violated the First and Fourteenth Amendment rights of its members’ children by chilling their ability to express certain social and political views in school. The association sought a preliminary injunction against enforcement of the challenged policies, arguing that the speech codes were impermissibly overbroad, vague, and compelled students to affirm views with which they disagreed.The United States District Court for the Southern District of New York denied the motion for a preliminary injunction and dismissed the action for lack of subject matter jurisdiction. The district court relied on Aguayo v. Richardson, 473 F.2d 1090 (2d Cir. 1973), which held that associations lack standing to sue on behalf of their members under § 1983. The association appealed to the United States Court of Appeals for the Second Circuit, but, acknowledging Aguayo, moved for summary affirmance, which the Second Circuit granted. Subsequently, the association petitioned for reconsideration en banc, asking the Court to overrule Aguayo.The United States Court of Appeals for the Second Circuit, after circulating the opinion to all active judges and receiving no objection, overruled Aguayo’s bar on associational standing under § 1983. The Court adopted the Supreme Court’s rule from Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333 (1977): a membership organization has standing to sue on behalf of its members under § 1983 if (1) members have standing to sue in their own right; (2) the interests are germane to the organization's purpose; and (3) individual member participation is unnecessary. The Second Circuit reversed the district court’s dismissal and remanded for further proceedings. View "Defending Education v. Croton-Harmon Union Free School District" on Justia Law

An employee of the New York State Unified Court System was terminated after she failed to comply with her employer’s COVID-19 vaccination mandate. She had requested a religious exemption, but her request was denied after she did not complete a supplemental form to the satisfaction of the vaccine exemption review committee. After her termination, the employer eventually rescinded the vaccination requirement and permitted her reinstatement, but she nonetheless brought a lawsuit alleging that the employer failed to accommodate her religious beliefs, in violation of Title VII.The United States District Court for the Eastern District of New York denied the employer’s motion to dismiss, then later granted partial summary judgment in favor of the employee. The district court relied on what it deemed to be judicial admissions by the employer that the employee’s initial exemption request was “perfectly adequate” and explained a religious belief. The district court held that the employee had established a prima facie case of religious discrimination under Title VII, using the Second Circuit’s previous standard, and determined that the employer had not shown that accommodation would pose an undue hardship.On appeal, the United States Court of Appeals for the Second Circuit held that its prior standard for establishing a prima facie case in Title VII religious accommodation cases was abrogated by the Supreme Court’s decision in EEOC v. Abercrombie & Fitch Stores, Inc., 575 U.S. 768 (2015). The Second Circuit clarified that a plaintiff must now show (1) an actual need for accommodation, and (2) that the employer’s desire to avoid providing that accommodation was a motivating factor in an adverse employment decision. The appellate court also found the district court erred in treating certain discovery statements as judicial admissions. The Second Circuit vacated the district court’s judgment and remanded for further proceedings. View "Bergin v. N.Y. State Unified Court System" on Justia Law

After the collapse of Silicon Valley Bank (SVB) in March 2023, the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver for the failed bank. SVB Financial Group, the parent company of SVB, had substantial deposits at the bank and, after the collapse, sought to recover its funds. The FDIC, however, asserted that it had setoff rights under California law, allowing it to offset SVB Financial’s deposits against debts allegedly owed by SVB Financial to the FDIC due to mismanagement. While the bankruptcy proceedings for SVB Financial were ongoing in the Southern District of New York, SVB Financial pursued a separate lawsuit in the Northern District of California to recover its deposits, where the FDIC asserted its setoff rights as a defense.The United States Bankruptcy Court for the Southern District of New York addressed whether the FDIC had forfeited its setoff rights by failing to file a proof of claim in the bankruptcy case, as required for “claims” under the Bankruptcy Code. The court determined that the FDIC’s defensive setoff rights, as asserted under California law, were not “claims” requiring the filing of a proof of claim. Therefore, the FDIC’s omission did not eliminate its setoff rights.On direct appeal, the United States Court of Appeals for the Second Circuit reviewed the Bankruptcy Court’s legal conclusions de novo. The Second Circuit held that the FDIC was not required to file a proof of claim in the bankruptcy proceeding to preserve its defensive setoff rights in the California litigation. The court concluded that, under California law, the FDIC’s setoff rights operated purely as an affirmative defense and did not entitle the FDIC to affirmative recovery from the bankruptcy estate. As such, these rights did not constitute “claims” within the meaning of the Bankruptcy Code, and the FDIC’s failure to file a proof of claim did not preclude it from asserting setoff. The order of the Bankruptcy Court was affirmed. View "In Re: SVB Fin. Grp." on Justia Law

A citizen of Brazil entered the United States without inspection in 1995, lived there for several years, and later left the country. In 2004, he attempted to reenter the U.S. on a visitor visa but was denied entry and received an expedited removal order before being deported. In 2017, he reentered the U.S. without inspection and was apprehended at the Vermont border, where U.S. Customs and Border Protection (CBP) issued a reinstatement order based on the 2004 removal. Although he was not removed at that time, he was later detained in 2023 pursuant to the reinstatement order. He filed a motion with CBP to reopen, reconsider, and rescind the reinstatement order, claiming he had not been advised of his rights in a language he understood. CBP denied his motion.In the interim, after his 2017 apprehension, he was referred for withholding-only proceedings, where an immigration judge denied his claims for relief and the Board of Immigration Appeals (BIA) affirmed. Separate immigration relief sought through his wife’s asylum status was also denied due to the outstanding reinstatement order. After various attempts to challenge his removal administratively, including a denied motion to the San Francisco ICE field office, he petitioned the United States Court of Appeals for the Second Circuit for review of both the 2017 reinstatement order and the 2023 denial of his motion to reopen.The United States Court of Appeals for the Second Circuit held that reinstatement orders are final orders of removal subject to judicial review under 8 U.S.C. § 1252(a), but found the petition for review of the 2017 order untimely and that equitable tolling did not apply. However, the court held it had jurisdiction to review CBP’s 2023 denial, ruled that CBP has authority under 8 C.F.R. § 103.5 to reopen and reconsider reinstatement orders, and found CBP’s contrary view was legal error and an abuse of discretion. The court denied the petition as to the 2017 order, but granted it as to the 2023 denial, vacated the denial, and remanded for further proceedings. View "Santos v. Blanche" on Justia Law