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

The case involves a group of bond investors (plaintiffs) who bought and sold certain types of corporate bonds from and to a group of financial institutions and major dealers in the corporate bond market (defendants). The plaintiffs alleged that the defendants violated antitrust laws by engaging in a pattern of parallel conduct and anticompetitive collusion to restrict forms of competition that would have improved odd-lot pricing for bond investors. The district court granted the defendants' motion to dismiss the case.Several months after the district court's order, it was discovered that the district court judge had presided over part of the case while his wife owned stock in one of the defendants. Although she had divested that stock before the district court judge issued his decision, the plaintiffs appealed, arguing that the district court judge should have disqualified himself due to this prior financial interest of his wife.The United States Court of Appeals for the Second Circuit was tasked with deciding whether, pursuant to 28 U.S.C. § 455, vacatur was warranted because the district court judge was required to disqualify himself before issuing his decision. The court concluded that while there was no outright conflict when the district court judge ruled on the merits of this action, § 455(a) and related precedents required pre-judgment disqualification, thus vacatur was warranted. As a result, the court vacated the judgment and remanded the case to the district court for further proceedings. View "Litovich v. Bank of America Corp." on Justia Law

Broadway producer Garth Drabinsky alleged that the Actors’ Equity Association, a union representing theater actors and stage managers, unlawfully boycotted, defamed, and harassed him during his production of the musical Paradise Square. Drabinsky brought antitrust claims and New York state tort claims against the union.The United States District Court for the Southern District of New York held that Drabinsky’s antitrust claims were barred by the statutory labor exemption derived from the Clayton Antitrust Act of 1914 and the Norris-LaGuardia Act of 1932. The court also held that his tort claims were barred under Martin v. Curran, a New York state case that requires a plaintiff seeking to hold a union liable for tortious wrongs to allege the individual liability of every single member.The United States Court of Appeals for the Second Circuit affirmed the lower court's decision. The court concluded that an antitrust plaintiff suing a union bears the burden of proving that the statutory labor exemption does not apply. The court found that Drabinsky failed to meet this burden, as the union was acting in its self-interest and did not combine with non-labor groups. The court also agreed with the lower court that Drabinsky's state-law tort claims were barred by the Martin v. Curran rule. View "Drabinsky v. Actors' Equity Association" on Justia Law

The case involves a dispute over the antitrust implications of a settlement agreement between Forest Laboratories, a brand manufacturer of the high-blood pressure drug Bystolic, and seven manufacturers of generic versions of Bystolic. The settlement agreement was reached after Forest Laboratories initiated patent-infringement litigation against the generic manufacturers. As part of the settlement, Forest Laboratories entered into separate business transactions with each generic manufacturer, paying them for goods and services.The plaintiffs, purchasers of Bystolic and its generic equivalents, filed a lawsuit against Forest Laboratories and the generic manufacturers, alleging that the payments constituted unlawful “reverse” settlement payments intended to delay the market entry of generic Bystolic. The plaintiffs' claims were dismissed twice by the United States District Court for the Southern District of New York for failure to state a claim.The United States Court of Appeals for the Second Circuit affirmed the district court's decision. The court found that the plaintiffs failed to plausibly allege that any of Forest’s payments were unjustified or unexplained, instead of constituting fair value for goods and services obtained as a result of arms-length dealings. The court also held that the district court’s application of the pleading law was appropriate. The court concluded that the plaintiffs did not plausibly allege that Forest’s payments were a pretext for nefarious anticompetitive motives rather than payments that constituted fair value for goods and services obtained as a result of arms-length dealings. View "In re Bystolic Antitrust Litigation" on Justia Law

The case was heard in the United States Court of Appeals for the Second Circuit between Regeneron Pharmaceuticals, Inc., the plaintiff-appellant, against Novartis Pharma AG and associates, the defendants-appellees. Regeneron appealed the judgment from the district court which dismissed its claims of antitrust violations and tortious interference with contract under the Federal Rules of Civil Procedure 12(b)(6).Regeneron and Novartis both manufacture medications to treat overproduction of a specific protein. The crux of the dispute was whether the medications, which come in vials and prefilled syringes (PFSs), compete in the same or in different product markets. Regeneron claimed that Novartis and its co-defendant Vetter Pharma International GmbH concealed their collaboration to produce a PFS version of Novartis’s drug, thereby delaying the launch of Regeneron's own PFS version and allowing Novartis to increase its market share.The district court had granted the motion to dismiss, reasoning that Regeneron failed to plausibly allege that the relevant antitrust market was limited to PFSs. The court also dismissed Regeneron’s tortious interference claim as untimely.On appeal, the United States Court of Appeals for the Second Circuit reversed the lower court's decision. The appellate court held that Regeneron had provided a plausible explanation that the market for PFSs was distinct from that for vials. It also held that Regeneron adequately pleaded that Novartis was equitably estopped from asserting a statute of limitations defense to the tortious interference claim. The case was remanded for further proceedings consistent with the appellate court’s opinion. View "Regeneron Pharmaceuticals, Inc. v. Novartis Pharma AG" on Justia Law

In this case before the United States Court of Appeals for the Second Circuit, the plaintiffs were U.S. investors who purchased Mexican government bonds. They alleged that the defendants, Mexican branches of several multinational banks, conspired to fix the prices of the bonds. The defendants sold the bonds to the plaintiffs through non-party broker-dealers. The defendants moved to dismiss the case for lack of personal jurisdiction, and the District Court granted the motion, concluding that it lacked jurisdiction as the alleged misconduct, price-fixing of bonds, occurred solely in Mexico.Upon appeal, the Second Circuit vacated and remanded the case. The court found that the defendants had sufficient minimum contacts with New York as they had solicited and executed bond sales through their agents, the broker-dealers. The plaintiffs' claims arose from or were related to these contacts. The court rejected the defendants' argument that the alleged wrongdoing must occur in the jurisdiction for personal jurisdiction to exist, stating that the defendants' alleged active sales of price-fixed bonds through their agents in New York sufficed to establish personal jurisdiction. The court remanded the case for further proceedings consistent with its opinion. View "In re: Mexican Government Bonds Antitrust Litigation" on Justia Law

A group of 18 pension and retirement funds and other investors alleged that 10 large banks conspired to rig U.S. Treasury auctions and boycott the emergence of direct, "all-to-all" trading between buy-side investors on the secondary market for Treasuries. The alleged conspiracies violated Section 1 of the Sherman Act. The investors failed to demonstrate that the banks formed an anticompetitive agreement, which is necessary to plead their antitrust claims. The allegations of wrongful information-sharing amounted to inconsequential market chatter and their statistical analyses were not sufficiently focused on the defendant banks. The United States Court of Appeals for the Second Circuit affirmed the district court's dismissal of the lawsuit, agreeing that the investors failed to plausibly allege that the banks engaged in a conspiracy to rig Treasury auctions or to conduct a boycott on the secondary market. View "In re Treasury Securities Auction Antitrust Litigation" on Justia Law

Defendant Klarna, Inc. ("Klarna") provides a "buy now, pay later" service that allows shoppers to buy a product and pay for it in four equal installments over time without incurring any interest or fees. Plaintiff paid for two online purchases using Klarna. Plaintiff incurred $70 in overdraft fees. Plaintiff brought this action on behalf of herself and a class of similarly situated consumers, alleging that Klarna misrepresents and conceals the risk of bank-overdraft fees that consumers face when using its pay-over-time service and asserting claims for common-law fraud and violations of the Connecticut Unfair Trade Practice Act ("CUTPA"). Klarna moved to compel arbitration. The district court denied Klarna's motion.   The Second Circuit reversed he district court's order and remanded with instructions to grant Klarna's motion to compel arbitration. The court explained that when Plaintiff arrived at the Klarna Widget, she knew well that purchasing the GameStop item with Klarna meant that she was entering into a continuing relationship with Klarna, one that would endure at least until she repaid all four installments. The Klarna Widget provided clear notice that there were terms that would govern this continuing relationship. A reasonable internet user, therefore, would understand that finalizing the GameStop transaction, entering into a forward-looking relationship with Klarna, and receiving the benefit of Klarna's service would constitute assent to those terms. The court explained that Plaintiff was on inquiry notice that her "agreement to the payment terms," necessarily encompassed more than the information provided on the Klarna Widget, and the burden was then on her to find out to what terms she was accepting. View "Najah Edmundson v. Klarna Inc." on Justia Law

Magellan, a manufacturer of electronic nicotine delivery systems (“ENDS”) products, sought authorization from the FDA to market ENDS under the Family Smoking Prevention and Tobacco Control Act (the “TCA”). The FDA denied Magellan's application related to the company's flavored ENDS products, finding insufficient evidence showing that marketing the pods would be appropriate for the protection of public health, a finding that requires denial of an application under the TCA. Magellan petitioned for review, arguing the FDA action was arbitrary and capricious. Magellan also argues that the FDA exceeded its statutory authority by requiring applicants to demonstrate that their flavored ENDS products are more effective than tobacco-flavored products at promoting cessation or switching from combustible cigarettes to ENDS products.The Second Circuit affirmed. The FDA did not impose a new evidentiary standard on Magellan; therefore, the FDA did not need to provide notice or consider its reliance interests. Thus, the court concluded that the FDA did not act arbitrarily or capriciously. View "Magellan Technology, Inc. v. United States Food and Drug Administration" on Justia Law

Plaintiffs appealed from a final judgment entered in favor of Defendants The TriZetto Group, Inc. and Cognizant Technology Solutions Corporation (collectively, “TriZetto”) after a jury trial in district court. Relevant here, the district court ordered and entered judgment that (1) Syntel misappropriated 104 of TriZetto’s trade secrets in violation of the Defend Trade Secrets Act (“DTSA”) and New York law; and (2) TriZetto’s $284,855,192 compensatory damages award was proper under the DTSA. On appeal, Syntel challenges the district court’s judgment with respect to liability and damages.   The Second Circuit affirmed and vacated the judgment of the district court and remanded. The court held that the unambiguous terms of the Amended Master Services Agreement (MSA) are clear, and so is the extrinsic evidence: TriZetto did not authorize Syntel to use TriZetto’s trade secrets to compete with TriZetto. Thus, Syntel misappropriated TriZetto’s intellectual property in violation of the DTSA and New York law. Accordingly, the court affirmed the district court’s denial of Syntel’s Rule 50(b) motion on this issue. The court concluded that, as a matter of law, an unjust enrichment award of avoided costs was unavailable under the specific facts of this case. Syntel’s unjust gain was fully “addressed in computing damages for [TriZetto’s] actual loss,” and TriZetto suffered no compensable harm beyond that actual loss. Thus, the court remanded the case for the district court to address the propriety of the two jury awards based on TriZetto’s damages theory of awarding a reasonable royalty: (1) the $142,427,596 New York trade secret misappropriation award and (2) the $59,100,000 copyright infringement award. View "Syntel Sterling Best Shores Mauritius, Ltd., et al. v. The TriZetto Grp.," on Justia Law

AMA Capital, LLC (“AMA”) is a claimant in an antitrust class-action settlement. The settlement agreement at issue required that each claimant substantiate its claims with such documents as class counsel and the claims administrator, in their discretion, deemed acceptable. The settlement agreement also provided each claimant with the opportunity to (1) remedy deficiencies in its claims before the claims administrator issued its decision and (2) if the claims administrator rejected its claims in whole or in part, contest the claims administrator’s decision within twenty days of the mailing of the rejection notice. In this case, the claims administrator rejected most of AMA’s claims because, among other things, AMA repeatedly failed to provide the requisite transactional records to support its claims. The district court agreed and also denied AMA’s motion for reconsideration based on documents it submitted subsequent to the claims administrator’s rejection.   On appeal, AMA argues primarily that the district court erred by failing to consider documents it submitted during the post-rejection contest process and by denying its claims on the basis of improper evidentiary requirements. The Second Circuit affirmed the district court’s order holding that the claims administrator was not required to accept records during the contest process that were previously available to AMA, which is akin to a motion for reconsideration, and that the district court did not err by denying AMA’s claims. Moreover, because AMA has standing as a class member to appeal any denial of its claims, the court dismissed as moot the appeal in No. 22-19, which challenges the district court’s denial of AMA’s motion to intervene. View "Contant v. AMA Cap., LLC" on Justia Law