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

The case involves the surviving relatives of Quinn Lucas Schansman, a passenger on Malaysia Airlines Flight 17 (MH17), which was shot down over eastern Ukraine by a missile launched from territory controlled by the Russian Federation-backed Donetsk People’s Republic (DPR). The plaintiffs allege that Sberbank of Russia PJSC (Sberbank) provided material support to the DPR by facilitating money transfers from donors to the DPR via correspondent accounts in the United States, which they claim proximately caused the downing of MH17.The United States District Court for the Southern District of New York denied Sberbank’s motion to dismiss the second amended complaint on foreign sovereign immunity grounds. Sberbank argued that it was immune under the Foreign Sovereign Immunities Act (FSIA) and the Anti-Terrorism Act (ATA) after the Ministry of Finance of the Russian Federation acquired a majority share in Sberbank. The district court found that Sberbank was presumptively immune under the FSIA but that the commercial activity exception applied, as the claims were based on commercial activities carried out in the United States.The United States Court of Appeals for the Second Circuit reviewed the case and held that Sberbank is presumptively immune under the FSIA due to its majority ownership by the Russian Ministry of Finance. However, the court also held that the FSIA’s commercial activity exception applies to Sberbank’s conduct, as the alleged claims are based on commercial activities—facilitating money transfers—carried out in the United States. Additionally, the court held that the ATA’s immunity provisions apply to instrumentalities of foreign states and that the FSIA’s commercial activity exception applies equally to actions brought under the ATA. Consequently, the court affirmed the district court’s order and remanded the case for further proceedings. View "Schansman v. Sberbank" on Justia Law

Oladayo Oladokun was convicted in the United States District Court for the Southern District of New York after pleading guilty to conspiracy to commit bank fraud and conspiracy to commit money laundering. His involvement included directing others to open bank accounts to receive stolen or forged checks and launder money. He was sentenced to 125 months in prison followed by three years of supervised release.Oladokun appealed, challenging the district court's calculation of his offense level under the United States Sentencing Guidelines. He argued against the application of an eighteen-level enhancement based on the loss amount, a two-level enhancement for ten or more victims, and a four-level enhancement for his role in an offense involving five or more participants. Additionally, he claimed ineffective assistance of counsel for not requesting a Franks hearing to suppress evidence obtained from his residence.The United States Court of Appeals for the Second Circuit reviewed the case. The court found that the district court did not err in its factual basis for the Guidelines enhancements. It upheld the eighteen-level enhancement for the intended loss amount, the two-level enhancement for ten or more victims, and the four-level enhancement for Oladokun's role in the offense. The court also rejected Oladokun's ineffective assistance claim, noting that even if his counsel had been ineffective, Oladokun failed to show the requisite prejudice because the warrant application was supported by probable cause without the challenged evidence.The Second Circuit affirmed the judgment of the district court. View "United States v. Oladokun" on Justia Law

The plaintiffs, a group of American service members and their families affected by the 1983 bombing of the U.S. Marine barracks in Beirut, Lebanon, sought to enforce multi-billion-dollar judgments against Iran. They aimed to obtain $1.68 billion held in an account with Clearstream Banking, a Luxembourg-based financial institution, representing bond investments made in New York on behalf of Bank Markazi, Iran’s central bank. The United States District Court for the Southern District of New York granted summary judgment in favor of the plaintiffs, ordering Clearstream and Bank Markazi to turn over the account contents. Clearstream and Bank Markazi appealed.The United States Court of Appeals for the Second Circuit reviewed the case. The court concluded that the district court lacked subject matter jurisdiction over the plaintiffs’ turnover claim against Bank Markazi. However, it determined that the district court could exercise personal jurisdiction over Clearstream. The court also found that Clearstream’s challenge to the constitutionality of 22 U.S.C. § 8772, which makes certain assets available to satisfy judgments against Iran, failed. Despite this, the court held that the district court erred in granting summary judgment in favor of the plaintiffs without applying state law to determine the ownership of the assets.The Second Circuit affirmed in part and vacated in part the district court's order and judgment. It remanded the case for further proceedings, instructing the district court to determine whether Bank Markazi is an indispensable party under Federal Rule of Civil Procedure 19 and to apply state law to ascertain the parties' interests in the assets before applying 22 U.S.C. § 8772. View "Peterson v. Bank Markazi" on Justia Law

In 2019, Tamika Miller filed a qui tam action under the False Claims Act (FCA) against Citibank, alleging that the bank violated 2015 consent orders by hiding failures in its management of third-party risks to avoid paying regulatory fines. Miller claimed that Citibank altered audit reports to downplay compliance violations, thereby avoiding penalties. The United States declined to intervene in June 2020. In October 2020, Citibank entered into a new consent order with the Office of the Comptroller of the Currency (OCC) and paid a $400 million civil penalty. Miller sought a share of this penalty, arguing it was an alternate remedy for her qui tam claim.The United States District Court for the Southern District of New York granted Citibank's motion to dismiss Miller's complaint for failure to state a claim and denied her motion for a share of the $400 million penalty. The court found that Miller failed to allege an "obligation" to pay the government as required by the FCA and did not meet the particularity requirement of Federal Rule of Civil Procedure 9(b). The court also denied Miller's request for leave to amend her complaint, concluding that the deficiencies could not be cured by amendment.The United States Court of Appeals for the Second Circuit affirmed the district court's decision. The appellate court held that Miller failed to state a reverse false claim because she did not allege an established duty for Citibank to pay the government. The court also found that Miller's complaint did not meet the particularity requirement of Rule 9(b) as it failed to identify specific false statements or reports. Consequently, Miller was not entitled to a share of the $400 million penalty, and the district court did not err in denying her leave to amend her complaint. View "Miller v. United States, Citibank, N.A." on Justia Law

This case involves Commerzbank AG, a German bank, and U.S. Bank, N.A., an American bank. Commerzbank sued U.S. Bank, alleging that it had failed to fulfill its duties as a trustee for residential mortgage-backed securities (RMBS) that Commerzbank had purchased. The case revolved around three main issues: whether Commerzbank could bring claims related to trusts with "No Action Clauses"; whether Commerzbank's claims related to certificates held through German entities were timely; and whether Commerzbank could bring claims related to certificates it had sold to third parties.The district court had previously dismissed Commerzbank's claims related to trusts with No Action Clauses, granted judgment in favor of U.S. Bank on the timeliness of Commerzbank's claims related to the German certificates, and denied Commerzbank's claims related to the sold certificates. Commerzbank appealed these decisions.The United States Court of Appeals for the Second Circuit affirmed the district court's decisions on the timeliness of the German certificate claims and the denial of the sold certificate claims. However, it vacated the district court's dismissal of Commerzbank's claims related to trusts with No Action Clauses and remanded the case for further proceedings. The court found that Commerzbank's failure to make pre-suit demands on parties other than trustees could be excused in certain circumstances where these parties are sufficiently conflicted. View "Commerzbank AG v. U.S. Bank, N.A." on Justia Law

The case originates from an Application for Judicial Assistance under 28 U.S.C. § 1782 by Frasers Group PLC ("Frasers"), a British retailer group. Frasers requested to obtain documentary and testimonial evidence from James Patrick Gorman, the former CEO of Morgan Stanley, for use in a lawsuit started in the UK. The district court denied the application, and Frasers appealed this decision.The dispute revolves around a series of transactions Frasers entered into with Saxo Bank A/S related to shares of the fashion company Hugo Boss. Concurrently, Saxo Bank engaged in trades with Morgan Stanley & Co. International PLC, a subsidiary of Morgan Stanley. A margin call was issued by Morgan Stanley, leading to a dispute and the commencement of the lawsuit in the UK.On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court's decision, finding no abuse of discretion. The court considered the factors established by the Supreme Court in Intel Corp. v. Advanced Micro Devices, Inc., which guide district courts when determining whether to grant domestic discovery for use in foreign proceedings under 28 U.S.C. § 1782(a). The court found that the first factor—whether “the person from whom discovery is sought is a participant in the foreign proceeding”— and the fourth factor—whether the discovery request is “unduly intrusive or burdensome”— weighed against granting the Application. Consequently, the court upheld the denial of the Application. View "FRASERS GROUP PLC v. MORGAN STANLEY" 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-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into two Note Agreements and a Credit Agreement with the predecessor-in-interest to now-Plaintiff-Appellee Red Tree Investments, LLC (“Red Tree”). PDVSA became delinquent on its obligations under the contracts. Red Tree’s predecessor-in-interest accelerated the outstanding debt. Then Red Tree initiated these actions in Supreme Court, New York County, which Defendants removed to district court. PDVSA claimed that any further payment under the Agreements was impossible and should therefore be excused. The district court granted summary judgment against PDVSA on the grounds that PDVSA had failed to provide sufficient evidence that payment was impossible or in the alternative, that any impediment to payment was not reasonably foreseeable. It therefore entered judgment in favor of Red Tree and imposed post-judgment interest. On appeal, PDVSA contends that the district court erred in concluding that no reasonable trier of fact could find that payment was impossible or that U.S. sanctions were unforeseeable. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible. Further, the court concluded that the district court did not err in its calculation of post-judgment interest. The court explained that under the plain language of the Note and Credit Agreements, the outstanding principal and interest that accrued prejudgment—including both default and ordinary interest—are subject to default interest post-judgment. View "Red Tree Investments, LLC v. PDVSA, Petróleo" on Justia Law

In January 2017, Defendant-Appellant Petróleos de Venezuela, S.A. (“PDVSA”), an oil company wholly owned by the Bolivarian Republic of Venezuela, entered into a Note Agreement with then-Plaintiff-Appellee Dresser-Rand Company. PDVSA made two of the twelve payments due under the Note Agreement in April and July 2017 but failed to make any subsequent payments. In February 2019, Dresser-Rand declared PDVSA to be in default, accelerated the debt, and initiated this action in Supreme Court, New York County, which Defendants removed to the district court. PDVSA claimed that any further payment was impossible and should therefore be excused. The district court concluded that PDVSA had failed to prove that repayment was impossible. It therefore entered judgment in favor of Dresser-Rand. On appeal, PDVSA contends that the district court erred in concluding that payment was not impossible. PDVSA further asserts that the district court incorrectly calculated post-judgment interest.   The Second Circuit affirmed. The court agreed with the district court that payment by PDVSA was not impossible, and the court further concluded that PDVSA forfeited any arguments relating to post-judgment interest. The court explained that the evidence demonstrates that PDVSA never attempted payment to a different bank or in an alternative currency, nor did it investigate whether this manner of payment would have been truly impossible. Instead of the evidence shows, did nothing. PDVSA cannot benefit from the impossibility defense on speculation. View "Siemens Energy, Inc. v. PDVSA" on Justia Law

This action concerns loans issued by Plaintiff, EMA Financial, LLC, to a group of companies that were controlled by Defendants. The loan agreements contained so-called “floating-price conversion option” provisions, which gave EMA the right to exercise an option to receive company stock in lieu of cash repayment on the loans. When EMA initially sought partial repayment of the loans through the stock repayment option in 2017, the companies delivered the shares to EMA at the agreed-upon discount rate. EMA sought to exercise the conversion option again. This time, the companies failed to deliver the stock. EMA then brought suit, claiming breach of contract and breach of guaranty as to the loan agreements, and fraudulent conveyance and fraudulent inducement. Defendants asserted as an affirmative defense that the loan agreements were void because the conversion option provisions rendered the agreements criminally usurious under New York law. The district court dismissed this defense and entered judgment in favor of EMA for some of its claims and in favor of Defendants for other. Two Defendants appealed, arguing that the district court’s dismissal of the usury defense at summary judgment should be vacated in light of an intervening change in New York law.   The Second Circuit vacated. The court reasoned that it is also clear that Adar Bays II materially altered the Defendants’ rights by providing them with a newly viable avenue by which they could seek to void the Notes and avoid liability for breaching them. Therefore, even assuming the other necessary conditions for collateral estoppel are met, the Defendants are not precluded from raising a usury defense notwithstanding the Corporate Defendants’ default. View "EMA Financial, LLC v. Chancis" on Justia Law