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

This case arose when plaintiff filed a putative class action complaint against defendant and others following the decline of defendant's stock price. At issue was whether certain statements concerning goodwill and loan loss reserves in a registration statement of defendant's gave rise to liability under sections 11 and 12 of the Securities Act of 1933, 15 U.S.C. 77a et seq. The court held that the statements in question were opinions, which were not alleged to have falsely represented the speakers' beliefs at the time they were made. Therefore, the court affirmed the judgment of the district court.

Plaintiffs Debbie and Max Walters appealed from a district court judgment that dismissed their petition for the issuance of a turnover order. In 1990, the Walters' thirteen-year-old son was killed on a hunting trip with his father when a Chinese-manufactured rifle the boy carried allegedly misfired. The Walters sued China and several entities allegedly controlled by China in the U.S. District Court on theories of products liability, negligence, and breach of warranty in connection with the manufacture of the rifle. The Walters eventually won a $10 million default judgment, and sought to enforce it by collecting China's assets in the possession of the respondent banks, Industrial and Commercial Bank of China, Ltd., Bank of China, Ltd. and China Construction Bank Corporation. Citing the Foreign Sovereign Immunities Act of 1976 (FSIA), the district court dismissed the petition with prejudice. Without filing a new petition, the Walters argued on appeal that the Banks lacked standing to assert foreign sovereign immunity on behalf of China, and that China waived any immunity by its conduct underlying the default judgment and by its failure to appear. Upon review of the submitted briefs and the applicable legal authority, the Second Circuit found Plaintiffs' arguments were without merit, and affirmed the district court's decision to dismiss their case.

This case arose from the infamous Ponzi scheme perpetrated by Bernard Madoff. Between October and December 2008, Plaintiff MLSMK Investment Company invested $12.8 million with Madoff's investment company. Defendants JP Morgan Chase & Co. (JPMC) and JP Morgan Chase Bank (Chase) were trading partners in Madoff's legitimate market-making business and the bank with which Madoff maintained his accounts. MLSMK lost its money when Madoff was arrested and his assets seized. MLSMK subsequently filed suit, alleging that Defendants had conspired with Madoff to "fleece" his victims in violation of federal racketeering laws. Furthermore, MLSMK alleged that Defendants knew of Madoff's fraudulent scheme, and "eagerly" continued to receive the substantial fees derived from Madoff's market-making and banking activities. The district court dismissed MLSMK's petition in its entirety, concluding that the complaint did not adequately plead any of the claims purportedly contained therein. The Second Circuit previously upheld the district court's decision to dismiss MLSMK's petition on its state-law claims, but the federal racketeering issue was one of first impression for the Court. Upon review of the submitted briefs and the applicable legal authority, the Court concluded that the racketeering claim must also be dismissed because it was barred by a section of the Private Securities Litigation Reform Act (PSLRA). Accordingly, the court affirmed that portion of the district court's judgment pertaining to federal law.

This criminal appeal arose from a "finite reinsurance" transaction between American International Group, Inc. (AIG) and General Reinsurance Corporation (Gen Re). Defendants, four executives of Gen Re and one of AIG, appealed from judgments convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. Most of the arguments were without merit, but defendants' convictions must be vacated because the district court abused its discretion by admitting the stock-price data and issued a jury instruction that directed the verdict on causation.

This case stemmed from continuing disputes between Argentina and its various private creditors. Argentina and its Brady bondholders entered into a Continuation of Collateral Pledge Agreement that extended the security interest in the tendered bonds' collateral during its transfer and liquidation. Capital Ventures International (CVI) held certain non-Brady bonds on which Argentina also defaulted and chose to sue Argentina to collect on the defaulted bonds it held, seeking to attach Argentina's reversionary interest in the Brady collateral. At issue was whether the attachments blocked the proposed exchange and whether the district court properly modified the attachments to allow the exchange. The court held that CVI was entitled to maintain its attachments even though a quirk of the bonds' Collateral Pledge Agreement meant that the attachments would effectively block the proposed exchange between Argentina and the Brady bondholders. Therefore, the court reversed the district court's orders that modified the attachments to permit the exchange.

Petitioners appealed from a Memorandum and Order and Final Order of Forfeiture entered by the district court dismissing their petition for an ancillary hearing and rejecting their claim as beneficiaries of a putative constructive trust in defendant's forfeiture assets. At issue was whether the remission provision of 21 U.S.C. 853(i) precluded the imposition of a constructive trust in petitioners' favor and whether imposing a constructive trust would be consistent with a forfeiture statutory scheme provided by section 853. Because the court concluded that section 853(i) did not preclude, as a matter of law, recognizing a constructive trust and because a constructive trust was not inconsistent with the forfeiture statute, the court vacated the Final Order of Forfeiture and remanded the case to the district court to consider whether, pursuant to Vermont law, a constructive trust should be recognized in favor of petitioners.

The Republic of Argentina and interested non-party-appellant, Banco Central de la Republica Argentina (BCRA), appealed from orders of the district court to attach funds held in BCRA's account at the Federal Reserve Bank of New York (FRBNY) on the theory that, pursuant to First National City Bank v. Banco Para El Comercio Exterior de Cuba (Bancec), those funds were attachable interests of the Republic. At issue was whether sovereign immunity for central bank property "held for its own account" pursuant to the Foreign Sovereign Immunities Act, 28 U.S.C. 1611(b)(1), depended upon a presumption of the central bank's independence under Bancec, and the proper definition of central bank property "held for its own account" under section 1611(b)(1). The court held that because BCRA's sovereign immunity over the FRBNY funds had not been waived and the FRBNY funds were property of BCRA held for its own account under section 1611(b)(1), the FRBNY funds were immune from attachment and restraint. Therefore, the court held that the district court erred in concluding that it had subject-matter jurisdiction to adjudicate a suit for attachment and restraint for the FRBNY funds. Accordingly, the court vacated and remanded for further proceedings.

Petitioner filed an arbitration claim against respondent with the Financial Industry Regulatory Authority ("FINRA") raising federal claims of securities fraud under section 10(b)(5) of the Securities and Exchange Act of 1934 ("SEC"), 15 U.S.C. 78a et seq., and SEC Rule 10b-5, as well as state-law claims. When respondent lost the FINRA arbitration, respondent appealed the arbitration order asserting various improprieties and asked the district court, and now this court, to undo the award. The court upheld confirmation of the award in full after giving careful attention to respondent's arguments and found them to be without merit. The court did hold, however, that the district court's judgment should credit respondent for approximately $75 million that petitioner received in exchange for selling some of the failed auction rate securities at issue and should have reduced respondent's liability for interest accordingly. Therefore, the court vacated the district court's judgment on that point and remanded for modification in light of the partial satisfaction of the award. The court rejected, however, respondent's attempt to alter the award's scheme for distributing interest earned on the securities portfolio.