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

Articles Posted in Business Law
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The case involves Nano Dimension Ltd., an Israeli 3D printing and manufacturing company, and several defendants including Murchinson Ltd. and Anson Advisors Inc. Nano alleged that the defendants violated Section 13(d) of the Securities Exchange Act of 1934 by failing to disclose that they acted as a group when acquiring more than five percent of Nano’s American Depository Shares (ADSs). As a remedy, Nano sought an order directing the defendants to disclose their alleged group status on amended Schedule 13Ds and an injunction prohibiting them from acquiring additional ADSs or voting their existing ADSs pending completion of the amended filings.The United States District Court for the Southern District of New York dismissed Nano's claims as moot. The court found that the defendants had cured the alleged Section 13(d) violations by amending their Schedule 13D filings to disclose Nano’s allegations and their position that the allegations were without merit.The United States Court of Appeals for the Second Circuit affirmed the district court's decision. The appellate court agreed that the defendants' amended filings satisfied Section 13(d)’s disclosure requirements. The court also rejected Nano's argument that it was entitled to retroactive injunctive relief, noting that such relief is not available under Section 13(d) when corrective disclosures have been made and the vote in question did not effect a change in control over the issuer. View "Nano Dimension Ltd. v. Murchinson Ltd." on Justia Law

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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

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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

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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

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This case arose from a Securities & Exchange Commission (SEC) enforcement action against Mohammed Ali Rashid, a former senior partner at the private equity firm Apollo Management L.P. Rashid was accused of breaching his fiduciary duties to the Apollo-affiliated private equity funds he advised by submitting fraudulent expense reports, which were eventually paid by the funds. The district court held that Rashid was not liable under § 206(1) of the Investment Advisers Act because he was not aware that the funds, rather than Apollo, would pay for his expenses. However, the court found Rashid liable under § 206(2) of the Act, concluding he was indifferent and therefore negligent as to which entity would pay for his expenses.The United States Court of Appeals for the Second Circuit reversed the district court's decision. The appellate court held that it was not reasonably foreseeable to Rashid that the funds would pay for his expenses, concluding that Rashid did not breach his duty of care to the funds or proximately cause their harm. The court noted that while Rashid's actions were serious and likely criminal, they did not constitute fraud against the funds as required under § 206(2) of the Investment Advisers Act. The court also found that Rashid did not breach his duty of care to the funds, as he could not have reasonably known that the funds would cover his expenses. The court concluded that Rashid did not proximately cause the funds' harm, as Apollo's intervening actions in overbilling the funds were not reasonably foreseeable to Rashid. View "SEC v. Rashid" on Justia Law

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In this case, five former customers of Peregrine Financial Group, Inc., a defunct futures commission merchant, filed a class action lawsuit against various defendants, including JPMorgan Chase Bank and National Futures Association. They claimed that their investments were wiped out due to fraudulent activities by Peregrine's CEO. The United States District Court for the Southern District of New York dismissed the federal claims as time-barred and declined to exercise supplemental jurisdiction over the state-law claims.On appeal, the United States Court of Appeals for the Second Circuit affirmed the lower court's decision. The main issue addressed by the Second Circuit was whether a party could compel a district court to exercise subject-matter jurisdiction on a theory of jurisdiction that the party raised untimely.The Court held that a party may not do so. The Court distinguished between objecting to a federal court's exercise of jurisdiction, which a party could do at any stage in the litigation, and invoking the district court’s jurisdiction, which can be forfeited if not raised timely. Therefore, although federal courts must ensure they have jurisdiction, there is no corresponding obligation to find and exercise jurisdiction on a basis not raised by the parties. The Court concluded that the district court was within its discretion to decline to consider the untimely raised theory of jurisdiction. View "Behrens v. JPMorgan Chase Bank, N.A." on Justia Law

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The case involves a group of plaintiffs who used the online cryptocurrency exchange, Binance, to purchase crypto-assets known as "tokens". They allege Binance violated the Securities Act of 1933 and the "Blue Sky" securities laws of various states by selling these tokens without registration. They also sought to rescind contracts they entered into with Binance under the Securities and Exchange Act of 1934, alleging Binance contracted to sell securities without being registered as a securities exchange or broker-dealer.The United States District Court for the Southern District of New York dismissed the plaintiffs' claims as impermissible extraterritorial applications of these statutes and also dismissed their federal claims as untimely. However, the United States Court of Appeals for the Second Circuit reversed this decision. The appellate court found that the plaintiffs had adequately alleged that their transactions on Binance were domestic transactions, thereby making the application of federal and state securities laws permissible. The court also concluded that the plaintiffs' federal claims did not accrue until after they made the relevant purchases, and therefore their claims arising from purchases made during the year before filing suit were timely.This case is significant as it addresses the application of federal and state securities laws to transactions involving cryptocurrencies, and the extraterritorial reach of these laws in the context of online cryptocurrency exchanges. View "Williams v. Binance" on Justia Law

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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

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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

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In this case before the United States Court of Appeals For the Second Circuit, two investment firms, held debt securities issued by FriendFinder Networks, Inc., and an affiliate. Several years later, FriendFinder’s founder, through a trust in his own name, unilaterally reduced the securities’ payment terms under the governing Indenture. The investment firms sued, alleging that the Trust Indenture Act (TIA) barred FriendFinder and its founder from changing the payment terms without their consent. The district court dismissed the case, holding that the TIA did not protect this Indenture because the underlying exchange offer was a private placement under the Securities Act of 1933, and the TIA does not apply to private placements. On appeal, the Second Circuit affirmed the district court's decision. The court held that, since the securities were issued through a private offering rather than a public one, the TIA did not apply. Therefore, the no-action clause in the Indenture, which barred the plaintiffs' lawsuit unless certain conditions were met, was not invalidated by the TIA. The court also determined that the plaintiffs' claim did not fall within the payment carve-out from the no-action clause, which allows suit for the enforcement of the right to receive payment of principal or interest on the securities. The court concluded that the plaintiffs' lawsuit was barred by the no-action clause and that the TIA did not invalidate that clause. View "Chatham Capital Holdings, Inc. v. Conru" on Justia Law