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

This appeal stemmed from a dispute regarding a contract the parties entered into, which gave Lewmar the exclusive right to manufacture and sell Steinerʹs patented sailboat winch handle, a device used to control the lines and sails of a sailboat. The parties resolved the dispute when Lewmar made, and Steiner accepted, an offer of judgment under Rule 68 of the Federal Rules of Civil Procedure. After judgment was entered, Steiner moved for attorneysʹ fees of $383,804 and costs of $41,470. The district court denied attorneysʹ fees but awarded costs of $2,926. The court concluded that Steiner was precluded from seeking fees pursuant to the Agreement in addition to the $175,000 settlement amount because claims under the Agreement were unambiguously included in the Offer; Steiner was not precluded from seeking attorneysʹ fees under the Connecticut Unfair Trade Practices Act (CUTPA), Conn. Gen. Stat. 42‐110g(d), because the Offer did not unambiguously encompass claims for attorneysʹ fees under CUTPA; and the court remanded for the district court to clarify whether it considered the claim for attorneys' fees under CUTPA on the merits and if not, to do so. Finally, the court concluded that the district court correctly added costs under the ʺcosts then accruedʺ provision of Rule 68. View "Steiner v. Lewmar, Inc." on Justia Law

Plaintiffs appealed the dismissal of their amended complaint for failure to state a claim. Plaintiffs alleged that they suffered losses in excess of $800 million when they refrained from selling their shares of Citigroup stock based on the fraudulent and negligent misrepresentations of defendants Citigroup and Citigroup executives. Defendants cross‐appealed, arguing that the district court erred by addressing the adequacy of plaintiffs’ substantive claims as “holders” of the shares during a period of decline in share value. Defendants claim that Delaware law mandates that such claims be brought in a shareholder derivative action, not as direct claims. The court certified the following question to the Delaware Supreme Court: Are the claims of a plaintiff against a corporate defendant alleging damages based on the plaintiff’s continuing to hold the corporation’s stock in reliance on the defendant’s misstatements as the stock diminished in value properly brought as direct or derivative claims? View "AHW Inv. P'ship v. Citigroup Inc." on Justia Law

Plaintiffs appealed the dismissal of their putative shareholder derivative actions against Facebook and its directors and lead underwriters. Plaintiffs alleged that Facebook’s directors breached duties owed to the company because its Registration Statement failed to disclose the mid‐quarter impact of mobile usage on the company’s projected growth. The court concluded that it was not error for the district court to decide, as a threshold matter, whether plaintiffs adequately pleaded contemporaneous share ownership, as required by Federal Rule of Civil Procedure 23.1. The court affirmed the judgment because none of the putative plaintiffs satisfied this requirement. The court did not reach the additional bases for dismissal raised by the district court or Facebook. View "In re Facebook, Inc. IPO Derivative Litig." on Justia Law

Beck filed suit against its franchisor, GM, for claims arising under the Motor Vehicle Dealer Act, N.Y. Vehicle & Traffic Law 460-473, and state contract law. The court certified the following questions to the New York Court of Appeals: (1) Is a performance standard that requires ʺaverageʺ performance based on statewide sales data in order for an automobile dealer to retain its dealership ʺunreasonable, arbitrary, or unfairʺ under New York Vehicle & Traffic Law section 463(2)(gg) because it does not account for local variations beyond adjusting for the local popularity of general vehicle types? and (2) Does a change to a franchiseeʹs Area of Primary Responsibility or AGSSA constitute a prohibited ʺmodificationʺ to the franchise under section 463(2)(ff), even though the standard terms of the Dealer Agreement reserve the franchisorʹs right to alter the Area of Primary Responsibility or AGSSA in its sole discretion?  Further, the court concluded that the district court did not err in dismissing plaintiffʹs vehicle allocation claim, denying plaintiffʹs request for attorneyʹs fees, or dismissing defendantʹs counterclaim for rescission. View "Beck Chevrolet v. General Motors" on Justia Law

Benihana America obtained a preliminary injunction in aid of arbitration of a dispute arising under its license agreement with Benihana of Tokyo, prohibiting Tokyo from: selling unauthorized food items at the restaurant it operates under the license agreement; using certain trademarks in connection with that restaurant in a manner not approved by the license agreement; and arguing to the arbitral panel, if it rules that Tokyo breached the license agreement, that Tokyo should be given additional time to cure any defaults. The Second Circuit affirmed with respect to the menu offering and trademark use injunctions. The court reasonably concluded that each of the relevant factors favored Benihana America. The court reversed the prohibition on arguing to the arbitral panel for an extended cure period. When a dispute is properly before an arbitrator, a court should not interfere with the arbitral process on the ground that, in its view of the merits, a particular remedy would not be warranted. Benihana America may challenge an arbitrator’s decision in court only after it has been issued. It may not subvert its agreement to arbitrate by obtaining an advance judicial determination that there are no grounds for the arbitrator to grant a particular remedy. View "Benihana, Inc. v. Benihana of Tokyo, LLC" on Justia Law

Luitpold is a New York corporation that develops and markets drugs and medical devices, including dental implant products. Geistlich, a Swiss corporation that develops and manufactures dental products, now owns the patents and trademarks for the Bio-Oss and Bio-Glide dental products, which are used to aid bone and tissue growth in patients following dental procedures. In 1994,, following failed attempts to market its products in the United States through other companies, Geistlich and Luitpold entered into interdependent commercial and license agreements to establish a distribution relationship for the sale of Geistlich’s dental products throughout the United States and Canada. The parties later entered into additional agreements and amendments. In 2010, Geistlich declared its intent to terminate the distribution relationship, without compensation to Luitpold, as of 2011. Geistlich did not allege breach of the agreements, but declared that the agreements had been in effect for a “reasonable” time and that under New York law, Geistlich could unilaterally terminate them upon reasonable notice. Luitpold sought declaratory relief, specific performance, damages, and prejudgment attachment of Geistlich patents and trademarks. The district court rejected all claims. The Second Circuit vacated and remanded, finding that material issues of fact precluded dismissal or summary judgment on certain claims. View "Luitpold Pharm., Inc. v. Ed. Geistlich Sohne A.G." on Justia Law

Select Comfort manufactures and sells Sleep Number bedding, which has inflatable air chambers that adjust to vary mattress firmness; it sells those beds through its own retail stores. In 2005, Sleepy’s, a bedding retailer, and Select executed an agreement making Sleepy’s a Sleep Number authorized retailer only for Select’s “Personal Preference” line. Sales were disappointing. In response to reports that Select salespeople were disparaging Sleepy’s and its Personal Preference line, Sleepy’s began conducting “secret shops.” Sleepy’s contends its undercover shopping revealed a pattern of disparagement. In 2007, Sleepy’s confronted Select; the parties executed a Wind-Up Agreement. Sleepy’s sued, alleging that Select breached the agreement by failing to provide “first quality merchandise,” and by violating a non-disparagement clause. Sleepy’s also asserted fraudulent inducement, slander per se, breach of the implied covenant of good faith and fair dealing, unfair competition, and violation of the Lanham Act. The district court granted judgment for Select, finding that the contract had expired on September 30, 2006 and that Sleepy’s had consented to the allegedly slanderous statements. The Second Circuit vacated, except with respect to the “first quality merchandise” claim. The court erred in treating “expiration” and “termination” as interchangeable terms referring to the end of the contract term. View "SleepyÂ’s, LLC v. Select Comfort Wholesale Corp." on Justia Law

NAF filed suit against Trading for breach of contract and sought damages, alleging that Trading wrongfully repudiated the contract and that, as a consequence of the breach, NAF lost financing commitments provided by third parties and was unable to complete the acquisition of Hampton. On appeal, NAF challenged the district court's judgment in favor of Trading. The court certified the following question to the Supreme Court of the State of Delaware: Where the plaintiff has secured a contractual commitment of its contracting counterparty, the defendant, to render a benefit to a third party, and the counterparty breaches that commitment, may the promisee-plaintiff bring a direct suit against the promisor for damages suffered by the plaintiff resulting from the promisor’s breach, notwithstanding that (1) the third-party beneficiary of the contract is a corporation in which the plaintiff-promisee owns stock; and (ii) the plaintiff-promisee’s loss derives indirectly from the loss suffered by the third-party beneficiary corporation; or must the court grant the motion of the promisor-defendant to dismiss the suit on the theory that the plaintiff may enforce the contract only through a derivative action brought in the name of the third-party beneficiary corporation? View "NAF Holdings, LLC v. Li & Fung (Trading) Ltd." on Justia Law

Plaintiff filed suit against AECOM and AME under the whistleblower retaliation provision created by the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1514A. The district court dismissed plaintiff's claim against AECOM and plaintiff appealed. The court concluded that an alleged whistleblowing employee's communications need not "definitively and specifically" relate to one of the listed categories of fraud or securities violations in section 1514A in order for that employee to claim protection under the statute; a complaint under section 1514A must, however, plausibly plead that plaintiff engaged in protected activity - that plaintiff reasonably believed the conduct he challenged constituted a violation of an enumerated provision; in this case, plaintiff did not plausibly allege that it was objectively reasonable for him to believe that there was such a violation here; and, therefore, the court affirmed the judgment of the district court.View "Nielsen v. AECOM Technology Corp." on Justia Law

TechnoMarine holds various trademark and copyright registrations for its word mark, logo, and watch dial. At issue in this appeal was whether a prior litigation between TechnoMarine and Giftports resolving claims of trademark infringement and other unfair business practices, and stemming from earlier conduct, bars the present suit of TechnoMarine over similar conduct that occurred after the settlement of the earlier suit. The court concluded that res judicata did not bar the trademark and other unfair business practice claims that arose after the original settlement agreement between the parties; the court affirmed the dismissal of the complaint on the alternative basis that TechnoMarine failed to state a claim upon which relief may be granted where TechnoMarine failed plausibly to plead its claims for trademark infringement, false designation of origin, trademark dilution, tortious interference, unfair competition, or copyright infringement; and the court affirmed the district court's denial of TechnoMarine's request to amend its complaint because TechnoMarine failed to indicate how further amendment would cure its pleading deficiencies. View "Technomarine SA v. Giftports, Inc." on Justia Law