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

The district court dismissed a suit brought by Sanderson, individually and on behalf of all others similarly situated, alleging that auditors (defendants) committed securities fraud by falsely representing that they performed their audits of Advanced Battery Technologies in accordance with professional standards and that the company’s filings accurately reflected its financial condition from the 2007 through the 2010 fiscal years. The court found that the complaint failed adequately to plead scienter as required by the Private Securities Litigation Reform Act of 1995, 15 U.S.C. 78u‐4. Sanderson sought to correct these deficiencies by moving to file an amended complaint. The court denied the motion, concluding that even the new allegations failed to “rise to the level of recklessness.” The Second Circuit affirmed, finding that the factual allegations did not give rise to a strong inference of either fraudulent intent or conscious recklessness, rather than mere negligence. View "In re: Advanced Battery Techs., Inc." on Justia Law

Reverend Flesher participated in benefits plans administered by the Ministers and Missionaries Benefit Board (MMBB), a New York not‐for‐profit corporation. Flesher entered into the plans while married to Snow. Snow, also a reverend and MMBB policyholder, was listed as the primary beneficiary on both of Flesher’s plans. Snow’s father was the contingent beneficiary. When Flesher and Snow divorced in 2008 they signed a Marital Settlement Agreement; each agreed to relinquish rights to inherit from the other and was allowed to change the beneficiaries on their respective MMBB plans. Flesher, then domiciled in Colorado, died in 2011 without changing his beneficiaries. MMBB , unable to determine how to distribute the funds, and filed an interpleader suit. The district court discharged MMBB from liability, applied New York law, and held that Flesher’s estate was entitled to the funds. The Second Circuit certified to the New York Court of Appeals the question: whether a governing‐law provision that states that the contract will be governed by and construed in accordance with the laws of New York, in a contract not consummated pursuant to New York General Obligations Law 5‐1401, requires the application of New York Estates, Powers & Trusts Law 3‐5.1(b)(2), which may, in turn, require application of the law of another state. View "Ministers & Missionaries Benefit Bd. v. Snow" on Justia Law

The law firm of Leeds, Morelli & Brown, representing 587 plaintiffs with discrimination claims against their employer, Nextel Communications, agreed with Nextel to set up a dispute resolution process whereby all of the plaintiffs’ claims against Nextel would be resolved without litigation. After most of the cases were settled through that process, a group of Nextel employees sued on behalf of the entire class of the firm’s Nextel clients against both the law firm and Nextel, alleging breach of fiduciary duty, legal malpractice, and breach of contract. The Second Circuit vacated dismissal of the case. On remand the district court certified a class under FRCP(b)(3), applying New York law to all of the class members’ claims, even though the class members came from 27 different states, and holding that common issues predominated over any individual issues, even though prior state court litigation indicated that for Colorado class members, individual waivers of the law firm’s conflict of interest could have vitiated defendants’ liability. The Second Circuit vacated: the district court erred in its choice‐of‐law analysis, and a proper analysis makes clear that the individual issues in this case will overwhelm common issues. View "Johnson v. Nextel Communications Inc." on Justia Law

Moulton, LLC entered a collective bargaining agreement (CBA) with the Union that required the company to contribute to Union funds; to remit deductions from paychecks to those funds; and to submit to an audit upon request. Duane Moulton, as Moulton’s owner, officer, and shareholder, signed the CBA, reported hours worked by union members, and communicated with the auditor. In 2012, the funds initiated an audit. Moulton failed to comply. The funds granted an extension of time to file an answer, but neither Moulton nor the corporation filed a responsive pleading. The funds requested a default and served a copy of that request on the defendants. The district court clerk entered the default. Though the defendants continued to ignore the judicial proceedings, Moulton did begin to work with the auditor and responded to some communications. The auditor issued his final report concluding that the corporation owed the funds $451,300.52. Weeks later, the funds moved for default judgment. The district court declined to vacate the initial entry of default and granted default judgment, awarding $451,300.52 in fringe benefit contributions and deductions, $104,628.81 in interest, $99,203.93 in liquidated damages, and $7,001.95 in attorney’s fees and costs. The Second Circuit affirmed as to the corporation defendant, but remanded as to Moulton because the district court erred in calculating the damages entered against him. View "Bricklayers & Allied Craftworkers v. Moulton Masonry & Constr., LLC" on Justia Law

AngioDynamics filed suit against Biolitec, alleging that Biolitec failed to fulfill its contractual obligation to defend or indemnify AngioDynamics for litigation expenses and losses resulting from AngioDynamic's distribution of Biolitec's products. Non-party Biolitec FZ now moves to be substituted for or joined with Biolitec, under Federal Rule of Appellate Procedure 43(b), as a party-appellant in appealing the partial final judgment entered by the district court. The court held that substitution is not warranted in this case because Biolitec FZ has not demonstrated that it "needs to be substituted" within the meaning of Rule 43(b) and, therefore, the court denied the motion and dismissed the appeal. The court approved AngioDynamic's stipulation to withdraw the appeal. View "AngioDynamics, Inc. v. Biolitec, Inc." on Justia Law

The district court granted a D.I.D. a temporary restraining order against Windstream, requiring D.I.D. to post security with the court clerk under Rule 65(c) of the Federal Rules of Civil Procedure. The district court later denied D.I.D.'s motion for a preliminary injunction and dissolved the TRO, concluding that D.I.D. failed to show a likelihood of success on the merits of the underlying suit. D.I.D. filed a notice of voluntary dismissal without prejudice under Rule 41(a)(1)(A)(i) and Windstream moved for an award of costs and damages from the TRO security. The court agreed that a district court may grant recovery from a TRO security after the plaintiff files a notice of voluntary dismissal. The court held that recovery from a TRO security requires only a determination that the defendant was wrongfully restrained, and not necessarily a final adjudication on the merits. The court vacated the district court's judgment because it never made this specific determination. The court remanded for the district court to determine, whether, and for what time period, Windstream was wrongfully restrained by the TRO, and to calculate the damages accordingly. View "U.S. D.I.D. Corp. v. Windstream Communications, Inc." on Justia Law

After losing his property in a state foreclosure action, plaintiff filed suit against Accredited and Deutsche Bank for fraud, negligent misrepresentation, unjust enrichment, violations of the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., violations of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601 et seq., violations of Connecticut's truth in lending law, and violations of the Connecticut Unfair Trade Practices Act (CUTPA), Conn. Gen. Stat. 42-110a et seq., as well as perjury, forgery, and predatory lending. The court concluded that the district court lacks jurisdiction over certain of plaintiff's fraud claims under the Rooker-Feldman doctrine; however, after determining that it lacked jurisdiction, the district court should have remanded the barred claims to state court instead of dismissing them on the merits; and, therefore, the court vacated the judgment as to those claims so they may be remanded to the state court. To the extent that petitioner asserted fraud claims that are not barred by Rooker-Feldman, the court affirmed the district court's dismissal of the claims as untimely and barred by collateral estoppel because plaintiff has not challenged those rulings on appeal. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Vossbrinck v. Deutsche Bank National Trust Co." on Justia Law

Plaintiff filed suit against Crane, alleging that Crane, a supplier of shipboard equipment to the Navy, caused her husband to be exposed to asbestos during his service from 1974 to 1980 by failing to affix adequate asbestos warnings to the valves it supplied for the Navy's vessels. Crane removed the suit to federal court under the federal officer removal statute, 28 U.S.C. 1442(a)(1). Plaintiff then moved to remand to state court and the district court granted the motion. The court concluded that Crane has provided evidence that the Navy issued detailed and comprehensive specifications regarding the production and packaging of its valves. Therefore, Crane has provided sufficient evidence to create a colorable federal defense at this preliminary stage. The court reversed the judgment of the district court. View "Cuomo v. Crane Co." on Justia Law

Plaintiffs, delivery drivers for one or more defendant corporations owned by defendant Peter Glazman, filed suit under federal and state laws, alleging that defendants systematically undercompensated them for their work, purporting to treat them as franchisees while reaping disproportionate profits at plaintiffs' expense. At issue was the district court's resolution of New York law under its supplemental jurisdiction. The court found no abuse of discretion in the district court's exercise of supplemental jurisdiction; concluded that the statute of limitations barred the New York Franchise Sales Act (FSA), N.Y. Gen. Bus. Law 680 et seq., claims of six of the eight plaintiffs; although the court affirmed the FSA award as to the remaining two plaintiffs, the court determined that the related attorneys' fee award must be recalculated to reflect that modification in the substantive award; decided that the statute of frauds does not preclude plaintiffs from pursuing their New York Labor Law, N.Y. Labor Law 190 et seq., and contract claims against defendant; and remanded for further proceedings on these state-law claims and for recalculation of the FSA-related attorneys' fees. View "Kroshnyi v. U.S. Pack Courier Services, Inc." on Justia Law

Intervenors, a group of police unions, challenged the ruling of the district court that the City of New York's "stop-and-frisk" policy was carried out in a discriminatory manner, as well as its imposition of various reforms to that policy. These cases were previously ordered to be reassigned to a different district court judge. The new district judge denied the unions' motion to intervene in these cases and the unions appeal. At issue was whether public-sector unions may intervene into a litigation where the actual parties to that litigation, including a newly-elected mayoral administration, have agreed to a settlement. The court held that the unions' motions to intervene are untimely and do not assert an interest that the law seeks to protect; the unions knew, or should have known, of their alleged interests in these controversial and public cases well before they filed their motions; granting the unions' motions in the wake of the mayoral election would essentially condone a collateral attack on the democratic process and could erode the legitimacy of decisions made by the democratically-elected representatives of the people; and the unions' interests in their members' reputations and collective bargaining rights are, as a matter of law, too remote from the "subject of the action" to warrant intervention as a "party." View "Floyd v. City of New York" on Justia Law