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

Articles Posted in Class Action
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The case involves a group of plaintiffs who filed a class-action lawsuit against KIND, LLC, a snack food company. The plaintiffs alleged that the phrase "All Natural" on the labels of KIND's products was deceptive and misleading. They sought damages on behalf of themselves and three classes, based on common law fraud, as well as consumer protection and false advertising laws in New York, California, and Florida.The District Court for the Southern District of New York granted KIND's motion for summary judgment, concluding that the plaintiffs had failed to establish how a reasonable consumer would understand the term "All Natural." The court held that this was fatal to the plaintiffs' claims because without showing how a reasonable consumer understood the term, the plaintiffs could not explain how or why they were materially deceived. The court also granted KIND's motion to preclude two of the plaintiffs' expert opinions from the summary judgment record and to decertify the classes.On appeal, the United States Court of Appeals for the Second Circuit affirmed the District Court's decision. The appellate court held that the District Court did not abuse its discretion in precluding the opinions of the plaintiffs' experts. The court also held that because the plaintiffs failed to present admissible evidence of what a reasonable consumer would expect of KIND products labeled "All Natural," the District Court did not err in concluding that there was no triable issue of fact as to whether reasonable consumers would be misled by the "All Natural" labeling. The court further held that the plaintiffs' arguments regarding class decertification were moot because the District Court's grant of summary judgment was affirmed. View "In re: Kind LLC "Healthy and All Natural" Litigation" 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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In this case, a group of patients initiated a class action lawsuit against various hospitals and vendors who provide medical record production services to the hospitals. The plaintiffs alleged that the hospitals and vendors were involved in an illegal kickback scheme, where the vendors charged patients excessive prices for their medical records and used the profits to offer free and discounted pages to the hospitals for other types of medical records. The plaintiffs alleged violations of New York Public Health Law (PHL) § 18(2)(e) (which restricts the price that can be charged for medical records), New York General Business Law (GBL) § 349 (which prohibits deceptive business practices), and unjust enrichment. However, the New York Court of Appeals had previously ruled in Ortiz v. Ciox Health LLC that PHL § 18(2)(e) does not provide a private right of action.The United States Court of Appeals for the Second Circuit affirmed the district court's dismissal of all the plaintiffs' claims. It found that the patients' GBL § 349 and unjust enrichment claims were essentially repackaging their PHL § 18(2)(e) claims, and therefore not cognizable as they attempted to circumvent the Ortiz ruling. The court also held that the plaintiffs failed to allege any actionable wrongs independent of the requirements of PHL § 18(2)(e). The court concluded that the plaintiffs failed to state a claim, and as such, the district court did not err in granting the defendants' motions for judgment on the pleadings, in denying the plaintiffs' cross-motion for summary judgment as moot, and in denying the plaintiffs' leave to file a second amended complaint. View "McCracken v. Verisma Systems, Inc." on Justia Law

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Plaintiff Joseph Kasiotis filed a class action lawsuit on behalf of himself and other similarly situated New York consumers against the New York Black Car Operators’ Injury Compensation Fund, Inc. (the “Fund”). The lawsuit alleged that the Fund improperly collected a surcharge on noncash tips paid by passengers to drivers providing livery or “black car” services from January 2000 until February 1, 2021. The United States District Court for the Southern District of New York ruled in favor of Kasiotis and the class, granting summary judgment on the unjust enrichment claim. On appeal, the United States Court of Appeals for the Second Circuit held that the Fund was statutorily permitted to collect a surcharge on noncash tips. The court's ruling was based on Article 6-F of the New York Executive Law, which unambiguously authorizes the Fund to impose a surcharge on noncash tips paid in connection with covered black car services. As such, the Second Circuit Court reversed the district court's order granting summary judgment in favor of Kasiotis and the class, and remanded the case with instructions to dismiss the unjust enrichment claim. View "Kasiotis v. N.Y. Black Car Operators' Inj. Comp. Fund, Inc." on Justia Law

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In a class action suit brought by George Mandala and Charles Barnett against NTT Data, Inc., the plaintiffs argued that NTT's policy of not hiring individuals with a felony conviction disproportionately impacted Black applicants, constituting disparate impact discrimination under Title VII of the Civil Rights Act of 1964. The United States District Court for the Western District of New York dismissed the plaintiffs' complaint, and that decision was affirmed by the United States Court of Appeals for the Second Circuit. The plaintiffs then filed a motion to vacate the dismissal judgment and sought leave to file a first amended complaint, which the district court denied as untimely under Federal Rule of Civil Procedure 60(b)(1).On appeal, the Second Circuit reversed the district court's decision, holding that the plaintiffs' motion should have been evaluated under Rule 60(b)(6) rather than Rule 60(b)(1). Rule 60(b)(6) allows for relief from a judgment under "extraordinary circumstances," which the court found to be present in this case. The court reasoned that the plaintiffs had not previously had a chance to amend their complaint, and that their decision to stand by their initial complaint was not unreasonable given that its sufficiency had been a point of dispute. Additionally, the court found that the proposed amendments to the complaint were not futile. Consequently, the Second Circuit ordered the case to be remanded to the district court for further proceedings consistent with its opinion. View "Mandala v. NTT Data, Inc." on Justia Law

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Plaintiff filed a putative shareholder class action complaint in New York State Supreme Court, alleging Maryland state law claims on behalf of himself and all similarly situated preferred stockholders of Cedar Realty Trust, Inc. (“Cedar”), a New York-based corporation incorporated in Maryland, following its August 2022 merger with Wheeler Real Estate Investment Trusts, Inc. (“Wheeler”) (collectively, “Defendants”). The complaint alleged Cedar and its leadership breached fiduciary duties owed to, and a contract with, shareholders such as Plaintiff and that Wheeler both aided and abetted the breach and tortiously interfered with the relevant contract. The Defendants collectively removed the case, invoking federal jurisdiction under the Class Action Fairness Act (CAFA), but the district court remanded the case to state court after Krasner argued that an exception to CAFA jurisdiction applied to his claims.   The Second Circuit dismissed Defendants’ appeal and concluded that the “securities-related” exception applies. The court explained that here, the securities created a relationship between Cedar and Plaintiff that gave rise to fiduciary duties on the part of Cedar and the potential for additional claims against those parties who aid and abet Cedar’s breach of those duties. Thus, the aiding and abetting claim—and by the same logic, the tortious interference with contract claim—“seek enforcement of a right that arises from an appropriate instrument.” As such, the securities-related exception applies, and the district court properly remanded the case to state court. View "Krasner v. Cedar Realty Trust, Inc." on Justia Law

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Plaintiff class participates in “403(b)” retirement plans administered by Cornell University (“Cornell”). Plaintiffs brought this suit against Cornell and its appointed fiduciaries alleging a number of breaches of their fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”). Plaintiffs appealed from entry of judgment in Defendants’ favor on all but one claim, which was settled by the parties. On appeal, Plaintiffs challenged: (1) the dismissal of their claim that Cornell entered into a “prohibited transaction” by paying the plans’ recordkeepers unreasonable compensation, (2) the “parsing” of a single count alleging a breach of fiduciary duty into separate sub-claims at the motion to dismiss stage, (3) the award of summary judgment against Plaintiffs for failure to show loss on their claim that Defendants breached their duty of prudence by failing to monitor and control recordkeeping costs, and (4) the award of summary judgment to Defendants on Plaintiffs’ claims that Cornell breached its duty of prudence by failing to remove underperforming investment options and by offering higher-cost retail share classes of mutual funds, rather than lower-cost institutional shares.   The Second Circuit affirmed. The court concluded that the district court correctly dismissed Plaintiffs’ prohibited transactions claim and certain duty-of-prudence allegations for failure to state a claim and did not err in granting partial summary judgment to Defendants on the remaining duty-of-prudence claims. In so doing, the court held as a matter of first impression that to state a claim for a prohibited transaction pursuant to 29 U.S.C. Section 1106(a)(1)(C), it is not enough to allege that a fiduciary caused the plan to compensate a service provider for its services. View "Cunningham v. Cornell University" on Justia Law

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Defendant Klarna, Inc. ("Klarna") provides a "buy now, pay later" service that allows shoppers to buy a product and pay for it in four equal installments over time without incurring any interest or fees. Plaintiff paid for two online purchases using Klarna. Plaintiff incurred $70 in overdraft fees. Plaintiff brought this action on behalf of herself and a class of similarly situated consumers, alleging that Klarna misrepresents and conceals the risk of bank-overdraft fees that consumers face when using its pay-over-time service and asserting claims for common-law fraud and violations of the Connecticut Unfair Trade Practice Act ("CUTPA"). Klarna moved to compel arbitration. The district court denied Klarna's motion.   The Second Circuit reversed he district court's order and remanded with instructions to grant Klarna's motion to compel arbitration. The court explained that when Plaintiff arrived at the Klarna Widget, she knew well that purchasing the GameStop item with Klarna meant that she was entering into a continuing relationship with Klarna, one that would endure at least until she repaid all four installments. The Klarna Widget provided clear notice that there were terms that would govern this continuing relationship. A reasonable internet user, therefore, would understand that finalizing the GameStop transaction, entering into a forward-looking relationship with Klarna, and receiving the benefit of Klarna's service would constitute assent to those terms. The court explained that Plaintiff was on inquiry notice that her "agreement to the payment terms," necessarily encompassed more than the information provided on the Klarna Widget, and the burden was then on her to find out to what terms she was accepting. View "Najah Edmundson v. Klarna Inc." on Justia Law

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Plaintiffs-appellants, nineteen children in New York City’s foster care system, filed suit alleging “systemic deficiencies” in the administration of the City’s foster care system in violation of federal and state law. The named Plaintiffs moved to represent a class of all children who are now or will be in the foster care custody of the Commissioner of New York City’s Administration for Children’s Services and two subclasses. As remedies, they sought injunctive and declaratory relief to redress alleged class-wide injuries caused by deficiencies in the City’s administration—and the New York State Office of Children and Family Services’ oversight—of foster care. The district court denied Plaintiffs’ motion for class certification. Plaintiffs appealed, arguing that the district court erred in its analysis of the commonality and typicality requirements under Federal Rule of Civil Procedure 23(a).   The Second Circuit vacated the district court’s order denying class certification and remanded. The court held that the district court erred in its analysis of commonality and typicality under Rule 23. The court explained that the district court did not determine whether commonality and typicality exist with respect to each of Plaintiffs’ claims. Instead, it concluded that commonality was lacking as to all alleged harms because “Plaintiffs’ allegations do not flow from unitary, non-discretionary policies.” The court held that this approach was legal error requiring remand. Further, the court wrote that here, the district court largely relied upon its commonality analysis to support its finding that typicality was not satisfied. Thus, the deficiencies identified in its commonality inquiry can also be found in its handling of typicality. View "Elisa W. v. City of New York" on Justia Law

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Appellants-Cross-Appellees Konstantine W. Kyros and his law firm, Kyros Law P.C. (together, “Kyros”), appealed from a judgment imposing sanctions for litigation misconduct under Rules 11 and 37 of the Federal Rules of Civil Procedure. In 2014 and 2015, Kyros brought several lawsuits against Appellees-Cross-Appellants World Wrestling Entertainment, Inc. and Vincent K. McMahon (together, “WWE”). Subsequently, the district court imposed sanctions against Kyros in the amount of $312,143.55—less than the full amount requested by WWE. Kyros now appeals these final sanctions determinations. On cross-appeal, WWE challenged the district court’s reduction of the requested fee award by application of the “forum rule,” under which a court calculates attorney’s fees with reference to the prevailing hourly rates in the forum in which the court sits.   The Second Circuit affirmed. The court held that the district court did not abuse its discretion by imposing Rule 11 sanctions on Kyros. WWE’s sanctions motions and the district court’s order that reserved ruling on those motions gave abundant notice to Kyros of the repeated pleading deficiencies that risked imposition of sanctions, and he was afforded sufficient opportunity to be heard. The district court did not abuse its discretion by imposing Rule 37 sanctions on Kyros because Kyros failed to make a good-faith effort to comply with the district court’s order compelling responses to WWE’s interrogatories. The district court did not abuse its discretion by applying the forum rule to award WWE less than the requested amount of sanctions. View "Kyros Law P.C. v. World Wrestling Entertainment, Inc." on Justia Law