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

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

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

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

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

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

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

Plaintiff filed this nationwide class action on behalf of herself and others similarly situated after her personally identifying information (“PII”), including her name and Social Security number, which had been entrusted to Defendants, were exposed to an unauthorized third party as a result of a targeted data hack. At issue is the proper framework for evaluating whether an individual whose PII is exposed to unauthorized actors, but has not (yet) been used for injurious purposes such as identity theft, has suffered an injury in fact for purposes of Article III standing to sue for damages.   The Second Circuit reversed and remanded. The court concluded that with respect to the question of whether an injury arising from risk of future harm is sufficiently “concrete” to constitute an injury, in fact, TransUnion controls; with respect to the question whether the asserted injury is “actual or imminent,” the McMorris framework continues to apply in data breach cases like this. Thus, the court concluded that Plaintiff’s allegation that an unauthorized third party accessed her name and Social Security number through a targeted data breach gives her Article III standing to bring this action against Defendants to whom she had entrusted her PII. View "Bohnak v. Marsh & McLennan Companies, Inc." on Justia Law

Objector-Appellant appealed from a district court judgment approving a settlement award, attorneys’ fee award, and incentive award in a class action lawsuit. Plaintiff-Appellee, on behalf of similarly situated subscribers in California, sued Defendant-Appellee The New York Times (“NYT”), claiming that NYT automatically renewed NYT subscriptions without providing the disclosures and authorizations required by California’s Automatic Renewal Law (the “ARL”).  The parties negotiated a settlement agreement whereby class members dropped their claims in exchange for NYT’s reformation of its business practices and either Access Codes for one-month NYT subscriptions or pro rata cash payments. The settlement agreement also provided for the payment of substantial attorneys’ fees to class counsel and an incentive award to the class representative. Appellant objected to the proposed settlement, primarily arguing that the settlement is unfair, the attorneys’ fees calculation improperly exceeds limits set by the coupon settlement provisions of the Class Action Fairness Act (“CAFA”), and the incentive award is not authorized by law. The district court disagreed, certifying a class and approving the settlement, $1.25 million attorneys’ fees, and a $5,000 incentive award.   On appeal, the Second Circuit agreed with Appellant that the district court exceeded its discretion when it approved the settlement based on the wrong legal standard in contravention of Rule 23(e). The court also agreed that the Access Codes are coupons,  which subject the attorneys’ fees calculation to CAFA’s coupon settlement requirements. Because the district court’s conclusions are intertwined, the court vacated the district court’s judgment in its entirety and remanded the case to the district court for further proceedings. View "Maribel Moses v. The New York Times Company" on Justia Law

Shareholders of Defendant-Appellant Goldman Sachs Group, Inc. brought this class action lawsuit against Goldman and several of its former executives, claiming defendants committed securities fraud in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b–5 promulgated thereunder by misrepresenting Goldman’s ability to manage conflicts of interest in its business practices. After a number of appeals and subsequent remand, including an appeal to the Supreme Court, the district court once again certified a shareholder class under Federal Rule of Civil Procedure 23(b)(3).   The Second Circuit reversed the district court’s class certification decision with instructions to decertify the class. The court held that the district court clearly erred in finding that Goldman failed to rebut the Basic presumption by a preponderance of the evidence and, therefore, abused its discretion by certifying the shareholder class. The court explained that there is an insufficient link between the corrective disclosures and the alleged misrepresentations. Defendants have demonstrated, by a preponderance of the evidence, that the misrepresentations did not impact Goldman’s stock price and, by doing so, rebutted Basic’s presumption of reliance. Thus, the district court clearly erred in concluding otherwise and therefore abused its discretion in certifying the shareholder class. View "Ark. Tchr. Ret. Sys. v. Goldman Sachs Grp., Inc." on Justia Law

Defendants Citigroup Inc. and Citibank, N.A. (collectively, “Citi”) appealed from the bankruptcy court’s order granting in part and denying in part Citi’s motion, pursuant to Federal Rule of Bankruptcy Procedure 7012, to dismiss Plaintiff’s amended complaint, or, alternatively, to strike or dismiss the nationwide class action allegations therein. On appeal, Citi advanced s two primary arguments. First, Citi argues that a bankruptcy court’s civil contempt power is limited to the enforcement of its own orders and, therefore, that the Bankruptcy Code does not authorize one bankruptcy court to adjudicate the claims of a nationwide class of former debtors seeking to hold Citi in contempt of discharge orders entered by other bankruptcy courts across the country. Second, Citi argues that Plaintiff’s claim for violation of her discharge order and injunction under 11 U.S.C. Section 524(a)(2) fails to satisfy the civil contempt standard under Taggart v. Lorenzen, 139 S. Ct. 1795 (2019).The Second Circuit affirmed in part and reversed in part the bankruptcy court’s order and remanded the case to the bankruptcy court. The court explained that the Bankruptcy Code does not authorize a bankruptcy court to enforce another bankruptcy court’s discharge injunction. Further, the court wrote that there is no Section 524 “affirmative act” deficiency here. An intentional and systematic refusal to update the credit report upon the debtor’s request constitutes “an act to collect” under Section 524(a)(2), where, objectively, it has the practical effect of improperly coercing the debtor into paying off a discharged debt. View "In re: Kimberly Bruce" on Justia Law