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

Defendant defrauded his former employer and its investors of some $65 million. He was indicted on unrelated insider trading charges, and a subsequent internal investigation revealed the full breadth of his wrongdoing. The Securities and Exchange Commission (“SEC”) brought a civil enforcement action against Defendant. To secure a potential disgorgement judgment, the SEC joined Defendant’s family and related entities as Relief Defendants, and the district court froze Defendant’s and the Relief Defendants’ assets. Defendant is currently a fugitive from justice, so the district court excluded him from discovery of the SEC’s investigative file. The district court granted the SEC’s motion for summary judgment and awarded disgorgement, supplemental enrichment, and civil penalties against Defendant. The district court also adopted the SEC’s theory that Defendant is the equitable owner of assets held in the name of the Relief Defendants as “nominees.” On appeal, Defendant and the Relief Defendants challenged the district court’s judgment and calculation of disgorgement.   The Second Circuit affirmed in part and vacated and remanded in part. The court affirmed the district court’s (1) exclusion of Defendant from discovery and denial of his access to frozen funds to hire counsel; (2) calculation of Defendant’s disgorgement obligation; and (3) retroactive application of the 2021 amendments to the Securities Exchange Act of 1934 to Defendant’s disgorgement obligation. However, the court held that the district court (4) failed to assess whether actual gains on the frozen assets were unduly remote from Defendant’s fraud and (5) should have applied an asset-by-asset approach to determine whether the Relief Defendants are, in fact, only nominal owners of their frozen assets. View "SEC v. Ahmed" on Justia Law

Appellants in these tandem appeals are each a parent of a disabled child. Arguing that his or her child was entitled to benefits under the Individuals with Disabilities Education Act (“IDEA”), 20 U.S.C. Section 1415(i), each parent brought an administrative action against his or her local education agency and prevailed. Subsequently, each parent brought a federal action for attorneys’ fees pursuant to 20 U.S.C. Section 1415(i)(3)(B). In each case, the district court awarded less attorneys’ fees than the parent requested, and the parents appealed.   The Second Circuit reversed the district court’s denial of travel-related fees in No. 21-1961 and remanded for further proceedings. The court otherwise affirmed the judgments of the district courts. The court found that it was persuaded that there was no abuse of discretion in the district court’s calculation of reasonable attorneys’ fees in each case. Further, the court wrote that the district courts that declined to award prejudgment interest did not abuse their discretion because “delays in payment” may be remedied by “application of current rather than historic hourly rates.” However, the court held that the district court abused its discretion when it denied any travel-related fees to M.D.’s counsel. A district court may permissibly adjust excessive travel costs. But the district court could not “eliminate all of the hours submitted by [CLF] as travel time” by denying travel-related fees altogether. View "H.C. v. NYC DOE, et al." on Justia Law

Magellan, a manufacturer of electronic nicotine delivery systems (“ENDS”) products, sought authorization from the FDA to market ENDS under the Family Smoking Prevention and Tobacco Control Act (the “TCA”). The FDA denied Magellan's application related to the company's flavored ENDS products, finding insufficient evidence showing that marketing the pods would be appropriate for the protection of public health, a finding that requires denial of an application under the TCA. Magellan petitioned for review, arguing the FDA action was arbitrary and capricious. Magellan also argues that the FDA exceeded its statutory authority by requiring applicants to demonstrate that their flavored ENDS products are more effective than tobacco-flavored products at promoting cessation or switching from combustible cigarettes to ENDS products.The Second Circuit affirmed. The FDA did not impose a new evidentiary standard on Magellan; therefore, the FDA did not need to provide notice or consider its reliance interests. Thus, the court concluded that the FDA did not act arbitrarily or capriciously. View "Magellan Technology, Inc. v. United States Food and Drug Administration" on Justia Law

Defendant Donald J. Trump and Appellant the United States of America appealed from a district court judgment denying their motion to substitute the United States in this action pursuant to the Westfall Act of 1988. In the Second Circuit’s prior opinion, the court vacated the district court’s judgment that Trump did not act within the scope of his employment, and the court certified to the D.C. Court of Appeals the following question: Under the laws of the District, were the allegedly libelous public statements made, during his term in office, by the President of the United States, denying allegations of misconduct, with regards to events prior to that term of office, within the scope of his employment as President of the United States?   The D.C. Court of Appeals reformulated our certified question in two parts, asking (1) whether the D.C. Court of Appeals should opine on the scope of the President of the United States’ employment and (2) how the court might clarify or modify the District of Columbia’s law of respondeat superior to resolve the issue in this appeal. The D.C. Court of Appeals answered the former part in the negative and provided additional guidance in response to the latter. Having vacated the district court’s judgment in the court’s prior opinion, the court remanded for further proceedings consistent with the guidance provided in the D.C. Court of Appeals’ opinion. View "E. Jean Carroll v. Donald J. Trump" on Justia Law

Plaintiff, MSP Recovery Claims, Series LLC (“MSP”) appealed from the district court’s judgment dismissing for lack of standing its putative class action against Defendant Hereford Insurance Company (“Hereford”) and denying leave to amend. MSP has brought several lawsuits around the country seeking to recover from insurance companies that allegedly owe payments to Medicare Advantage Organizations (“MAOs”) under the Medicare Secondary Payer Act (the “MSP Act”). In the putative class action brought here, MSP charges Hereford with “deliberate and systematic avoidance” of Hereford’s reimbursement obligations under the MSP Act.   The Second Circuit affirmed. The court concluded that MSP lacked standing because its allegations do not support an inference that it has suffered a cognizable injury or that the injury it claims is traceable to Hereford. The court also concluded that the district court did not abuse its discretion when it denied MSP leave to amend based on MSP’s repeated failures to cure. The court explained that the plain language of Section 111 provides that when a no-fault insurance provider such as Hereford reports a claim pursuant to Section 111, it does not thereby admit that it is liable for the claim. The statutory context of the section’s reporting obligation and the purpose of the reporting obligation confirms the correctness of this interpretation. Because MSP’s argument that the payments made by EmblemHealth are reimbursable by Hereford rests entirely on its proposed interpretation of Section 111, MSP has not adequately alleged a “concrete” or “actual” injury or that the injury it alleges is fairly traceable to Hereford. View "MSP v. Hereford" on Justia Law

Appellant the Law Offices of Crystal Moroney (“Moroney”) is a law firm that principally provides legal advice and services to clients seeking to collect debt. As the agency charged with regulating this industry, the Consumer Financial Protection Bureau (“CFPB”) served on Moroney a civil investigative demand (“CID”) for documents, which it subsequently petitioned to enforce in the district court. While that petition was pending, the Supreme Court issued its opinion in Seila Law LLC v. CFPB, 140 S. Ct. 2183 (2020), holding that the provision that protected the Director of the CFPB from removal other than for cause was an unconstitutional limitation on the President’s removal power. The CFPB filed a notice to ratify the CID and the enforcement action against Moroney. The district court granted the CFPB’s petition to enforce the CID. On appeal, Moroney argues that the CID cannot be enforced.   The Second Circuit affirmed. The court held that the CID was not void ab initio because the CFPB Director was validly appointed, that the CFPB’s funding structure is not constitutionally infirm under either the Appropriations Clause or the nondelegation doctrine and that the CID served on Moroney is not an unduly burdensome administrative subpoena. The court explained that under the nondelegation doctrine’s lenient standard, Congress has plainly provided an intelligible principle to guide the CFPB in setting and spending its budget. Therefore, the court concluded that the CFPB’s funding structure is proper under the nondelegation doctrine. View "CFPB v. Law Offs. of Crystal Moroney" on Justia Law

Pro se Plaintiff filed a whistleblower claim against his former employer, the Federal Energy Regulatory Commission, and his former supervisors in the United States District Court for the Southern District of New York. But before doing so, Plaintiff failed to exhaust his administrative remedies as required by the Whistleblower Protection Act of 1989 (WPA) and the Civil Service Reform Act of 1978. The district court thus dismissed the claim for lack of subject-matter jurisdiction.
The Second Circuit affirmed the district court’s dismissal of Plaintiff’s whistleblower claim under Federal Rule of Civil Procedure 12(b)(1) for failure to exhaust administrative remedies. Plaintiff did not file a complaint with the Office of Special Counsel or the Merit Systems Protection Board, as required by the CSRA. Instead, he went straight to federal court. The district court thus lacked “jurisdiction to entertain a whistleblower cause of action . . . in the first instance” because Plaintiff failed to follow the proper administrative process. Second, the court wrote that Plaintiff’s argument that his failure to exhaust should be excused on equitable grounds is meritless. The court noted that it has “no authority to create equitable exceptions to jurisdictional requirements.” And, in any event, Plaintiff offers no reason why he should be granted such an equitable exception. View "Chinniah v. Fed. Energy Regul. Comm'n" on Justia Law

Plaintiff sued the Department of Justice under the Freedom of Information Act (“FOIA”), 5 U.S.C. Section 552, seeking documents from the Federal Bureau of Investigation (“FBI”) related to himself, speculating that they might include exculpatory information that the government had not disclosed in his recent criminal trial. The government produced sets of responsive documents and an index detailing FOIA exemptions under which it withheld other responsive documents, and the district court granted summary judgment for the government. Plaintiff appealed the district court’s ruling granting summary judgment to the United States Department of Justice.   On appeal, Plaintiff argued (1) that summary judgment was improperly granted because his FOIA action is an effort to vindicate his rights under Brady v. Maryland, 373 U.S. 83 (1963), and (2) that, in the alternative, the district court erred in not conducting an in-camera inspection of withheld documents. The Second Circuit affirmed. The court explained that in Brown v. Federal Bureau of Investigation, 658 F.2d 71, 76 (2d Cir. 1981), FOIA and the criminal discovery process provide distinct tracks for seeking disclosure from the government. That a FOIA action might lead to the discovery of documents useful to a particular criminal defendant changes neither the government’s statutorily defined obligations under FOIA nor the government’s burden at summary judgment. View "Jabar v. U.S. Department of Justice" on Justia Law

The American Society for the Prevention of Cruelty to Animals (“ASPCA”) appealed the judgment of the district court dismissing its “policy or practice” claim brought under the Freedom of Information Act (“FOIA”) against the Department of Agriculture and its component agency, the Animal and Plant Health Inspection Service. The ASPCA alleged that the agencies adopted a policy or practice of violating the FOIA when the agencies decommissioned two online databases of frequently requested documents. The ASPCA argued that the policy or practice violates the FOIA. While the ASPCA’s action was pending before the district court, Congress enacted a new statute that required the agencies to recommission the databases, and the agencies complied. The district court held that the ASPCA’s policy or practice claim was resolved when the agencies recommissioned the databases as required by law.   The Second Circuit affirmed, holding that the ASPCA cannot state a policy or practice claim that the agencies systematically violated the FOIA after an intervening statutory enactment required the restoration of the databases that underpinned the ASPCA’s claim. The court explained that even assuming that a “policy or practice” claim is cognizable, the ASPCA failed to state such a claim against the agencies because the Further Consolidated Appropriations Act of 2020 reversed the alleged policy or practice. View "ASPCA v. APHIS & Dep't of Agric." on Justia Law

Plaintiff American Civil Liberties Union Immigrants’ Rights Project (“ACLU”) brought a Freedom of Information Act (“FOIA”) suit in district court to compel Defendant, United States Immigration and Customs Enforcement (“ICE”), to produce agency records in the form of electronic spreadsheet data pertaining to five stages of the immigration enforcement and deportation process. ICE produced 21 spreadsheets of responsive data but did not comply with ACLU’s request to replace exempt Alien Identification Numbers (“A-Numbers”) on such spreadsheets with anonymized unique identifiers (“Unique IDs”). ACLU submits that such Unique IDs could be any combinations of numbers, letters, or symbols that, while meaningless in themselves, would allow ACLU to track datapoints pertaining to individual (but unidentified) aliens across ICE databases. The district court granted ICE’s motion for summary judgment, ruling that ACLU’s requested substitution effectively required ICE to create new records.   The Second Circuit reversed the award of summary judgment to ICE and remanded. The court reasoned that by redacting A-Numbers from the spreadsheets, it produced conveying datapoints by event rather than by person, ICE not only shielded the FOIA-exempt personal identifying information (“PII”) documented by the A-Numbers but also effectively deprived the public of access to nonexempt records in the same person-centric manner available to the agency. The court explained that the substitution of Unique IDs for A-Numbers does not create any new agency records and is a reasonable step to shield the exempt content of A-Numbers while preserving the function necessary to afford public access to non-exempt records in the same person-centric form or format available to the agency. View "ACLU Immigrants' Rts. Project v. ICE" on Justia Law