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

Articles Posted in Professional Malpractice & Ethics
by
Ivan Reyes-Arzate, the defendant-appellant, appealed his conviction and sentence after pleading guilty to a drug offense before the United States District Court for the Eastern District of New York. He was sentenced to 120 months' imprisonment, four years of supervised release, and was also subjected to a special assessment and forfeiture. His defense counsel filed an Anders brief seeking to withdraw from the appeal on the basis that any appeal would be frivolous due to the defendant's plea agreement, which included a valid waiver of the right to appeal any sentence of 293 months or less. The United States Court of Appeals for the Second Circuit, however, deferred a decision on the motion to withdraw and ordered the defense counsel to submit a supplemental brief. The court found that the defense counsel's brief only addressed the validity of Reyes-Arzate's appeal waiver and did not discuss the scope of the waiver, particularly as it related to non-imprisonment components of the sentence such as the term and conditions of supervised release. The court clarified that when filing Anders briefs, defense counsels should address all aspects of a defendant’s conviction and sentence that are not unambiguously waived. The court deferred decision on the motions and ordered the defendant-appellant's counsel to file a supplemental brief addressing whether the non-imprisonment components of the sentence, which are not unambiguously covered by the appeal waiver, present any non-frivolous issues for appeal. View "United States v. Reyes-Arzate" on Justia Law

by
In this case, the United States Court of Appeals for the Second Circuit affirmed the dismissal of Minhye Park’s case against David Dennis Kim by the United States District Court for the Eastern District of New York. The District Court dismissed the case due to Park’s persistent and knowing violation of court orders, specifically regarding discovery. The Court of Appeals found that Park’s noncompliance amounted to "sustained and willful intransigence" despite repeated warnings that continued refusal to comply would result in dismissal.Additionally, the Court of Appeals addressed the conduct of Park's attorney, Jae S. Lee. Lee cited a non-existent court decision in her reply brief to the court, which she admitted she generated using an artificial intelligence tool, ChatGPT. The court deemed this action as falling below the basic obligations of counsel and referred Lee to the court’s Grievance Panel. The court also ordered Lee to provide a copy of the decision to her client. The court emphasized that attorneys must ensure that their submissions to the court are accurate and that they have conducted a reasonable inquiry to confirm the existence and validity of the legal authorities on which they rely. View "Park v. Kim" on Justia Law

by
Appellant, an attorney, represented debtor in proceedings before the United States Bankruptcy Court. After Appellant failed to comply with a series of discovery orders, the bankruptcy court imposed sanctions of $55,000 for 55 days of non-compliance and $36,600 in attorneys' fees. The orders were affirmed by the district court. Appellant appealed, arguing that, first, the bankruptcy court lacked inherent authority to issue civil contempt sanctions, and second, as a matter of due process, he was not provided with sufficient notice of the basis for the sanctions imposed against him.   The Second Circuit affirmed. The court concluded that the civil contempt sanctions imposed against Appellant were within the scope of the bankruptcy court's discretion and that he had ample notice of the basis and reasons for the imposition of sanctions. The court explained that it appears that Appellant could not have been sanctioned under any express authority; the bankruptcy court was right to consider its inherent contempt authority. Nor was the bankruptcy court's exercise of its inherent contempt authority contrary to any provision of the Bankruptcy Code, including Section 105(a). Further, the court reasoned that the bankruptcy court found all the necessary elements -- that is, a finding of bad faith and satisfaction of the King factors -- to order contempt sanctions in the circumstances here, where Appellant was acting as an advocate. View "In re: Larisa Ivanovna Markus" on Justia Law

by
Defendant, a California licensed attorney, challenged (1) the sufficiency of the evidence supporting his conviction for transmitting extortionate communications in interstate commerce to sportswear leader Nike, attempted Hobbs Act extortion of Nike, and honest-services wire fraud of the client whom Defendant was purportedly representing in negotiations with Nike. Defendant further challenged the trial court’s jury instruction as to honest-services fraud and the legality of a $259,800.50 restitution award to Nike.   The Second Circuit affirmed. The court explained that the trial evidence was sufficient to support Defendant’s conviction for the two charged extortion counts because a reasonable jury could find that Defendant’s threat to injure Nike’s reputation and financial position was wrongful in that the multi-million-dollar demand supported by the threat bore no nexus to any claim of right. Further, the court held that the trial evidence was sufficient to support Defendant’s conviction for honest-services fraud because a reasonable jury could find that Defendant solicited a bribe from Nike in the form of a quid pro quo whereby Nike would pay Defendant many millions of dollars in return for which Defendant would violate his fiduciary duty as an attorney. The court further explained that the district court did not exceed its authority under the MVRA by awarding restitution more than 90 days after initial sentencing, and Defendant has shown no prejudice from the delayed award. Finally, the court wrote that the MVRA applies in this case where Nike sustained a pecuniary loss directly attributable to those crimes as a result of incurring fees for its attorneys to attend the meeting demanded by Defendant at which he first communicated his extortionate threat. View "United States v. Avenatti" on Justia Law

by
Plaintiff sued her employer, Defendant Montefiore Medical Center, and two of its employees, asserting claims of sexual harassment during and retaliatory discharge from her employment. Following the district court’s grant of partial summary judgment in their favor, Defendants moved to dismiss Plaintiff’s remaining claims and sought sanctions against Plaintiff and her counsel, Appellant Daniel Altaras and his firm, Appellant Derek Smith Law Group, PLLC (“DSLG”), contending that Plaintiff’s text message evidence was a forgery. The district court found by clear and convincing evidence that Plaintiff had fabricated the text messages, falsely testified about their production, and spoliated evidence in an attempt to conceal her wrongdoing. The district court also found that Altaras had facilitated Plaintiff’s misconduct. The district court dismissed Plaintiff’s remaining claims with prejudice and imposed a monetary sanction of attorneys’ fees, costs, and expenses incurred by Defendants. On appeal, Appellants challenged various aspects of the district court’s conduct.   The court vacated the portion of the district court’s judgment imposing a sanction on Altaras and DSLG and remanded for further proceedings consistent. The court affirmed the judgment of the district court in all other respects. The court held that the district court erred by failing to expressly make the finding of bad faith required to support the sanction it imposed against Altaras and DSLG.  The court directed that on remand, the district court may assess in its discretion whether Altaras’s misconduct—including his insistence on defending a complaint founded on obviously fabricated evidence or other actions—amounted to bad faith. View "Rossbach et al. v. Montefiore Medical Center et al." on Justia Law

by
Plaintiff, a Virginia-licensed mental health counselor, appealed from a district court judgment dismissing her First Amendment and Due Process challenges to a New York law requiring her to obtain a further license in that state to provide mental health counseling to New York residents. Plaintiff argued that the district court erred in (1) dismissing her as-applied challenges for lack of standing, (2) construing her First Amendment facial challenge as alleging overbreadth and concluding therefrom that she failed to state a plausible claim for relief, and (3) overlooking her facial Due Process claim.   The Second Circuit affirmed. The court explained that because Plaintiff need not satisfy the particular requirements for initial licensure to provide mental health counseling to New York residents, she can allege no injury from, and therefore has no standing to challenge, that part of the law. Moreover, as to Plaintiff’s First Amendment claims, the court explained that New York’s license requirement withstands intermediate scrutiny as a matter of law because there is no question that the law (i) serves an important government interest in promoting and protecting public health, specifically, public mental health; and (ii) is narrowly tailored by statutory definition and exemptions to advance that interest without unduly burdening speech. View "Brokamp v. James" on Justia Law

by
An attorney appealed from orders of the Committee on Grievances of the Board of Judges of the United States District Court for the Eastern District of New York (the “Committee”) finding her liable for violating various provisions of the New York Rules of Professional Conduct and imposing sanctions for these violations, including a six-month suspension from practicing law in the Eastern District. On appeal, the attorney argued that the Committee (1) deprived her of due process by failing to afford her with reasonable notice of the charges and an adequate opportunity to defend against the charges, (2) failed to substantiate each element of the charges by clear and convincing evidence, and (3) imposed a punishment that was excessive in light of the putative lack of harm to the public. She has also requested that we maintain her appeal under seal, arguing that public disclosure of her identity would cause her reputational harm.   The Second Circuit affirmed the orders of the Committee and ordered that the docket in this appeal, and all its contents, be unsealed. The court explained that the attorney violated her most basic duty to the vulnerable clients who depended on her: to provide them with diligent, competent representation. Along the way, her neglectful and discourteous conduct harmed the administration of justice itself. The Committee’s evidence establishing as much was unassailable. Further, the court wrote that to the extent that the attorney’s sufficiency-of-the-evidence challenge relies on her contention that it was improper for the Committee to consider filings and transcripts from her non-disciplinary matters in the Eastern District, it fails. View "In re Demetriades" on Justia Law

by
Plaintiff and his firm appeal from the district court's opinion and order sanctioning them for their conduct during their representation of a client in his copyright case against Bandshell Artist Management. The district court found that plaintiff repeatedly violated court orders, lied under oath to the district court, and brought and maintained this case in bad faith. The district court cited its authority under 28 U.S.C. 1927, Federal Rule of Civil Procedure 16, and its inherent power, and imposed monetary sanctions in attorney's fees, additional monetary sanctions, and nonmonetary sanctions that, inter alia, imposed nationwide requirements on cases filed by plaintiff and his firm.The Second Circuit affirmed, holding that the district court's sanctions on plaintiff and his law firm, while strict, were not an abuse of discretion. In this case, the district court's factual findings – including the findings of bad faith – were adequately supported by the evidence in the record and by the district court's judgments of witness credibility. The court explained that, given plaintiff's serious and repeated misconduct, he and his firm merited sanctions reserved for attorneys and litigants who demonstrate via their actions that unusual measures are required to deter future misbehavior, protect other litigants, and maintain the integrity of the judicial system. View "Liebowitz v. Bandshell Artist Management" on Justia Law

by
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

by
Plaintiffs, Joint Official Liquidators of the SPhinX Funds, filed suit against defendants, alleging that defendants aided and abetted fraud and breached their fiduciary duty to Refco, the brokerage and financial services firm that entered bankruptcy in 2005, and whose demise led to the bankruptcies of SPhinX and its investment manager, PlusFunds. The court concluded that the claims against defendants were properly dismissed for failure of the Amended Complaint to contain sufficient allegations that defendants had actual knowledge of Refco's fraud and breach of fiduciary duty. The district court did not abuse its discretion by dismissing the claims without leave to amend where amendment could not cure the absence of factual allegations as to actual knowledge on the part of defendants sufficient to state a claim against them for aiding and abetting Refco's fraud and breach of fiduciary duty. Accordingly, the court affirmed the judgment of the district court and denied the request for leave to amend the Amended Complaint. View "Krys v. Pigott" on Justia Law