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

The case concerns a former CEO of a brand-management company who was prosecuted for allegedly orchestrating a scheme to inflate company revenues through secret “overpayments-for-givebacks” deals with a business partner. The government alleged that the CEO arranged for the partner to pay inflated prices for joint ventures, with a secret understanding that the excess would be returned later, thereby allowing the company to report higher revenues to investors. The CEO was also accused of making false filings with the SEC and improperly influencing audits. The central factual dispute was whether the CEO actually made these undisclosed agreements.In 2021, the United States District Court for the Southern District of New York held a jury trial. The jury acquitted the CEO of conspiracy to commit securities fraud, make false SEC filings, and interfere with audits, but could not reach a verdict on the substantive charges, resulting in a mistrial on those counts. The government retried the CEO in 2022 on the substantive counts, and the second jury convicted him on all charges. The CEO moved to bar the retrial, arguing that the Double Jeopardy Clause precluded it because the first jury’s acquittal necessarily decided factual issues essential to the government’s case.The United States Court of Appeals for the Second Circuit reviewed the case. It held that the first jury’s acquittal on the conspiracy charge necessarily decided that the CEO did not make the alleged secret agreements, which was a factual issue essential to the substantive charges. Because the government’s case at the second trial depended on proving those same secret agreements, the Double Jeopardy Clause’s issue-preclusion doctrine barred the retrial. The Second Circuit reversed the district court’s judgment, vacated the CEO’s convictions, and ordered dismissal of the indictment. View "United States v. Cole" on Justia Law

A citizen of Ecuador who had been living unlawfully in the United States since 1997 was placed in removal proceedings after multiple convictions, including for driving under the influence. He conceded removability but applied for cancellation of removal, arguing that his deportation would cause “exceptional and extremely unusual hardship” to his three U.S.-citizen children. At the time of his application, all three children were minors. During a hearing before an immigration judge, he and his eldest daughter testified about the potential hardship his removal would cause. The judge ultimately denied his application, finding he lacked good moral character and had not shown the required level of hardship to his children.The Board of Immigration Appeals (BIA) affirmed the immigration judge’s decision, specifically agreeing that the petitioner had not demonstrated the necessary hardship to his children. The petitioner did not seek judicial review of this decision. Later, he filed a motion to reopen his removal proceedings, submitting new evidence—a psychological evaluation of his eldest daughter, who was then almost 20 years old—arguing that this showed she would suffer the requisite hardship. Nearly two years later, the BIA denied the motion, concluding that the new evidence would not change the outcome because the daughter had turned 21 while the motion was pending and thus no longer qualified as a “child” under the relevant statute.The United States Court of Appeals for the Second Circuit reviewed the BIA’s denial of the motion to reopen. The court held that, under 8 U.S.C. § 1229b(b)(1)(D), a qualifying “child” must be under 21 at the time the application for cancellation of removal is adjudicated, not at the time of filing or when evidence is presented. The court also found that the petitioner was not barred from raising this issue on appeal, as the BIA had raised it sua sponte. The petition for review was denied. View "Yupangui-Yunga v. Bondi" on Justia Law

A law firm sought defense and indemnification from its professional liability insurer after being sued in New York state court by a judgment creditor of its client. The creditor alleged that the firm facilitated the sale of the client’s diamond ring and received a portion of the proceeds to satisfy past fees and as a retainer for future services, despite a restraining notice prohibiting the client from transferring assets due to an unpaid judgment. The state court complaint accused the firm of fraudulent conveyance, tortious interference with judgment collection, and contempt of court.The United States District Court for the Western District of New York dismissed the law firm’s claims for defense and indemnification and denied its motion for partial summary judgment regarding the insurer’s duty to defend. The district court found that the policy’s misappropriation exclusion applied, concluding that the firm’s handling of the sale proceeds was unauthorized in light of the restraining notice, regardless of the client’s consent.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s rulings de novo. Applying New York law, the Second Circuit held that the allegations in the underlying complaint involved the provision of professional services by the law firm and did not constitute “misappropriation” as commonly understood, since there was no allegation that the firm acted without its client’s authorization. The court found the term “misappropriation” ambiguous and construed it in favor of the insured. The Second Circuit vacated the district court’s dismissal, reversed the denial of partial summary judgment on the duty to defend, and remanded with instructions to enter partial summary judgment for the law firm on the insurer’s duty to defend. The court did not address other policy exclusions or the insurer’s ultimate duty to indemnify. View "Marcus & Cinelli, LLP v. Aspen Am. Ins. Co." on Justia Law

Several individuals and a firearms association challenged provisions of New York’s Concealed Carry Improvement Act (CCIA) that require ammunition sellers to conduct background checks on purchasers, pay a $2.50 fee per check, and register with the Superintendent of the New York State Police. The plaintiffs alleged that these requirements deterred them from purchasing or selling ammunition, and that one plaintiff was unable to complete a purchase due to a system failure. They also claimed that dealers were passing the background check fee onto purchasers, and that the registration requirement deterred private sales.The United States District Court for the Western District of New York found that the association lacked standing but that the individual plaintiffs did have standing to challenge the provisions. The district court denied a preliminary injunction, concluding that the plaintiffs were unlikely to succeed on the merits of their Second Amendment claims because the state had shown that the provisions were consistent with the nation’s historical tradition of firearm regulation, as required by the framework set out in New York State Rifle & Pistol Ass’n, Inc. v. Bruen.On appeal, the United States Court of Appeals for the Second Circuit agreed that the individual plaintiffs had standing. However, the Second Circuit affirmed the denial of a preliminary injunction on different grounds. The court held that the plaintiffs failed to show that the background check, fee, and registration provisions meaningfully constrained their ability to “keep” or “bear” arms under the first step of the Bruen framework. Because the plaintiffs did not meet this threshold, the court did not address the historical analysis. The Second Circuit affirmed the district court’s order and remanded for further proceedings. View "N.Y. State Firearms Ass'n v. James" on Justia Law

A group of individuals planned and executed a robbery of a stash house in Queens, New York, in September 2017. Matthew Elias, one of the defendants, drove a getaway car but was arrested shortly after the robbery, before he received any share of the stolen property, which included marijuana, a gun, and approximately $20,000 in cash. Testimony at trial established that another participant, Hytmiah, kept all the proceeds from the robbery, distributing only a small portion to one other individual and refusing to share with the rest, including Elias.The United States District Court for the Eastern District of New York (Judge Garaufis) presided over the trial, where a jury convicted Elias of Hobbs Act robbery. As part of his sentence, the district court ordered Elias to forfeit $10,000, calculated as a pro rata share of the robbery’s proceeds, under 18 U.S.C. § 981(a)(1)(C). Elias appealed, arguing that the forfeiture order was improper because he never actually acquired any of the proceeds.The United States Court of Appeals for the Second Circuit reviewed the case. The court held that, under 18 U.S.C. § 981(a)(1)(C), as informed by the Supreme Court’s decision in Honeycutt v. United States, criminal forfeiture is limited to property that the defendant personally acquired as a result of the offense. The Second Circuit concluded that Elias was ordered to forfeit property he never obtained, which violated this rule. Accordingly, the court vacated the forfeiture order against Elias. The remainder of the judgments against Elias and his co-defendant were affirmed in part and vacated in part, with instructions for further proceedings consistent with the court’s opinion. View "United States v. Elias" on Justia Law

A group of investors who purchased American Depository Shares in a Spanish engineering and construction company alleged that the company manipulated its financial records to conceal a liquidity crisis, which ultimately led to its bankruptcy. The investors claimed that the company’s registration statement for its U.S. offering contained false statements about its accounting practices, specifically regarding the use of the percentage-of-completion method for recognizing revenue. They also alleged that company executives and underwriters were involved in or responsible for these misrepresentations. The complaint relied on information from confidential witnesses and findings from Spanish criminal proceedings and regulatory investigations, which described widespread accounting fraud and the deliberate inflation of project revenues.The United States District Court for the Southern District of New York dismissed the investors’ claims under both the Securities Act of 1933 and the Securities Exchange Act of 1934. The district court found the Securities Act claims untimely under the one-year statute of limitations and concluded that the complaint failed to state a claim under either statute. The court also denied leave to amend the Exchange Act claims against the company’s former CEO, finding that such amendment would be futile.The United States Court of Appeals for the Second Circuit reviewed the case and held that the Securities Act claims were timely because the relevant “storm warning” triggering the statute of limitations occurred later than the district court had found. The appellate court also held that the complaint adequately stated claims under both the Securities Act and the Exchange Act against the company, crediting the detailed allegations from confidential witnesses and Spanish proceedings. However, the court affirmed the denial of leave to amend the Exchange Act claims against the former CEO, finding insufficient allegations of scienter. The judgment of the district court was affirmed in part, reversed in part, and vacated in part. View "Sherman v. Abengoa, S.A." on Justia Law

A transgender inmate serving a lengthy sentence in the Connecticut prison system was diagnosed with gender dysphoria after several years of incarceration. The inmate requested various treatments, including stronger hormone therapy and a vaginoplasty, but was initially denied hormone therapy due to a prison policy that only allowed continuation, not initiation, of such treatment. After a policy change, the inmate received hormone therapy, mental health counseling, antidepressants, and some lifestyle accommodations. Despite these measures, the inmate continued to request additional treatments, including surgery, and expressed dissatisfaction with the care provided, alleging it was inadequate and not delivered by specialists in gender dysphoria.The United States District Court for the District of Connecticut reviewed the inmate’s claims of deliberate indifference to serious medical needs under the Eighth Amendment. The district court found that the corrections officials had deprived the inmate of adequate care by providing mental health treatment from unqualified providers, delaying and inadequately administering hormone therapy, and denying surgical intervention. The court denied the defendants’ motion for summary judgment on qualified immunity grounds, holding that the right to be free from deliberate indifference to serious medical needs was clearly established.On appeal, the United States Court of Appeals for the Second Circuit reversed the district court’s decision. The Second Circuit held that there is no clearly established constitutional right for inmates to receive specific treatments for gender dysphoria or to be treated by gender-dysphoria specialists. The court found that reasonable officials could disagree about the adequacy and legality of the care provided, which included talk therapy, antidepressants, and hormone therapy. The Second Circuit concluded that the defendants were entitled to qualified immunity and remanded the case with instructions to grant summary judgment in their favor. View "Clark v. Valletta" on Justia Law

The City of New York brought suit in New York state court against several major oil companies and the American Petroleum Institute, alleging violations of New York’s consumer protection laws through deceptive advertising about the environmental impact of fossil fuels. The defendants removed the case to the United States District Court for the Southern District of New York, asserting multiple grounds for federal jurisdiction. The City moved to remand the case to state court, but the district court stayed proceedings pending the outcome of a similar case, Connecticut v. Exxon Mobil Corp., in the United States Court of Appeals for the Second Circuit.After the Second Circuit affirmed the remand in the Connecticut case, the district court in New York lifted the stay and allowed the parties to re-brief the remand motion in light of the new precedent. The City renewed its motion to remand and requested attorneys’ fees and costs under 28 U.S.C. § 1447(c). The oil companies continued to oppose remand, pressing several arguments that had already been rejected by numerous federal courts, including the Second Circuit in the Connecticut case. The district court granted the motion to remand and awarded the City attorneys’ fees and costs, but only for work related to five of the six grounds for removal, and only for work performed after the Connecticut decision.On appeal, the United States Court of Appeals for the Second Circuit reviewed only the award of attorneys’ fees and costs. The court held that the district court did not abuse its discretion in awarding fees and costs for the objectively unreasonable grounds for removal pressed after the legal landscape had shifted. The Second Circuit affirmed the district court’s order, concluding that the award was justified under the “unusual circumstances” exception recognized in Martin v. Franklin Capital Corp. View "The City of New York v. Exxon Mobil Corp." on Justia Law

Zesty Paws LLC and Health and Happiness (H&H) US International Inc. are competitors of Nutramax Laboratories, Inc. and Nutramax Laboratories Veterinary Sciences, Inc. in the pet supplements market. In July 2023, Zesty Paws began advertising itself as the "#1 brand of pet supplements" in the United States. Nutramax objected, asserting that its combined pet supplement sales exceeded those of Zesty Paws, making Zesty Paws’s advertising claims false. Zesty Paws responded by filing a lawsuit seeking a declaratory judgment that its advertising was not false or misleading, arguing that its claims were reasonably interpreted as comparing its aggregate sales to those of Nutramax’s individual product brands, such as Cosequin and Dasuquin, rather than to Nutramax as a whole.The United States District Court for the Southern District of New York granted Nutramax’s motion for a preliminary injunction, enjoining Zesty Paws from making the "#1 brand" claims. The district court found that Nutramax was likely to succeed on its false advertising claim under the Lanham Act, concluding that Nutramax is a brand and that its total sales exceeded those of Zesty Paws, rendering Zesty Paws’s advertising likely literally false. The court also found the claims material, likely to cause injury, and presumed irreparable harm under the Lanham Act.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s legal conclusions de novo and its decision to issue the injunction for abuse of discretion. The Second Circuit held that the district court erred by not properly applying the literal falsity standard, which requires that the challenged advertising be unambiguously false to a reasonable consumer. Because the district court did not adequately consider whether Zesty Paws’s interpretation was reasonable, the Second Circuit vacated the preliminary injunction and remanded for further proceedings. View "Zesty Paws LLC v. Nutramax Lab'ys, Inc." on Justia Law

The case concerns allegations by investors against a company that markets and sells organic and natural products, as well as several of its current and former executives. The investors claim that, during a specified period, the company engaged in “channel stuffing”—offering distributors significant incentives to purchase more product than they could sell, in order to meet financial projections. The investors allege that these practices were not adequately disclosed to the public or properly accounted for, and that the company made misleading statements about its financial health, internal controls, and compliance with accounting standards. The company later restated its financial results, admitted to deficiencies in its internal controls, and settled with the Securities and Exchange Commission, which did not bring charges but found violations of recordkeeping and internal control requirements.The United States District Court for the Eastern District of New York initially dismissed the investors’ complaint, finding that they had not sufficiently alleged that the defendants acted with scienter, or wrongful intent. After a prior appeal resulted in a remand for further consideration, the district court again dismissed the complaint, concluding that the plaintiffs failed to adequately plead scienter and actionable misstatements or omissions.The United States Court of Appeals for the Second Circuit reviewed the case and determined that the plaintiffs had adequately alleged that the defendants made actionable misstatements and omissions regarding the company’s financial results, internal controls, and the use of channel stuffing. The court also found that the plaintiffs sufficiently alleged scienter, loss causation, and control-person liability under the relevant securities laws. The Second Circuit vacated the district court’s dismissal and remanded the case for further proceedings. The main holding is that the plaintiffs’ allegations were sufficient to survive a motion to dismiss and that the case should proceed. View "Gimpel v. Hain Celestial Group, Inc." on Justia Law