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

A major music performing rights organization, which licenses the public performance of musical works to concert promoters, was unable to reach agreement with a national association of concert promoters on the rates and revenue base for blanket licenses covering live performances. For the first time in their relationship, the rights organization petitioned the United States District Court for the Southern District of New York to set the licensing terms, as permitted under an antitrust consent decree applicable to the organization due to its significant market share. The promoters’ association, whose members include the two largest concert promoters in the United States, has historically secured blanket licenses from multiple performing rights organizations to avoid copyright infringement.The district court accepted the organization’s proposed rates for a retroactive period and set a new, higher rate for a more recent period. It also broadened the definition of “gross revenues” for calculating royalties, including new categories such as revenues from ticket service fees, VIP packages, and box suites, which had not traditionally been included. The promoters’ association appealed these decisions, arguing that both the rates and the expanded revenue base were unreasonable. The rights organization cross-appealed the denial of prejudgment interest on retroactive payments.The United States Court of Appeals for the Second Circuit reviewed the district court’s decisions. It held that the district court imposed unreasonable rates, in part because it adopted an unprecedented and administratively burdensome revenue base without justification and relied too heavily on benchmark agreements that were not sufficiently comparable to prior agreements with the association. The court also found no economic changes justifying a significant rate increase. While it found no abuse of discretion in denying prejudgment interest, it vacated the district court’s judgment and remanded for further proceedings consistent with its opinion. View "Broadcast Music, Inc. v. North American Concert Promoters Association" on Justia Law

SBK ART LLC, a special purpose vehicle formerly owned by Sberbank and holding a substantial interest in a Croatian company called Fortenova Grupa, became subject to international sanctions after Russia’s invasion of Ukraine. Following Sberbank’s sale of SBK to an Emirati investor, Fortenova continued to treat SBK as a sanctioned entity, citing uncertainty about the change of control. Akin Gump Strauss Hauer & Feld LLP, acting as Fortenova’s counsel, issued a memorandum (the “Akin Opinion”) questioning the legitimacy of the sale and compliance with EU sanctions. This opinion was allegedly shared with the EU Council, which imposed sanctions on SBK. Subsequently, SBK was excluded from corporate governance decisions and lost its interest in Fortenova, prompting SBK to initiate litigation in the General Court of the European Union and the Civil Court of Malta, and to contemplate further proceedings in the Netherlands.The United States District Court for the Southern District of New York, after referral to a Magistrate Judge, granted SBK’s petition under 28 U.S.C. §1782 for discovery from Akin, but limited it to non-privileged materials relating to the sale, the Akin Opinion, and governance changes, within a defined timeframe. The District Judge adopted the Magistrate Judge’s report and recommendations, overruling Akin’s objections, particularly those based on the Second Circuit’s prior decision in Kiobel by Samkalden v. Cravath, Swaine & Moore LLP.The United States Court of Appeals for the Second Circuit reviewed whether the District Court abused its discretion by granting discovery from Akin even though the documents sought were not discoverable from Akin’s client in the relevant foreign jurisdictions. The Second Circuit held that Section 1782 does not impose a foreign-discoverability requirement, distinguishing Kiobel and affirming the District Court’s order. Any objections regarding privilege or undue burden must be resolved under ordinary discovery rules. The District Court’s order was affirmed. View "In Re: Ex Parte Application of SBK ART LLC" on Justia Law

A mother and the Connecticut Fair Housing Center sued a company that provides tenant screening reports, alleging that its practices contributed to the denial of a housing application for the mother’s disabled son. The apartment manager used the defendant’s screening platform to review applicants’ criminal histories, and the son’s application was denied based on a flagged shoplifting charge. The mother later had the charge dismissed. She also sought a copy of her son’s screening report from the defendant, but was told she needed to provide a power of attorney. She instead submitted documentation of her conservatorship, but the defendant rejected it as facially invalid due to a missing court seal.The United States District Court for the District of Connecticut held a bench trial. It found that the Fair Housing Act (FHA) did not apply to the defendant because it was not the decision-maker on housing applications; only the housing provider made those determinations. The district court also found the defendant’s requirement for a valid conservatorship certificate reasonable and not discriminatory toward handicapped individuals. However, the district court found the defendant liable under the Fair Credit Reporting Act (FCRA) for a period when it insisted on a power of attorney, making it impossible for the mother to obtain her son’s consumer file.On appeal, the United States Court of Appeals for the Second Circuit concluded that the Connecticut Fair Housing Center lacked standing because its diversion of resources to address the defendant’s actions did not constitute a concrete injury. The court also held that, although the FHA does not exclude certain defendants, the defendant here was not the proximate cause of the housing denial, and the mother failed to establish a prima facie case of disparate-impact discrimination. Furthermore, because she never provided a facially valid conservatorship certificate, she could not show that the defendant’s documentation requirements prevented her from obtaining the report. The court vacated, affirmed, and reversed in part, dismissing the Center’s claims, affirming no FHA liability, and reversing FCRA liability. View "CFHC v. CoreLogic Rental Prop. Sols." on Justia Law

In this case, a school bus company’s employees voted in 2020 to change their union representation, shifting from a Teamsters local to an Amalgamated Transit Workers local. As a result, the company was required under federal law to withdraw from the multiemployer pension plan affiliated with the old union and begin contributing to a new plan aligned with the new union. This withdrawal triggered several obligations under ERISA, including the company’s duty to pay “withdrawal liability” to the old plan and the old plan’s obligation to transfer certain assets and liabilities to the new plan relating to the employees who switched unions.After the old pension fund assessed withdrawal liability of approximately $1.8 million, the company argued that, under 29 U.S.C. § 1415(c), this liability should be reduced by the difference between the liabilities and assets transferred to the new plan. The old plan disagreed, interpreting the statute differently and contending that no reduction should occur. The United States District Court for the Southern District of New York granted summary judgment to the company, holding that the statute required a $1.8 million reduction in withdrawal liability.On appeal, the United States Court of Appeals for the Second Circuit reviewed the District Court’s interpretation of the statute de novo. The Second Circuit found that the phrase “unfunded vested benefits” in Section 1415(c) is ambiguous, but, after examining the statute’s structure and purpose, concluded that the District Court’s interpretation was correct. The court held that “unfunded vested benefits allocable to the employer” under Section 1415(c) refers to the entire amount of liabilities transferred to the new plan, not reduced by transferred assets. As a result, the Second Circuit affirmed the District Court’s judgment, approving the $1.8 million withdrawal liability reduction and dismissing the company’s cross-appeal as moot. View "Mar-Can Transp. Co. v. Loc. 854 Pension Fund" on Justia Law

A patrol-level police officer in Colombia was convicted after a jury trial of conspiracy to import cocaine into the United States. The officer did not dispute that he participated in communications about a proposed cocaine export scheme, but argued that he lacked criminal intent because he believed he was assisting the Colombian National Police in arranging a seizure of the cocaine, rather than joining a drug-trafficking conspiracy. His defense at trial centered on his understanding that he was participating in an anti-narcotics operation and not an illegal export scheme.The United States District Court for the Southern District of New York presided over the jury trial. The prosecution presented evidence of the officer’s participation in meetings and communications with a DEA informant posing as a drug trafficker. The defense sought to introduce evidence that the officer’s colleague, who recruited him into the scheme, had previously assisted the Colombian National Police's anti-narcotics unit in successful drug seizures. The district court excluded this evidence, accepting the government’s argument that it constituted impermissible propensity evidence under Federal Rule of Evidence 404(b). The officer was convicted and sentenced to 165 months in prison, followed by five years of supervised release.The United States Court of Appeals for the Second Circuit reviewed the case and concluded that the district court erred in excluding the challenged evidence. The appellate court found the evidence relevant to corroborate the officer’s account of conversations with his colleague, directly impacting his state of mind, and determined that it was not barred by Rule 404(b). The court further held that the exclusion was not harmless, as the officer’s defense turned on criminal intent and the evidence could have affected the jury’s verdict. Accordingly, the Second Circuit vacated the conviction and remanded for further proceedings. View "U.S. v. Cardenas" on Justia Law

A ceiling collapse at a construction site in New York injured three employees of a subcontractor, Vanquish Contracting Corporation. The general contractor, Reidy Contracting Group, LLC, had required Vanquish to procure insurance coverage that would protect Reidy as an additional insured. Vanquish obtained an excess liability policy from Mt. Hawley Insurance Company, which incorporated the terms of an underlying policy issued by Endurance American Specialty Insurance Company. After the accident, the injured Vanquish employees sued Reidy. Reidy sought defense and indemnification from Mt. Hawley, but Mt. Hawley denied coverage, arguing that Reidy was not an additional insured and that the Employers Liability Exclusion in the policy barred coverage. The United States District Court for the Western District of New York reviewed cross-motions for summary judgment. The district court found that Reidy was an additional insured under the policy and that the Employers Liability Exclusion did not bar coverage. The court reasoned that, based on the policy’s language and the Separation of Insureds clause, “the insured” in the exclusion referred to the party seeking coverage—here, Reidy, which did not employ the injured workers. Alternatively, the court found the exclusion ambiguous and construed it against Mt. Hawley as the drafter. The court also held that Mt. Hawley was precluded from contesting Reidy’s status as an additional insured because it failed to timely raise this argument as required by New York law. On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court’s judgment. The appellate court held that Reidy qualifies as an additional insured and that the Employers Liability Exclusion is ambiguous; thus, the ambiguity must be resolved in favor of coverage for Reidy. The judgment granting summary judgment to Reidy and Merchants Mutual Insurance Company was affirmed. View "Reidy Contracting Group, LLC v. Mt. Hawley Insurance Company" on Justia Law

A professional photographer discovered that between 2018 and 2022, hundreds of his photographs were uploaded to an online stock photo platform operated by a large digital content marketplace, without his permission. Three contributors to the platform were responsible for uploading these images, and the platform subsequently licensed many of them to customers, generating revenue shared with the uploaders. After being notified by the photographer’s attorney, the platform removed the images and terminated the contributor accounts, but the photographer filed suit alleging both copyright infringement and violations related to the removal and alteration of copyright management information (CMI).The United States District Court for the Southern District of New York granted summary judgment to the platform on all claims. The court concluded that the platform qualified for safe harbor immunity under the Digital Millennium Copyright Act (DMCA) for the copyright infringement claims. For the CMI claims, the court found that the photographer failed to present evidence of the platform's required scienter (knowledge or intent) to sustain a violation under 17 U.S.C. § 1202.On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court’s decision regarding the CMI claims, agreeing that there was no evidence the platform acted with the necessary scienter under § 1202(a) or (b). However, the appellate court vacated the grant of summary judgment on the copyright infringement claims. It held that factual disputes remained as to whether the infringing activity occurred “by reason of the storage at the direction of a user” and whether the platform had the “right and ability to control” the infringing activity, both critical to safe harbor eligibility under the DMCA. The case was remanded for further proceedings on these factual questions. View "McGucken v. Shutterstock, Inc." on Justia Law

Lanesborough 2000, LLC and Nextres, LLC entered into a loan agreement for the funding of a self-storage facility in Corning, New York. The deal included an arbitration agreement that required disputes to be resolved by binding arbitration. Lanesborough alleged that Nextres breached the agreement by failing to disburse loan funds as promised. An arbitrator found in favor of Lanesborough, awarding consequential damages, declaratory and injunctive relief, and attorney’s fees based on Nextres’s bad faith conduct. The arbitration agreement contained a waiver of the “right to appeal,” but did not specify its scope.The United States District Court for the Southern District of New York partially confirmed the arbitrator’s awards. It confirmed the awards of consequential damages, declaratory relief, and attorney’s fees, finding that the fee award was permissible because it was based on a finding of bad faith. The District Court also granted Lanesborough’s requests for injunctive relief by ordering Nextres to comply with the loan agreement and enjoining Nextres from pursuing foreclosure actions, including a pending state court foreclosure against a related party. The District Court awarded Lanesborough post-award prejudgment interest and stayed enforcement of its judgment pending appeal.On appeal, the United States Court of Appeals for the Second Circuit first held that the parties’ contractual waiver of the “right to appeal” was ambiguous and not sufficiently clear or unequivocal to preclude appellate review. On the merits, the Second Circuit affirmed the district court’s confirmation of the arbitrator’s awards and its grant of post-award prejudgment interest. However, it vacated the district court’s injunction barring the state-court foreclosure action because the lower court had not considered whether the injunction was consistent with the Anti-Injunction Act. The case was remanded for further proceedings on that issue. View "Lanesborough 2000, LLC v. Nextres, LLC" on Justia Law

Several health care facilities and their affiliates faced administrative complaints from the General Counsel of the National Labor Relations Board (NLRB) in 2012 for alleged unfair labor practices. The proceedings were assigned to Administrative Law Judge (ALJ) Kenneth Chu, who developed the factual record over multiple hearings. During this period, the Supreme Court’s decision in NLRB v. Noel Canning invalidated certain NLRB Board appointments, calling into question ALJ Chu’s own appointment. The Board later “ratified” prior actions, including Chu’s appointment, after regaining a lawful quorum. Administrative proceedings were delayed for several years due to interlocutory appeals and COVID-19, and ultimately resumed in 2023. Shortly before resumption, the plaintiffs sought to halt the proceedings, arguing the ALJ was unlawfully appointed and protected from removal in a manner unconstitutional under the separation of powers.The plaintiffs initially sought relief in the United States District Court for the District of New Jersey, which denied a temporary restraining order and transferred the case to the United States District Court for the District of Connecticut. There, the plaintiffs moved for a preliminary injunction, again raising constitutional arguments regarding the ALJ’s appointment and removal protections. The District of Connecticut denied the injunction, finding the plaintiffs had not shown a clear likelihood of success on the merits. Proceedings before ALJ Chu concluded in May 2024, after which Chu retired and the NLRB Board assumed de novo review of the case.The United States Court of Appeals for the Second Circuit reviewed the appeal. It assumed jurisdiction but declined to address the likelihood of success on the merits, instead affirming the district court’s denial of a preliminary injunction on the ground that the plaintiffs could not demonstrate irreparable harm. The court held that, because all proceedings before the challenged ALJ had concluded and the Board (now lawfully constituted) would conduct de novo review, there was no risk of irreparable injury warranting injunctive relief. The order was affirmed. View "Care One, LLC v. NLRB" on Justia Law

In January 2023, Jones J. Woods was charged with depredation against federal property after throwing rocks at windows of the United States Attorney’s Office in Buffalo, New York. Woods exhibited erratic behavior during court appearances in the United States District Court for the Western District of New York, prompting a psychiatric evaluation. In June 2023, the court found him incompetent to stand trial and ordered hospitalization for up to four months to determine if competency could be restored. After delays, Woods was hospitalized in January 2024, but after four months, he remained in custody at FMC Devens. In August 2024, following an evaluation, a Magistrate Judge found no substantial probability Woods would be restored to competency and ordered an additional 45 days of hospitalization, also directing an evaluation of dangerousness.Woods appealed the Magistrate Judge’s order to the United States District Court for the Western District of New York, which affirmed the order in September 2024. Meanwhile, the government filed a certificate of dangerousness, staying Woods’s release and initiating civil commitment proceedings in the District of Massachusetts. Woods challenged the validity of the extension of his hospitalization, arguing the district court lacked authority under the relevant statutes once the initial four-month period had expired and no restoration of competency was likely.The United States Court of Appeals for the Second Circuit reviewed the case. The court held that Woods’s appeal was moot as to the dangerousness evaluation, since it had been completed and relief was not available. However, the appeal was not moot regarding the 45-day extension of hospitalization, as vacatur could affect ongoing civil commitment proceedings. On the merits, the Second Circuit affirmed the district court’s authority under 18 U.S.C. § 4241(d)(2)(B) to order continued custodial hospitalization for a reasonable period after the initial four months if charges were not yet disposed of, even when restoration of competency was deemed unlikely. The remainder of Woods’s appeal was dismissed as moot. View "United States v. Woods" on Justia Law