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

The defendant pled guilty to possession of a firearm and ammunition after a felony conviction. At sentencing, the United States District Court for the Eastern District of New York imposed a term of imprisonment followed by supervised release. During the sentencing hearing, the court orally imposed several “special” conditions of supervised release, as recommended in the presentence report, but did not specify or discuss any “standard” or additional discretionary conditions. The court also stated that the defendant would not be required to contribute to the cost of mental health services, contrary to a recommendation in the presentence report. However, the written judgment later included not only the special conditions but also thirteen additional discretionary “standard” conditions of supervised release, as well as a requirement that the defendant contribute to mental health service costs.After sentencing, the defendant appealed, arguing that his constitutional right to be present at sentencing was violated because the thirteen discretionary conditions were not pronounced in his presence, and that the written judgment’s requirement to pay for mental health services contradicted the oral sentence. Both parties agreed that the payment requirement should be eliminated due to this inconsistency.The United States Court of Appeals for the Second Circuit, sitting en banc, reviewed the case de novo. The court overruled its prior precedent in United States v. Truscello, which had allowed non-mandatory “standard” conditions to be added to the written judgment without oral pronouncement. The Second Circuit held that all non-mandatory conditions of supervised release, including those labeled as “standard” in the Sentencing Guidelines, must be pronounced in the defendant’s presence at sentencing. The court vacated the portions of the sentence imposing the thirteen discretionary conditions and the payment requirement, and remanded the case for further proceedings consistent with its opinion. View "United States v. Maiorana" on Justia Law

Armistice Capital, LLC and its client fund held warrants to purchase shares in Vaxart, Inc., a biotech company developing an oral COVID-19 vaccine. Stephen J. Boyd, Armistice’s Chief Investment Officer, served on Vaxart’s board. The warrants included “blocker provisions” limiting Armistice’s ownership to 4.99% and 9.99% of Vaxart’s shares. Boyd requested that Vaxart’s board amend these provisions to allow Armistice to own up to 19.99%. The board, with full knowledge that Boyd and another director were Armistice representatives, unanimously approved the amendment. Shortly after Vaxart announced its vaccine’s selection for a federal study, Armistice exercised the warrants and sold its shares, allegedly realizing an $87 million profit.Andrew E. Roth, a Vaxart shareholder, filed suit in the United States District Court for the Southern District of New York, alleging that Armistice and Boyd, as statutory insiders, violated Section 16(b) of the Securities Exchange Act by engaging in a prohibited short-swing transaction. Roth sought disgorgement of the profits to Vaxart. The defendants moved for summary judgment, arguing that even if a short-swing transaction occurred, they were exempt from liability under SEC Rule 16b-3(d) because the Vaxart board had approved the transaction with knowledge of all material facts. The District Court granted summary judgment for the defendants, finding the exemption applied.On appeal, the United States Court of Appeals for the Second Circuit reviewed the District Court’s decision de novo. The Second Circuit held that the exemption under SEC Rule 16b-3(d) applied because the transaction involved the acquisition of issuer equity securities by insiders, those insiders were directors at the time, and the transaction was approved in advance by the issuer’s board with full knowledge of the relevant relationships. The court affirmed the District Court’s judgment, holding that the defendants were exempt from Section 16(b) liability under Rule 16b-3(d). View "Roth v. Armistice Capital, LLC" on Justia Law

Joanne Sudakow entered into a contract with CleanChoice Energy, Inc. to purchase electricity. The initial agreement, which she accepted in October 2021, did not include an arbitration clause and specified that New York would be the exclusive venue for any lawsuits. About three weeks after the contract was executed, CleanChoice sent Sudakow a “Welcome Package” containing new terms, including an arbitration provision, but Sudakow did not sign or otherwise expressly assent to these new terms. She continued to pay for her electricity service until she terminated it in August 2022.Sudakow later filed a putative class action in the United States District Court for the Southern District of New York, alleging breach of contract and deceptive business practices by CleanChoice. CleanChoice moved to compel arbitration based on the arbitration provision in the subsequently mailed terms. The district court denied the motion, finding that Sudakow did not have sufficient notice of the arbitration provision and had not assented to it.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Second Circuit held that Sudakow was not bound by the arbitration provision because CleanChoice failed to provide clear and conspicuous notice of the new terms, and a reasonable person would not have understood that making payments constituted assent to those terms. The court also found that the language of the subsequent terms indicated that a signature was required for assent, which Sudakow never provided. Accordingly, the Second Circuit affirmed the district court’s judgment denying CleanChoice’s motion to compel arbitration. View "Sudakow v. CleanChoice Energy, Inc." on Justia Law

A New York State Police trooper stopped Daniel Delgado for erratic driving and discovered that his license was suspended. During an inventory search of his vehicle, the trooper found a loaded “ghost gun” and ammunition, which Delgado admitted belonged to him. Delgado had several prior convictions, including a felony conviction for attempted second-degree murder in Florida, where he had shot a man in the back. Delgado was indicted for possessing ammunition after a felony conviction, in violation of 18 U.S.C. § 922(g)(1), and pleaded guilty without a plea agreement.The United States District Court for the Southern District of New York denied Delgado’s motion to withdraw his guilty plea and to dismiss the indictment, finding that § 922(g)(1) did not violate the Second Amendment. At sentencing, the court determined that Delgado’s prior Florida conviction for attempted second-degree murder was a “crime of violence” under U.S.S.G. § 2K2.1(a), resulting in a higher base offense level. Delgado was sentenced to thirty months’ imprisonment and three years of supervised release. He timely appealed, challenging both the constitutionality of § 922(g)(1) and the classification of his prior conviction.The United States Court of Appeals for the Second Circuit reviewed the case. It held that Delgado’s constitutional challenge to § 922(g)(1) was foreclosed by its recent decision in Zherka v. Bondi, which reaffirmed the statute’s constitutionality after New York State Rifle & Pistol Ass’n v. Bruen. The court also held that Florida’s offense of attempted second-degree murder is categorically a crime of violence under the Sentencing Guidelines, as it requires an intentional act imminently dangerous to another and demonstrating a depraved mind. The Second Circuit affirmed the judgment of the district court. View "United States v. Delgado" on Justia Law

Investors who purchased shares of a fitness equipment company between February 2021 and January 2022 alleged that the company and several executives misled the public about the ongoing demand for its products and the state of its inventory following the COVID-19 pandemic. During the pandemic, demand for the company’s products surged, but plaintiffs claimed that by early 2021, demand had declined as gyms reopened. Plaintiffs asserted that the company concealed this decline and continued to assure investors that demand remained strong and that supply chain investments were necessary. Their allegations were supported by statements from numerous former employees who described declining sales, missed quotas, and growing excess inventory.The United States District Court for the Southern District of New York reviewed the case after the plaintiffs filed an amended complaint. The district court dismissed the complaint, finding that the plaintiffs failed to allege any actionable material misstatements or omissions. The court determined that most statements were either protected forward-looking statements, non-actionable puffery, or consistent with the company’s actual financial results. The court also found that the confidential witness accounts were anecdotal and did not reflect the company’s overall performance.The United States Court of Appeals for the Second Circuit reviewed the district court’s decision. The appellate court agreed that most of the challenged statements were not actionable, either because they were not materially false or misleading, or because they constituted non-actionable puffery. However, the Second Circuit found that the plaintiffs plausibly alleged actionable misstatements or omissions regarding the company’s characterization of a price reduction as “absolutely offensive” and its risk disclosures about excess inventory in certain SEC filings, which may have been misleading because the risks had already materialized. The Second Circuit vacated the district court’s dismissal as to these statements and remanded for further proceedings, while affirming the dismissal of claims based on other statements. View "City of Hialeah Employees' Retirement System v. Peloton Interactive, Inc." on Justia Law

Several groups of plaintiffs sought to access approximately $3.5 billion in assets held at the Federal Reserve Bank of New York in the name of Da Afghanistan Bank (DAB), the central bank of Afghanistan. The first group, the Pre-Judgment Plaintiffs, sought to confirm a pre-judgment attachment order on these funds to secure potential future judgments against the Taliban for its alleged role in the 1998 U.S. embassy bombings in East Africa. The second group, the Judgment Plaintiffs, who already held judgments against the Taliban for its role in the September 11, 2001 terrorist attacks, sought turnover of the same funds to satisfy their judgments. The assets in question were blocked by the U.S. government after the Taliban seized control of Afghanistan in August 2021, but the United States has not recognized the Taliban as the legitimate government of Afghanistan.In the United States District Court for the Southern District of New York, Judge Valerie E. Caproni denied the Pre-Judgment Plaintiffs’ motion to confirm the attachment, finding that DAB’s funds were immune from attachment under the Foreign Sovereign Immunities Act (FSIA). Judge George B. Daniels denied the Judgment Plaintiffs’ turnover motions, concluding that the FSIA and the Terrorism Risk Insurance Act of 2002 (TRIA) did not permit turnover of the funds, and that DAB was not an agency or instrumentality of the Taliban for TRIA purposes.The United States Court of Appeals for the Second Circuit affirmed both district court orders. The court held that DAB, as the central bank of Afghanistan, is an agency or instrumentality of a foreign state recognized by the Executive Branch, and thus its assets are immune from attachment and execution under the FSIA. The court further held that while the TRIA abrogates FSIA immunity and provides an independent basis for subject matter jurisdiction, DAB was not an agency or instrumentality of the Taliban at the time the assets were blocked. Therefore, the TRIA did not apply, and the plaintiffs could not access the funds. View "Havlish v. Taliban" on Justia Law

Ed Seganti, the owner of a 2018 Cobia motorboat, was involved in a boating collision near Goose Creek in Nassau County on May 29, 2022. Nancy Skolnik, a passenger on another boat, was injured in the accident. On September 22, 2022, Skolnik’s attorney sent Seganti a letter notifying him of her intent to pursue a personal injury claim arising from the collision. Nearly a year later, Skolnik filed suit in New York State Supreme Court against Seganti and the other boat’s operator. On November 1, 2023, Seganti filed a petition in the U.S. District Court for the Eastern District of New York seeking to limit his liability under the Limitation of Liability Act.The U.S. District Court for the Eastern District of New York determined that Seganti’s petition was untimely because it was filed more than six months after he received written notice of Skolnik’s claim. The court held that this untimeliness deprived it of subject matter jurisdiction and dismissed the action on that basis.The United States Court of Appeals for the Second Circuit reviewed the district court’s decision. The Second Circuit held that the six-month time limit in 46 U.S.C. § 30529(a) is a non-jurisdictional claim-processing rule, not a restriction on subject matter jurisdiction. However, because Seganti’s petition was untimely, the appellate court concluded that the petition failed to state a claim upon which relief could be granted. The Second Circuit modified the district court’s judgment to reflect dismissal under Federal Rule of Civil Procedure 12(b)(6) with prejudice, and affirmed the judgment as modified. The main holding is that the six-month deadline in § 30529(a) is not jurisdictional, but failure to comply with it requires dismissal for failure to state a claim. View "In the Matter of the Complaint of Ed Seganti" on Justia Law

Ripple Analytics Inc. operated a software platform for human resources functions and originally owned the federal trademark for the word “RIPPLE®” in connection with its software. In April 2018, Ripple assigned all rights, title, and interest in its intellectual property, including the trademark, to its Chairman and CEO, Noah Pusey. Meanwhile, People Center, Inc. began using the name “RIPPLING” for similar software, though it abandoned its own trademark registration effort. Ripple later sued People Center for trademark infringement and unfair competition, claiming ownership of the RIPPLE® mark.The United States District Court for the Eastern District of New York reviewed the case. During discovery, Ripple produced the assignment agreement showing that Pusey, not Ripple, owned the trademark. People Center moved to dismiss under Federal Rule of Civil Procedure 17, arguing Ripple was not the real party in interest. The district court dismissed Ripple’s trademark infringement claim with prejudice, dismissed its unfair competition claims without prejudice for lack of standing, and denied Ripple’s motion to amend its complaint, finding the proposed amendment futile because it did not resolve the standing issue.On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court’s judgment. The appellate court held that Ripple was not the real party in interest for the trademark infringement claim, as ownership had been assigned to Pusey, who failed to ratify or join the action. The court also held that Ripple lacked standing to pursue unfair competition claims under federal and state law, as it no longer had a commercial interest in the trademark. The denial of Ripple’s motion to amend was upheld because the amendment would not cure the standing defect. The court further found that the district court’s interlocutory order allowing People Center to amend its answer was not properly before it on appeal. View "Ripple Analytics Inc. v. People Center, Inc." on Justia Law

A former dancer at two adult entertainment clubs in Manhattan filed a class charge with the Equal Employment Opportunity Commission (EEOC), alleging pervasive sexual harassment and a hostile work environment affecting herself and other female dancers. She claimed that the clubs’ policies and practices fostered this environment, including being forced to change in open areas monitored by video and being pressured to engage in sexual acts with customers. After receiving the charge, the EEOC requested information from the clubs, including employee “pedigree” data such as names, demographics, and employment details. The clubs objected, arguing the requests were irrelevant and burdensome, but the EEOC issued subpoenas for the information.The United States District Court for the Southern District of New York granted the EEOC’s petition to enforce the subpoenas, finding the requested information relevant to the investigation and not unduly burdensome for the clubs to produce. The clubs appealed and, while the appeal was pending, the EEOC issued a right-to-sue letter to the charging party, who then filed a class action lawsuit in the same district court. The clubs argued that the EEOC lost its authority to investigate and enforce subpoenas once the right-to-sue letter was issued and the lawsuit commenced.The United States Court of Appeals for the Second Circuit held that the EEOC retains its statutory authority to investigate charges and enforce subpoenas even after issuing a right-to-sue letter and after the charging party files a lawsuit. The court also found that the employee information sought was relevant to the underlying charge and that the clubs had not shown compliance would be unduly burdensome. The Second Circuit therefore affirmed the district court’s order enforcing the subpoenas. View "EEOC v. AAM Holding Corp." on Justia Law

Carlos Mercado was originally convicted in federal court of conspiracy to distribute heroin and sentenced to 120 months’ imprisonment followed by five years of supervised release, with conditions including a prohibition on committing new offenses. After completing his prison term, Mercado began supervised release in June 2021. In November 2024, he was arrested by Hartford police and charged under Connecticut law with drug offenses after narcotics and cash were found in his possession. The United States Probation Office petitioned the United States District Court for the District of Connecticut to issue a summons for a hearing on Mercado’s alleged violation of supervised release.The District Court for the District of Connecticut questioned whether it had statutory authority to detain Mercado pending revocation proceedings, citing the Non-Detention Act, which requires statutory authorization for detention of U.S. citizens. The court concluded that neither 18 U.S.C. § 3143(a)(1) nor Federal Rule of Criminal Procedure 32.1 provided such authority, reasoning that Mercado had not been “found guilty of an offense” with respect to the alleged violation and was not “awaiting imposition or execution” of a sentence. The court denied the government’s motion to detain Mercado, and Mercado moved to dismiss the government’s appeal for lack of jurisdiction.The United States Court of Appeals for the Second Circuit held that it had jurisdiction to review the district court’s order under 18 U.S.C. § 3145(c) and 28 U.S.C. § 1291. The Second Circuit further held that 18 U.S.C. § 3143(a)(1) authorizes a district court to detain a supervisee charged with a supervised release violation pending revocation proceedings, because the supervisee was previously found guilty and is awaiting execution of a portion of the original sentence. The appellate court vacated the district court’s order and remanded for further proceedings. View "United States v. Mercado" on Justia Law