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

This action concerns loans issued by Plaintiff, EMA Financial, LLC, to a group of companies that were controlled by Defendants. The loan agreements contained so-called “floating-price conversion option” provisions, which gave EMA the right to exercise an option to receive company stock in lieu of cash repayment on the loans. When EMA initially sought partial repayment of the loans through the stock repayment option in 2017, the companies delivered the shares to EMA at the agreed-upon discount rate. EMA sought to exercise the conversion option again. This time, the companies failed to deliver the stock. EMA then brought suit, claiming breach of contract and breach of guaranty as to the loan agreements, and fraudulent conveyance and fraudulent inducement. Defendants asserted as an affirmative defense that the loan agreements were void because the conversion option provisions rendered the agreements criminally usurious under New York law. The district court dismissed this defense and entered judgment in favor of EMA for some of its claims and in favor of Defendants for other. Two Defendants appealed, arguing that the district court’s dismissal of the usury defense at summary judgment should be vacated in light of an intervening change in New York law.   The Second Circuit vacated. The court reasoned that it is also clear that Adar Bays II materially altered the Defendants’ rights by providing them with a newly viable avenue by which they could seek to void the Notes and avoid liability for breaching them. Therefore, even assuming the other necessary conditions for collateral estoppel are met, the Defendants are not precluded from raising a usury defense notwithstanding the Corporate Defendants’ default. View "EMA Financial, LLC v. Chancis" on Justia Law

A school bus driver filed an action under 42 U.S.C. Section 1983 against two public-sector unions and her employer, the New Hartford Central School District, alleging that their continued deduction of union fees from her paycheck following her resignation from both unions violated her First and Fourteenth Amendment rights under Janus v. Am. Fed’n of State, Cnty., and Mun. Emps., Council 31, 138 S. Ct. 2448 (2018). She appealed the dismissal of her claims, arguing that the district court erred by prematurely dismissing her claims against the unions for, among other things, failing to adequately plead state action.   The Second Circuit affirmed. The court concluded that because Appellant voluntarily became a union member and affirmatively agreed to pay union dues through payroll deductions for a set period, the district court properly dismissed her claims. The court explained that New York’s Taylor Law guarantees public employees the right to choose whether to join the union as members, N.Y. Civ. Serv. Law Section 202 and prohibits any union or public employer from “interfering with, restraining or coercing public employees in the exercise of their rights.” Here,  it is undisputed that Appellant voluntarily joined the Unions and authorized dues deductions from her wages when she signed the Membership Agreement in 2018. View "Wheatley v. New York State United Teachers, et al." on Justia Law

Defendant appealed from a judgment of conviction entered in district court after a jury found him guilty of two counts of conspiracy to commit honest-services wire fraud (Counts Nine and Ten), and one count of solicitation of bribes and gratuities (Count Eleven). Finding no merit in the arguments raised on appeal, the Second Circuit affirmed the judgment of the district court. Defendant then petitioned the Supreme Court for review, asking that Court to decide, as pertinent to Count Ten, whether a private citizen who has informal political or other influence over governmental decision-making can be convicted of honest services fraud. The Supreme Court reversed the court’s judgment – holding that the district court’s jury instructions, based on our decades-old decision in United States v. Margiotta, 688 F.2d 108 (2d Cir. 1982), were clearly erroneous – and remanded for further proceedings.   The Second Circuit affirmed Defendant’s convictions and sentences on Counts Nine and Eleven, vacated his conviction and sentence on Count Ten, and remanded to the district court. The court explained that although the Supreme Court held that a private citizen “nominally outside public employment” can, in certain circumstances, be convicted of defrauding the public of honest services it nonetheless concluded that the Margiotta-based jury instructions given at trial in this case were erroneous, and that “it was far from clear that the erroneous jury instructions would be harmless.” The court explained that, on remand, the government has made no argument that the instructional error was harmless. Thus vacatur of Defendant’s conviction and sentence on Count Ten is therefore warranted. View "United States v. Percoco" on Justia Law

Petitioner challenged his conviction for brandishing a firearm during and in relation to a crime of violence or drug trafficking crime. Petitioner argued that his firearms conviction cannot survive United States v. Barrett. Petitioner argued that (1) his plea allocutions did not connect the robbery conspiracy to the “separate” drug conspiracy, such that the latter cannot serve as a predicate for the Section 924(c) conviction; and (2) his arguable allocution to substantive robbery (an uncharged offense) likewise cannot predicate the gun count.   The Second Circuit affirmed. The court explained that a petitioner may seek collateral relief to challenge the constitutional validity of a guilty plea where a subsequent substantive constitutional or statutory holding creates “a significant risk that a defendant stands convicted of an act that the law does not make criminal.” The court wrote that because the government has not argued otherwise, it assumes without deciding that Petitioner has not procedurally defaulted his claim. On the merits, the court applied the new substantive rule the Supreme Court announced in Davis and that the court applied in Barrett, recognizing that a Section 924(c) conviction based on an invalid predicate is error. The court reasoned that when Petitioner admitted to brandishing a firearm in furtherance of one, he necessarily admitted to brandishing it in furtherance of the other. Accordingly, Petitioner is not entitled to collateral relief based on the fact that the Hobbs Act robbery conspiracy is no longer a valid predicate for a Section 924(c) charge. View "Tavarez v. United States" on Justia Law

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

Defendant appealed the district court’s judgment awarding damages to Plaintiff to recover funds Defendant received as the result of various alleged fraudulent transfers. The district court entered a default against Defendant as a sanction under Federal Rule of Civil Procedure 37(b) for her repeated failure to comply with discovery orders and ultimately entered a default judgment against Defendant for fraudulent transfers, awarding Plaintiff damages calculated based on three checks Defendant drew from bank accounts she held jointly with her debtor husband.   The Second Circuit affirmed. The court concluded that the district court did not abuse its discretion in determining that Defendant’s noncompliance during discovery warranted a default. The court explained that Defendant failed to respond to interrogatories and produce the documents Plaintiff requested, in violation of the district court’s many orders. This record supports the district court’s determination that Defendant acted willfully, that lesser sanctions would have been inadequate given Defendant’s continued noncompliance after multiple explicit warnings about the consequences of further noncompliance, that Defendant was given ample notice that her continued noncompliance would result in sanctions, including the entry of default judgment, and that her noncompliance spanned more than six months. The court also concluded that Defendant’s withdrawals from accounts she held jointly with her husband constitute fraudulent transfers under Connecticut law. View "Mirlis v. Greer" on Justia Law

Plaintiff, an adjunct professor of economics at SUNY Albany, alleged that his failure to advance within his department to his colleagues’ unfavorable view of the methodology he employs in his scholarship. Plaintiff filed a lawsuit against Defendants, two of Plaintiff’s colleagues who were involved in the hiring decisions at issue. Plaintiff asserted three causes of action: (1) a claim for damages pursuant to 42 U.S.C. Section 1983 ; (2) a claim pursuant to Section 1983 for injunctive relief against SUNY Albany President in the form of a court order to “prevent ongoing discrimination against Keynesian economists” in violation of the First Amendment; and (3) an age discrimination claim under New York State’s Human Rights Law. The district court granted summary judgment to Defendants   The Second Circuit affirmed. The court explained that while it disagrees with much of the district court’s reasoning, it nonetheless agrees with its ultimate disposition. The court held that Garcetti v. Ceballos, 547 U.S. 410 (2006), does not apply to speech related to academic scholarship or teaching and that Plaintiff’s speech addressed matters of public concern, but that Plaintiff’s First Amendment claim nonetheless fails because under Pickering v. Bd. of Educ., 391 U.S. 563 (1968), a public university’s interest in deciding for itself what skills, expertise, and academic perspectives it wishes to prioritize in its hiring and staffing decisions outweighs Plaintiff's asserted interest in competing for academic positions unencumbered by university decisionmakers’ assessment of his academic speech. View "Heim v. Daniel" on Justia Law

Defendants appealed from a judgment of the district court awarding the United States $112,324.18, plus statutory additions and interest, in connection with an unpaid tax assessment from 2007. The district court granted summary judgment in favor of the government, notwithstanding the fact that the Internal Revenue Service (the “IRS”) referred the assessment to the Department of Justice (the “DOJ”) before formally rejecting Defendants’ proposed installment agreement. Defendants contended that this referral violated the provisions of the Internal Revenue Code and the implementing Treasury Regulations that curb the IRS’s collection activities while a proposed installment agreement remains on the table.   The Second Circuit affirmed. The court explained that as their plain terms indicate, the suspension provisions of Section 6331(i) and (k) prohibit the commencement of a collection action in court during specified periods, not the IRS’s antecedent request that the DOJ file such an action. The court wrote that the Internal Revenue Code is silent on when the IRS may refer an action to the DOJ, and a Treasury Regulation that limits the IRS’s referral power cannot read into the statute something that is not there. Further, this conclusion is not altered because authorization from the Treasury Secretary is a prerequisite to commencing an in-court proceeding.   Further, the court explained that Defendants have not claimed a violation of their constitutional rights and the regulatory limits on IRS referrals of collection actions are not statutorily derived. As a result, Defendants must demonstrate prejudice for the government’s regulatory violation to invalidate the instant collection action. The court found that Defendants have failed to do so. View "United States v. Schiller" on Justia Law

Plaintiff RSD Leasing Inc., a company that leases and, eventually, resells trucks to other commercial entities, appealed from a district court decision, granting in relevant part summary judgment to Defendants Navistar International Corp. and Navistar, Inc., the manufacturer of several allegedly substandard trucks in RSD’s fleet. The sole question on appeal is whether, for purposes of its purchase of those trucks, RSD qualifies as a “consumer” under the Vermont Consumer Protection Act and therefore is eligible to invoke the Act’s protections. In the absence of any on-point Vermont caselaw signaling whether the statute extends “consumer” protections to a business that purchases a good intending exclusively to lease that good to a third party and then to resell it at the end of the lease term, the district court relied in substantial part on two brief passages from the Act’s legislative history, holding that RSD was not acting as a “consumer” when it purchased the trucks at issue.   The Second Circuit wrote that it is unable to confidently predict how the Vermont Supreme Court would decide the matter. Therefore, the court certified to the Vermont Supreme Court the following question: Does a business that purchases goods intending first to lease those goods to end users and then to resell them at the termination of the lease term qualify as a ‘consumer’ under the VCPA? View "RSD Leasing, Inc. v. Navistar Int'l Corp." on Justia Law

Around 1:00 a.m. on October 14, 2020, New York City Police Department (“NYPD”) officers drove by Defendant near a New York City Housing Authority (“NYCHA”) complex in the Bronx. Defendant was wearing a fanny pack across his chest and standing next to a double-parked car. According to the officers, Defendant was visibly nervous when he saw them, and one officer noticed that Defendant’s fanny pack appeared to contain a bulging object with a straight line on top—the same shape as a handgun. The officers stopped and frisked Defendant and found a loaded semiautomatic pistol in the fanny pack. Defendant was arrested and charged with a violation of 18 U.S.C. Sections 922(g)(1), 924(a)(2): possessing a firearm after having been convicted of a felony. He moved to suppress the firearm, and the district court denied the motion. Defendant appealed, arguing that the stop violated his Fourth Amendment rights because the officers lacked reasonable suspicion that he was engaged in criminal activity.The Second Circuit affirmed. The court explained that the totality of circumstances in this case—including the officer’s observations of the fanny pack (as informed by his experience recovering firearms from fanny packs), Defendant’s unusual manner of wearing the fanny pack, his nervous appearance, and the late hour in a high-crime neighborhood—established reasonable suspicion. View "United States v. Hagood" on Justia Law