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

Smarter Tools Inc. (“STI”) appeals the district court’s judgment denying STI’s petition to vacate an arbitral award and granting Chongqing SENCI Import & Export Trade Co., Ltd.’s and Chongqing AM Pride Power & Machinery Co. Ltd.’s (collectively, “SENCI”) cross-petition to confirm that award. The district court agreed with STI that the arbitrator exceeded his authority by failing to provide a reasoned award as requested by the parties. The district court remanded to allow the arbitrator to issue a reasoned award. On remand, the arbitrator issued a final amended award, which STI again challenged in district court on the grounds that the award was not reasoned and that it reflected a manifest disregard of the law, and which SENCI again cross-petitioned to confirm. The district court denied STI’s petition to vacate the award and granted SENCI’s cross-petition to confirm the award.   STI’s primary argument on appeal is that the district court erred in remanding for the arbitrator to issue a reasoned award, in contravention of the doctrine of functus officio and the Federal Arbitration Act. Absent a finding of ambiguity, or a minor clerical error, STI argues, once the district court determined that the arbitrator exceeded its authority by failing to issue a  reasoned award, the only remedy available was vacatur.   The Second Circuit affirmed. The court explained that the original award was found not to provide the reasoned award the parties bargained for; in its amended award, the arbitrator clarified the original award by including a rationale for rejecting STI’s counterclaims; and this clarification is consistent with the parties’ intent that the arbitrator issue a reasoned award. View "Smarter Tools Inc. v. Chongqing Senci Import & Export Trade Co., Ltd." on Justia Law

Admiral Insurance Co. (“Admiral”) sought a declaration that it need not defend or indemnify its historical insured, Niagara Transformer Corp. (“Niagara”), in potential litigation between Niagara and nonparties Monsanto Co., Pharmacia LLC, and Solutia Inc. (collectively, “Monsanto”) over harms caused by polychlorinated biphenyls that Monsanto had sold to Niagara in the 1960s and 1970s. Admiral appealed from the order of the district court dismissing its action for lack of a justiciable “case of actual controversy” within the meaning of the Declaratory Judgment Act (the “DJA”). The district court principally relied on (1) the fact that Monsanto has not commenced or explicitly threatened formal litigation against Niagara, and (2) its assessment that Monsanto would not be likely to prevail in such litigation.   The Second Circuit affirmed the district court’s order dismissing Admiral’s action to the extent that it sought a declaration of Admiral’s duty to indemnify Niagara, and remanded for the district court to determine whether there exists a practical likelihood that Monsanto will file suit against Niagara. The court explained that while the district court properly concluded that it lacked jurisdiction to declare Admiral’s duty to indemnify Niagara, it did not adequately distinguish between that duty and the insurer’s separate duty to defend its insured. Because a declaratory-judgment action concerning either duty becomes justiciable upon a “practical likelihood” that the duty will be triggered, the justiciability of Admiral’s duty-to-defend claim turns on the practical likelihood that Monsanto will file suit against Niagara – not on whether Monsanto has already in fact done so. View "Admiral Ins. Co. v. Niagara Transformer Corp." on Justia Law

Plaintiffs are U.S. service members wounded in terrorist attacks in Iraq and the families and estates of service members killed in such attacks. They appealed from the dismissal of their claims under the Antiterrorism Act (the “ATA”) as amended by the Justice Against Sponsors of Terrorism Act (the “JASTA”), against various financial institutions in the United States and abroad (the “Banks”). As relevant to this appeal, Plaintiffs alleged that the Banks conspired with and aided and abetted Iranian entities to circumvent sanctions imposed by the United States and channel funds to terrorist groups that killed or injured U.S. service members. The district court dismissed Plaintiffs’ JASTA conspiracy claims primarily because Plaintiffs failed to plausibly plead a direct connection between the Banks and the terrorist groups. The district court also declined to consider Plaintiffs’ JASTA aiding-and-abetting claims because they were raised for the first time in Plaintiffs’ motion for reconsideration.   The Second Circuit explained that while it disagreed with the district court’s primary reason for dismissing Plaintiffs’ JASTA conspiracy claims, it affirmed the district court’s judgment because Plaintiffs failed to adequately allege that the Banks conspired – either directly or indirectly – with the terrorist groups, or that the terrorist attacks that killed or injured the service members were in furtherance of the alleged conspiracy to circumvent U.S. sanctions. The court agreed with the district court that Plaintiffs forfeited their JASTA aiding-and-abetting claims by raising them for the first time in a motion for reconsideration. View "Freeman v. HSBC Holdings PLC" on Justia Law

Plaintiff alleged that private educational loan was discharged in bankruptcy. He sued Experian under the Fair Credit Reporting Act (FCRA) for reporting the loan was due and owing. The district court concluded the loan was not discharged in bankruptcy and later declined to set aside summary judgment when Plaintiff proffered newly discovered evidence.   The Second Circuit held that the kind of legal inaccuracy alleged by Plaintiff is not cognizable as an “inaccuracy” under the FCRA, thus the court affirmed, on an alternative ground, the district court’s order granting summary judgment in favor of Experian. Accordingly, the court dismissed as moot Plaintiff’s appeal of the denial of his motion for an indicative judgment. The court explained that Plaintiff has failed to allege an inaccuracy within the plain meaning of section 1681e(b) of the FCRA. The unresolved legal question regarding the application of section 523(a)(8)(A)(i) to Plaintiff’s educational loan renders his claim non-cognizable under the FCRA. The court noted that the holding does not mean that credit reporting agencies are never required by the FCRA to accurately report information derived from the readily verifiable and straightforward application of law to facts. However, the inaccuracy that Plaintiff alleged does not meet this statutory test because it evades objective verification. There is no bankruptcy order explicitly discharging this debt. View "Mader v. Experian" on Justia Law

Plaintiff brought a lawsuit against Allianz Life Insurance Company of North America (“Allianz”) in Plaintiff’s capacity as a trustee of the Zupnick Family Trust 2008A (“Trust”). Plaintiff sought a declaratory judgment that an Allianz life insurance policy (“Zupnick Policy”), which Plaintiff contends is owned by the Trust, remains in effect. The district court concluded that the Trust was not the actual owner of the Zupnick Policy under New York law because any assignment of the policy to the Trust failed to comply with the Zupnick Policy’s provision that assignment would be effective upon Allianz’s receipt of written notice of the assignment. The district court held that the Trust lacked contractual standing to sue on the Zupnick Policy, and granted Allianz’s motion to dismiss. On appeal, Plaintiff argued that failure to comply with the provisions of a life insurance policy requiring written notice of assignment cannot, under New York law, render an assignment ineffective.   The Second Circuit certified the question to the Court of Appeals because the argument turns on a question of state law for which no controlling decision of the New York Court of Appeals exists. The court certified the following question: Where a life insurance policy provides that “assignment will be effective upon Notice” in writing to the insurer, does the failure to provide such written notice void the assignment so that the purported assignee does not have contractual standing to bring a claim under the Policy? View "Brettler v. Allianz Life Insurance Company of North America" on Justia Law

Defendant appealed from a judgment of conviction entered after a jury found him guilty on counts related to a drug distribution conspiracy, the discharge of a firearm during a drug trafficking crime, and the unlawful possession of a firearm. Defendant committed these crimes while on supervised release following prior convictions. On appeal, Defendant asserted primarily that two alleged district court errors require vacatur of his conviction. First, relying on Weatherford v. Bursey, 429 2 U.S. 545 (1977), Defendant contended that the government violated his Sixth Amendment rights by eliciting testimony from his former cellmate concerning what Defendant told the cellmate about Defendant planned defense. Second, Defendant submitted that his Fourth Amendment rights were violated when the officer supervising Defendant during his period of supervised release coordinated a search of his residence and rental car. Accordingly, Defendant argued that the district court erred by admitting his former cellmate’s testimony and evidence seized during the search of his residence and rental car.   The Second Circuit affirmed hold that on plain error review of the Sixth Amendment claim, the court identified no error, never mind plain error. Nothing in the record suggests that the government learned privileged information or intentionally invaded Defendant’s relationship with his attorney. On de novo review of the Fourth Amendment challenge, the court concluded that the district court properly denied Defendant’s motion to suppress. The officer monitoring Defendant had reasonable suspicion to search his residence and rental car based on credible reports that Defendant unlawfully possessed a firearm and was engaged in drug trafficking. View "United States v. Chandler" on Justia Law

On appeal to the Second Circuit from remand from the United States Supreme Court, the court vacated Defendants’ convictions conversion of government property, wire fraud, and securities fraud; and convicting certain Defendants on various counts of conspiring to engage in conduct violating one or more of the above sections, all originating from misappropriation of confidential information from the Centers for Medicare & Medicaid Services ("CMS").   On remand: (A) Defendants contend that their argument that the CMS information at issue does not constitute "property" or a "thing of value" within the meaning of the above statutes is supported by the Supreme Court's decision in Kelly; (B) the government, concurring in that contention, confesses error as to the substantive counts and as to a count charging only conspiracy to violate Sections 1343 and 1348 (Count Two); and it agrees that either Defendants' convictions on those counts should be reversed, or the cases should be remanded to the district court so that the government can dismiss those counts pursuant to Fed. R. Crim. P. 48(a); and (C) the government seeks affirmance on the remaining conspiracy counts (Counts One and Seventeen).   The Second Circuit explained that given the Supreme Court's decision in Kelly and the prosecutorial discretion to which the Executive Branch of the government is entitled, the court granted the government's request to remand the cases to the district court for dismissal of the substantive counts and Count Two. View "USA v. Blaszczak" on Justia Law

Yale New Haven Hospital (“YNHH”) receives federal funds under the Medicare Act. As part of the statutory formula for determining appropriate funding, the Medicare Act directs the Secretary of Health and Human Services (the “Secretary”) to “estimate” the “amount of uncompensated care” that each hospital will provide to indigent patients in a given federal fiscal year (“FFY”). Here, YNHH contended that the Secretary failed to conduct adequate notice-and-comment rulemaking before choosing to use only YNHH’s historical data – and not that of a hospital that had recently merged into YNHH – to estimate YNHH’s amount of uncompensated care for FFY 2014. The Secretary moved to dismiss for lack of subject-matter jurisdiction under 42 U.S.C Section 1395ww(r)(3), which prohibits “judicial review” of “[a]ny estimate of the Secretary.” The district court denied the Secretary’s motion, reasoning that section 1395ww(r)(3) applies only to substantive challenges to estimates, but not to procedural challenges like YNHH’s. The district court subsequently granted summary judgment in favor of YNHH.   The Secretary appealed, disputing (1) the district court’s ruling that it had jurisdiction to consider YNHH’s procedural challenge, and alternatively (2) the district court’s merits ruling that the Secretary’s estimate was procedurally unlawful.   The Second Circuit reversed the district court’s denial of the Secretary’s motion to dismiss YNHH’s procedural challenge for lack of subject-matter jurisdiction; vacated, for lack of subject-matter jurisdiction, the district court’s grant of summary judgment for YNHH on its procedural challenge; REMAND the case to the district court with instructions to dismiss the remainder of YNHH’s action for lack of subject-matter jurisdiction; and dismissed YNHH’s cross-appeal disputing the district court’s chosen remedy. View "Yale New Haven Hosp. v. Becerra" on Justia Law

Defendants, Connecticut Interscholastic Athletic Conference (the "CIAC") and its member high schools (together, "Defendants"), have followed the "Transgender Participation" Policy (the "Policy"), which permits high school students to compete on gender specific athletic teams consistent with their gender identity if that is different from "the gender listed on their official birth certificates."   Plaintiffs are four cisgender female students who allege that the policy disproportionally disadvantages cisgender girls as compared to boys. Plaintiffs allege that the Policy violates Title IX of the Education Amendments of 1972, 20 U.S.C. Section 1681 et seq. ("Title IX"), because the participation of transgender females in girls' high school athletic events results in "students who are born female" having materially fewer opportunities for victory, public recognition, athletic scholarships, and future employment "than students who are born male."   The district court dismissed the claims on grounds that (1) Plaintiffs' request to enjoin future enforcement of the Policy was moot; (2) Plaintiffs lacked standing to assert their claim for an injunction to change the record books; and (3) Plaintiffs' claims for monetary damages were barred under Pennhurst State School & Hospital v. Halderman.   The Second Circuit affirmed writing that it was unpersuaded, with respect to the claim for an injunction to alter the records, that Plaintiffs have established the injury in fact and redressability requirements for standing; both fail for reasons of speculation. And because the court concluded that the CIAC and its member schools did not have adequate notice that the Policy violates Title IX Plaintiffs' claims for damages must be dismissed. View "Selina Soule et al. v. Connecticut Association of Schools et al." on Justia Law

The TLA Claimholders, who assert unsecured claims against Tam Linhas Aéreas S.A. (“TLA”), an affiliate of LATAM Airlines Group S.A. (“LATAM”), a large South American airline holding company, appealed from an order of the district court, affirming a June 18, 2022 order of the United States Bankruptcy Court confirming LATAM’s reorganization plan. The plan of reorganization provides that the Appellants’ claims will be paid in full, except for any post-petition interest. The Bankruptcy Court determined that such treatment rendered the claims unimpaired under Section 1124(1) of the Bankruptcy Code, because Section 502(b)(2) of the Code provides that “unmatured interest” may be excluded from a claim. It also determined that the affiliate, TLA, was insolvent, so that the solvent-debtor exception—an equitable doctrine permitting the payment of post-petition interest by a solvent debtor in limited circumstances—did not apply. On appeal, the TLA Claimholders contend that, unless they receive post-petition interest, their claims are “impaired” under Section 8 1124(1). They also argue that TLA is solvent and that its solvency makes the solvent debtor exception applicable. They further contended that the Bankruptcy Court’s test for assessing solvency was legally flawed.   The Second Circuit affirmed. The court held that 1) a claim is not impaired under 11 U.S.C. Section 1124(1) when it is altered by operation of the Bankruptcy Code, and (2) the Bankruptcy Court did not err in its assessment of TLA’s solvency. The district court did not abuse that discretion in determining that the Debtors’ analyses and the corrected Waterfall Analysis were more probative on the question of TLA’s solvency than the Discounted Cash Flow Analysis. View "In re LATAM Airlines Group S.A." on Justia Law