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

A group of federally funded health centers and clinics serving low-income populations alleged that several major drug manufacturers conspired to restrict drug discounts offered through the federal Section 340B Drug Discount Program. The plaintiffs claimed that, beginning in 2020, the manufacturers coordinated efforts to limit the availability of discounted diabetes medications at contract pharmacies, resulting in significant financial losses for safety-net providers. The manufacturers, who are direct competitors in the diabetes drug market, allegedly implemented similar policies within a short timeframe, each restricting or eliminating the discounts in ways that had a comparable anticompetitive effect.After the plaintiffs filed a class action complaint, the United States District Court for the Western District of New York dismissed their first amended complaint and denied leave to file a second amended complaint. The district court concluded that the plaintiffs failed to allege sufficient parallel conduct or factual circumstances suggesting a conspiracy, and thus found the proposed amendments futile.The United States Court of Appeals for the Second Circuit reviewed the case and applied a de novo standard to both the dismissal and the denial of leave to amend. The Second Circuit held that the plaintiffs’ proposed second amended complaint alleged enough facts to plausibly infer a horizontal price-fixing conspiracy under Section 1 of the Sherman Act. The court found that the complaint sufficiently pled both parallel conduct and “plus factors” such as a common motive to conspire, actions against individual economic self-interest, and a high level of interfirm communications. The court also determined that Supreme Court precedents cited by the defendants did not bar the plaintiffs’ claims. Accordingly, the Second Circuit vacated the district court’s judgment and remanded the case with instructions to allow the plaintiffs to file their second amended complaint. View "Mosaic Health, Inc. v. Sanofi-Aventis U.S., LLC" on Justia Law

Several investment funds based in the British Virgin Islands invested heavily in Bernard L. Madoff Investment Securities and were forced into liquidation after the Madoff Ponzi scheme was exposed in 2008. Liquidators were appointed in the BVI insolvency proceedings. Before the collapse, certain investors redeemed their shares in the funds for cash, receiving over $6 billion in payments. The liquidators, seeking to recover these redemption payments for equitable distribution among all investors, initiated approximately 300 actions in the United States, alleging that the payments were inflated due to fictitious Net Asset Value (NAV) calculations based on Madoff’s fraudulent statements.The U.S. Bankruptcy Court for the Southern District of New York consolidated the actions after recognizing the BVI proceedings under Chapter 15 of the Bankruptcy Code. The bankruptcy court dismissed most claims, finding it lacked personal jurisdiction over some defendants, that the liquidators were bound by the NAV calculations, and that the safe harbor for securities transactions under § 546(e) of the Bankruptcy Code barred the claims. However, it allowed constructive trust claims to proceed against certain defendants alleged to have known the NAVs were inflated. The U.S. District Court for the Southern District of New York affirmed the bankruptcy court’s judgment, leaving only the constructive trust claims.On appeal, the United States Court of Appeals for the Second Circuit held that all of the liquidators’ claims, including the constructive trust claims, should have been dismissed under the safe harbor provision of § 546(e), which applies extraterritorially via § 561(d) in Chapter 15 cases. The court concluded that the safe harbor bars both statutory and common-law claims seeking to avoid covered securities transactions, regardless of the legal theory or proof required. The Second Circuit reversed the district court’s judgment allowing the constructive trust claims and otherwise affirmed the dismissal of the remaining claims. View "In re Fairfield Sentry Ltd." on Justia Law

A company that supplies oil and propane hired a trucking business to deliver 10,000 gallons of heating oil to its property in Putnam, Connecticut. During the delivery, the trucking company’s employee allegedly failed to monitor the filling process, resulting in an overflow that contaminated the soil and groundwater. The supplier claimed it incurred over $500,000 in remediation and related expenses due to the spill.The supplier filed a lawsuit in the United States District Court for the District of Connecticut, asserting common-law negligence and recklessness claims under Connecticut law. The complaint cited specific federal Hazardous Materials Regulations (HMRs) as evidence of the trucking company’s duties and alleged breaches. The trucking company moved to dismiss, arguing that the supplier’s claims were preempted by the federal Hazardous Materials Transportation Act (HMTA) and, alternatively, that the recklessness claim was insufficiently pleaded. The district court granted the motion, holding that the HMTA preempted the state-law claims and that the recklessness claim failed to state a claim.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s dismissal de novo. The Second Circuit held that the HMTA does not preempt the supplier’s Connecticut common-law claims for negligence and recklessness, so long as those claims are based on duties that are “substantively the same” as federal requirements under the HMTA and HMRs. The court found that the mental state required for negligence and recklessness under Connecticut law is not inconsistent with the HMTA’s standards for civil violations. Accordingly, the Second Circuit vacated the district court’s judgment and remanded the case for further proceedings. View "DCC Propane LLC v. KMT Enterprises, Inc." on Justia Law

Petitioner, a citizen of the Dominican Republic and a lawful permanent resident of the United States, was ordered removed after being convicted of sexual abuse in the second degree under New York Penal Law (NYPL) § 130.60(2). This conviction was deemed an "aggravated felony" under 8 U.S.C. §§ 1101(a)(43)(A) and 1227(a)(2)(A)(iii) because it constituted "sexual abuse of a minor." Approximately a year later, the petitioner moved to reopen his removal proceedings, but the Board of Immigration Appeals (BIA) denied the motion as untimely and concluded that he did not warrant equitable tolling.An Immigration Judge (IJ) initially determined that the petitioner’s conviction was an aggravated felony, rendering him removable and ineligible for asylum and cancellation of removal. The IJ also found the conviction to be a "particularly serious crime," barring withholding of removal under the Immigration and Nationality Act (INA) and the Convention Against Torture (CAT). The BIA affirmed the IJ’s decision and denied the petitioner’s motion to remand for consideration of new evidence regarding his mental health and diabetes diagnosis.The United States Court of Appeals for the Second Circuit reviewed the case. The court dismissed the petition challenging the removal order, citing its recent decision in Debique v. Garland, which held that a conviction under NYPL § 130.60(2) is categorically an aggravated felony. The court rejected the petitioner’s arguments that Debique was not binding and that the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo undermined its precedential force. The court also denied the petition challenging the BIA’s denial of the motion to reopen, finding that the BIA had a reasonable basis for concluding that the petitioner failed to show due diligence for the entire period between the expiration of the 90-day deadline and the filing of the motion. View "Garcia Pinach v. Bondi" on Justia Law

Plaintiffs, including Eugene Volokh and two social media companies, challenged New York's Hateful Conduct Law, which mandates social media networks to provide mechanisms for reporting hateful conduct and to disclose policies on how they address such reports. The law defines hateful conduct as speech that vilifies, humiliates, or incites violence against groups based on protected characteristics. Plaintiffs argued that these requirements compel speech and chill protected speech, violating the First Amendment.The United States District Court for the Southern District of New York granted a preliminary injunction, halting the law's enforcement. The court found that the law likely violates the First Amendment by compelling social media networks to engage in speech and by being overly broad and vague, thus chilling users' speech.The United States Court of Appeals for the Second Circuit reviewed the case. The court noted that the constitutionality of the Hateful Conduct Law hinges on its interpretation. If the law requires social media networks to adopt the state's definition of hateful conduct, it would be subject to strict scrutiny and likely fail. However, if the law merely requires disclosure of any content moderation policy without specific reference to the state's definition, it might survive under the more relaxed Zauderer standard.The Second Circuit deferred its decision and certified three questions to the New York Court of Appeals: whether the law requires explicit reference to the state's definition of hateful conduct in social media policies, whether the reporting mechanism must specifically address hateful conduct, and whether social media networks must respond to reports of hateful conduct. The answers to these questions will determine the law's constitutionality. View "Volokh v. James" on Justia Law

Victor J. Orena was convicted in 1992 for his involvement in the "Colombo Family War," a violent power struggle within an organized crime family. The jury found him guilty of nine charges, including the use and carrying of a firearm in relation to a crime of violence under 18 U.S.C. § 924(c)(1). In 2021, Orena successfully petitioned under 28 U.S.C. § 2255 to vacate his § 924(c)(1) conviction based on the Supreme Court's decision in United States v. Davis. He sought de novo resentencing on the remaining counts.The United States District Court for the Eastern District of New York denied Orena's request for de novo resentencing. Instead, the court corrected the judgment by excising the § 924(c) conviction and its consecutive sentence but left the sentences for the remaining eight counts unchanged. Orena appealed, arguing that the district court was required to conduct de novo resentencing on all remaining counts, citing the Second Circuit's decision in Kaziu v. United States.The United States Court of Appeals for the Second Circuit reviewed the case. The court distinguished Orena's case from Kaziu, noting that the district court had recently evaluated the 18 U.S.C. § 3553(a) factors in denying Orena's motion for sentence reduction under 18 U.S.C. § 3582(c)(1)(A). The court found that the district court had thoroughly assessed the relevant factors and the changed circumstances Orena cited. The court also concluded that the fact that Orena's original sentence predated the Supreme Court's decision in United States v. Booker, which made the Sentencing Guidelines advisory, did not compel resentencing in this case. Additionally, the court found that Orena's arguments regarding alleged government misconduct were not proper considerations for resentencing.The Second Circuit held that the district court did not exceed its discretion in declining to conduct de novo resentencing and affirmed the district court's judgment. View "U.S. v. Orena" on Justia Law

The appellants, Banoka S.à.r.l. and others, sought third-party discovery under 28 U.S.C. § 1782 from Elliott Management Corp. and related entities for use in a contemplated fraud lawsuit in England. The dispute arose from a failed transaction involving the sale of a Paris hotel, where Westmont International Development Inc. was the potential buyer, and the Elliott entities were to provide funding. Banoka alleged that Westmont acted in bad faith during negotiations, leading to the collapse of the deal.The United States District Court for the Southern District of New York denied Banoka's petition for discovery from Elliott Management Corp. and its affiliates, but allowed limited discovery from the Elliott Funds. The court found that the forum-selection clause in the agreement between Banoka and Westmont, which designated English courts for dispute resolution, weighed against granting the petition. Additionally, the court determined that Banoka's discovery requests were overly broad and burdensome, particularly since the relevant documents and custodians were primarily located abroad.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the district court did not abuse its discretion in considering the forum-selection clause as a factor against granting the discovery petition. The court also found no error in the district court's conclusion that the discovery requests were unduly burdensome, given their broad scope and the foreign location of the documents and custodians. The appellate court emphasized that the district court's careful and contextual analysis of the relevant factors was appropriate and within its discretion. View "Banoka S.à.r.l. v. Elliott Mgmt. Corp." on Justia Law

Nathaniel Chastain was convicted of wire fraud and money laundering based on trades he made while employed at OpenSea, an online NFT marketplace. As head of product, Chastain selected NFTs to feature on the website, which increased their value. He purchased NFTs before they were featured and sold them afterward for a profit, making about $57,000. Chastain argued that the district court erred in instructing the jury that it could find him guilty of defrauding OpenSea of its property if he misappropriated an intangible interest unconnected to traditional property rights.The United States District Court for the Southern District of New York denied Chastain's motion to dismiss the indictment and excluded certain evidence he sought to introduce at trial. The jury found Chastain guilty on both counts, and he was sentenced to three months of imprisonment and three years of supervised release.The United States Court of Appeals for the Second Circuit reviewed the case and agreed with Chastain that confidential business information must have commercial value to qualify as property under the wire fraud statute. The court found that the district court erred by instructing the jury that it could find Chastain guilty even if the information lacked commercial value to OpenSea. The court also found that the district court erred by instructing the jury that it could find Chastain guilty if he conducted himself in a manner that departed from traditional notions of fundamental honesty and fair play.The Second Circuit concluded that these errors were not harmless, as the jury could have convicted Chastain based on unethical behavior rather than the misappropriation of a traditional property interest. The court vacated the judgment of conviction for wire fraud and money laundering and remanded the case for further proceedings. The court did not find any abuse of discretion in the district court's evidentiary rulings. View "United States v. Chastain" on Justia Law

Michael Hild, the Defendant-Appellant, was convicted by a jury in 2021 of securities fraud, wire fraud, bank fraud, and conspiracy. Hild, as the CEO of Live Well Financial, Inc., engaged in a scheme to inflate the value of a bond portfolio used as collateral for loans. This scheme allowed Live Well to grow its bond portfolio significantly from 2014 to 2016. Hild appealed his conviction, arguing that the evidence was insufficient and that a new trial was warranted due to a Supreme Court decision invalidating one of the fraud theories used in his jury instructions.The United States District Court for the Southern District of New York denied Hild's post-trial motions for acquittal and a new trial. Hild then appealed to the United States Court of Appeals for the Second Circuit, challenging the sufficiency of the evidence and the jury instructions.The Second Circuit reviewed the case and found that sufficient evidence supported Hild's conviction. The court noted that Hild misrepresented the value of the bonds to secure loans and acted with fraudulent intent. The court also addressed Hild's argument regarding the jury instructions, acknowledging that the instructions included an invalid right-to-control theory of fraud as per the Supreme Court's decision in Ciminelli v. United States. However, the court concluded that this error did not affect Hild's substantial rights because the jury would have convicted him based on a valid theory of fraud.Ultimately, the Second Circuit affirmed the judgment of the district court, upholding Hild's conviction on all counts. View "United States v. Hild" on Justia Law

Angel Diaz, a prisoner in the custody of the New York State Department of Corrections and Community Supervision (DOCCS), filed a pro se petition for a writ of habeas corpus in the Southern District of New York. Diaz argued that due to the COVID-19 pandemic, the State could not provide him with constitutional conditions of confinement at any of its facilities, necessitating his release. He claimed that his high blood pressure and morbid obesity put him at severe risk of serious harm or death from COVID-19 and that DOCCS had no plan to protect medically vulnerable inmates like himself.The District Court referred the case to a magistrate judge, who recommended denying the petition on the grounds that Diaz's claim was not cognizable in habeas and should be brought under 42 U.S.C. § 1983 instead. The District Court adopted this recommendation, holding that Diaz's complaints about the conditions of his confinement did not challenge the validity or duration of his confinement. Diaz's request for a certificate of appealability was initially denied by the District Court but later granted by the United States Court of Appeals for the Second Circuit.The United States Court of Appeals for the Second Circuit reviewed the case and held that Diaz's claim was indeed cognizable under habeas corpus because he alleged violations of the Constitution that would require his release from all available facilities. However, the court found that Diaz failed to provide sufficient factual support to make his claim plausible. As a result, the Second Circuit affirmed the District Court's decision to dismiss the petition. View "Diaz v. Kopp" on Justia Law