Tuesday, August 31, 2004
We don't want no stinkin' pesos.
A bondholder sued Argentina for payment on defaulted bonds. The acceleration clause provided that the bondholder could elect to be paid in American dollars at the ratio of one dollar to one Argentine peso regardless of the changes in foreign exchange rates. The bondholder, not surprisingly, elected to be paid in dollars, and the District Court held that it was entitled to do so. On appeal, the Second Circuit affirmed, rejecting the strained reading of the contract advanced by Argentina to avoid paying in dollars. The decision in EM Ltd. v. Republic of Argentina can be found at the Second Circuit website
. It was decided on August 31, 2004.
Intellectual property lawyer C. E. Petit has more to say about the Martha Graham
Back in June, the Second Circuit certified certain question in Capitol Records, Inc. v. Naxos of America, Inc
. (See my post on that here
.) Today, the New York State Court of Appeals accepted the questions
. (They don't have to.) Thanks to Matt Lerner of New York Civil Law
for the heads up.
Monday, August 30, 2004
Not this one. This is 101. Nice to reach this milestone. The next milestone should be 100 hits in a day. I think it'll be a while before that happens.
Views on Martha.
No, not Stewart, Martha Graham. As those of you who read this blog regularly (all 10 of you), the Second Circuit recently decided the case of Martha Graham School and Dance Foundation, Inc. v. Martha Graham Center of Contemporary Dance, Inc.
I blogged about here
. Well, intellectual property attorney C.E. Petit has some things to say about it as well
I normally do not report on summary opinions (life's only so long), but on August 25th, 1004, the Second Circuit vacated an injunction, barring an Alabama state court from proceeding with an investor suit against the underwriters and accountants for WorldCom Inc. The summary opinion, which is very uninformative (I found out what the injunction was about from reading the New York Law Journal), can be found here
. A full decison will follow, at which time, I will report more fully.
Sunday, August 29, 2004
Readers of this blog might be interested in "As Worldcom Turns, Cases Pile Up," an article appearing in the September issue of the ABA Jouranl. A copy on line can be found here
. As regular readers of this blog know, the Worldcom
case has been addressed here on a few occasions.
Friday, August 27, 2004
Thursday, August 26, 2004
Chief Judge Walker has announced a set of procedural and administrative measures that the Second Circuit is adopting pending the decision of the Supreme Court in United States v. Booker
and United States v. Fanfan
, the cases that deal with the issue of whether the Blakely
case invalidates the United States Sentencing Guidelines. The measures can be found here
Friday, August 20, 2004
Talk about bad record keeping. The Second Circuit found the records of the IRS so confusing that it remanded a case to the Tax Court for a determination of the following issues:
1. whether the tax payer's 1993 tax refund was sent to him by the IRS in 1994. (The taxpayer had requested that the refund be applied to his tax indebtedness. The IRS did not do so.)
2. if not, whether the tax payer received timely notice from the IRS that his refund had not been applied to his 1987 and 1989 tax deficiencies.
3. if not, whether his current tax liability should be consequently adjusted by, inter alia, an abatement of interest.
4. in any case, whether the current interest abatement that the tax payer had already received was correct in light of the IRS's failure to give the taxpayer appropriate withholding credits for 1987 and 1989 and the taxpayer's payment on June 21, 1994 of $6,681.22.
The Court cautioned the taxpayer, who had represented himself pro se, that the Tax Court would deal with these issues and no other issues that had already been adjudicated.
The decision in Wright v. CIR
can be found here
Thursday, August 19, 2004
Dancing for Joy.
That's what the Martha Graham Center of Contemporary Dance, Inc. and the Martha Graham School of Contemporary Dance, Inc. must be doing. The Second Circuit, in substantial part, upheld the finding of Judge Miriam Goldman Cederbaum that the bulk of Martha Graham's dances were either work for hire or assigned to the Center and, therefore, belonged to them, rather than to Graham's heir, Ronald Protas. The Court, however, did remand for a finding as to whether certain dances created from 1956 through 1964 that were unpublished were assigned to the Center or passed under Graham's will to Protas. The Court reversed the District Court as to one dance, the renewal term of which, the Court held, passed to Protas.
The decision in Martha Graham School and Dance Foundation, Inc. v. Martha Graham Center of Contemporary Dance, Inc.
can be found here
In D'Alessio v. Securities and Exchange Commission, the Second Circuit upheld the ban of a broker from the NYSE floor for making illegal trades. The petitioner claimed that the NYSE was biased against him because he had brought suit against it. The Second Circuit rejected that argument and noted that if it upheld such an argument, it would serve as an incentive for other brokers facing a similar sanction to sue the NYSE, so as to prevent any action by the NYSE against them. At any rate, the petitioner had not shown that interests of the hearing officer were adverse to him so as to render the NYSE's decision tainted by conflict of interest. The Court also rejected the petitioner's assertion that the SEC could not be impartial in reviewing the NYSE's decision and that the penalty was too severe.
The decision can be found here
. An article from the New York Law Journal regarding the case can be found here
The Short and Long of It.
The short of it is that the Second Circuit has upheld Vermont's campaign reform law, which contains spending limits. The long of it is that the opinion is 150 pages long. The decision in Landell v. Sorrell
can be found here
. The dissent can be found here
Wednesday, August 18, 2004
For those of you interested in special education law, I have started a new blog called The FAPE Page
. (FAPE, for those of you not in the know, is an acronym for free appropriate public education to which all children are entitled under the Individuals with Disabilities Education Act.) Feel free to drop by.
At the end of the day, it doesn't appear to me that the the plaintiffs-appellants in Societe des Hotels Meridien v. LaSalle Hotel Operating Partnership, L.P.
, will end up with much in this litigation, but, hey, a win is a win. Meridien managed certain hotels owned by LaSalle pursuant to certain lease. The leases provided that if there was change of ownership of Meridien, LaSalle could buy out Meridien's leasehold interest in the properties at fair market value. There was such a change of ownership, and LaSalle tried to exercise its option. However, Meridien refused to cooperate, so LaSalle terminated the leases based on the default. Meridien then entered into an agreement with Starwood Hotels & Resorts Worldwide, Inc. to manage the hotels.
Of course, Meridien sued. In fact, there were multiple lawsuits in various jurisdictions between Meridien and LaSalle. While this was going on, Starwood sent out a directory, which included the LaSalle hotels as hotels managed by Starwood even though Meridien was still in possession and managing the hotels. This brochure was the basis for this lawsuit.
LaSalle brought claims against Starwood under the Lanham act for false advertising and reverse palming off. The district court dismissed the claims. It held that the false advertising claim could not stand because nothing in the directory disparaged the quality of Meridien's product. It dismissed the reverse palming off claim because it held that the directories would create only a small likelihood of confusion, which, in any event, would benefit Meridien because Meridien would benefit from any sales generated by the directory.
The Second Circuit reversed. It held that Starwood, in publishing the directory, had drawn a direct comparison between its product and that of Meridien. In doing so, it used Meridien's product to sell its own product. Hence, Meridien had standing to bring a false advertising claim. The Court also noted that a false advertising claim can be based not only on false disparagement of a competitor, but on a misrepresentation of the quality of the advertiser's own goods. Hence, the complaint has stated a proper claim for false advertising under the Lanham Act.
With regard to the reverse palming off claim, while the Court noted that Starwood, at a later juncture in the litigation midhg prove that consumer confusion was unlikely, the fact that Starwood did not indicate in the directory that Meridien was managing the hotels was the hallmark of a reverse palming off claim. Because Meridien alleged that Starwood's directory falsely designated the services being provided at the hotels as being provided by Starwood, the complaint stated a proper claim.
It should be noted that Meridien lost its litigation with LaSalle relating to its leasehold rights to the property, so it is unclear how much it was damaged. I suspect a quick settlement will ensue, and nothing more will be heard of this case.
The decision can be found here
Well, in the TTLB Ecosystem, this blog is a flippery fish
. While it's nice to be recognized at all, I think we can do better.
Tuesday, August 17, 2004
In Scalisi v. Fund Asset Management, L.P.
, the Second Circuit discussed the proper standard for determining whether a demand on a board to bring an action would be futile in the context of a shareholder's derivative action. Since the corporation at issue was Maryland, the Court applied Maryland law, and held that a demand is to be considered futile only when (1) a demand, or a delay in awaiting a response to a demand, would cause irreparable harm to the corporation, or (2) a majority of the directors are so personally and directly conflicted or committed to the decision in dispute that they cannot reasonably be expected to respond to a demand in good faith and within the ambit of the business judgment rule.
The plaintiff asserted that a director is independent only if he is not an "interested person" under the Investment Company Act. It claimed that since the directors were not independent under the ICA, demand on the board would have been futile. The Second Circuit noted that that view had no basis under Maryland law. As the plaintiff had not met the standard set out above, the Second Circuit affirmed the dismissal of the action by the District Court.
The decision can be found here
The Second Circuit has declined to set bail for Rafil Dhafir, who has been indicted for sending money to terrorist groups in Iran. A prior post on this case can be found here
. For more information on the Court's decision, see Newsday's article here
Monday, August 16, 2004
Just the law, ma'am.
Back in 1998, the Second Circuit, in Halligan v. Piper Jaffray, Inc.,
held that an arbitration award could be vacated if the arbitrator demonstrated manifest disregard of the law and the facts. However, in Wallace v. Buttar
, the Court has reversed course and held that manifest disregard of the facts is not a basis for vacating an arbitration award. The Court stated: "To the extent that a federal court may look upon the evidentiary record of an arbitration proceeding at all, it may do so only
for the purpose of discerning whether a colorable basis exists for the panel's award so as to assure that the award cannot be said to be the result of the panel's manifest disregard of the law."
The decision can be found here
Sunday, August 15, 2004
Meritless, but not frivolous.
Metropolitan Life Insurance Company converted from an old-fashioned mutual insurance company to a modern stock insurance company in 2000. The conversion affected policyholders' interest in the company, converting them to cash, policy credits or stock in the new company, MetLife, Inc. The conversion was done in compliance with the pertinent law and was approved by the New York superintendent of Insurance after a hearing. Ninety-three percent of the voting policyholders supported the conversion.
Nevertheless, there were some disgruntled policyholders who sued, claiming that the conversion violated their constitutional rights under the Takings Clause, the Due Process Clause, the Commerce Clause and the Contracts Clause. The complaint, which sought relief under section 1983, claimed that MetLife acted under color of state law by receiving the sanction of the superintendent of Insurance and by reorganizing pursuant to New York Insurance Law 7312.
MetLife moved to dismiss. The District Court granted the motion, and the plaintiffs filed a notice of appeal.
MetLife, as the prevailing party, moved for attorneys' fees, pursuant to 42 U.S.C. 1988(b). Its motion was made seven days beyond the 14-day deadline set by Rule 54(d)(2)(B) of the Federal Rules of Civil Procedure. The Court denied the motion without prejudice to renewing it after the disposition of the appeal. While noting that the motion was untimely, the Court directed that any renewed motion should be filed no later than 14 days after the entry of the Second Circuit's mandate on the District Court's docket.
The Second Circuit affirmed and issued its mandate. MetLife made its renewed motion within 14 days of the entry of the mandate on the docket, seeking only attorneys' fees incurred in the District Court.
The plaintiffs argued that the Court did not have jurisdiction over the initial application because a notice of appeal had already been filed, the initial motion was untimely and the action was not frivolous and did not warrant an award of attorneys' fees.
The District Court, however, rejected the plaintiff's arguments and granted the motion. MetLife was awarded $30,000 in attorneys' fees. The plaintiffs appealed this award.
The Second Circuit agreed with the District Court with respect to that Court's power to entertain the motion, however, it agreed that a showing of excusable neglect was required to extend the deadline. It did not remand for a factual finding on this issue because it reversed the award on another ground.
The other ground was that the Second Circuit found that the plaintiffs' claims were not frivolous. The Court noted that there was case law that tended to support the plaintiffs' state action theory, albeit weak authority. In sum, the Court stated: "Hindsight proves that plaintiffs' allegation of state action was very weak, but it was not completely without foundation. Accordingly, the district court abused its discretion by awarding attorneys' fees to MetLife."
The decision can be found here.
Whether you want it or not.
The Second Circuit, in United States v. Johnson
, has held that, under the Mandatory Victims Restitution Act of 1996, restitution must be paid whether the victim wants it or not. The decision can be found here
Friday, August 13, 2004
Notice in Spanish
. Counsel in United States v. Leyba
wanted to withdraw as appellate counsel because he felt there was no non-frivolous basis for appeal. Before the Court ruled on counsel's motion, it ordered the counsel to ensure that defendant, who speaks Spanish, but not English, received adequate notice in Spanish of the substance of the Anders
brief, his right to proceed pro se
or seek appointment of new counsel and the likely consequence of of failure to respond to the Anders
motion. The decision can be found here
Thursday, August 12, 2004
Reserved Decision on Accused Terrorist Supporter.
Yesterday, Judges Barrington Parker, Jr. and Dennis Jacobs heard argument on whether bail could be posted so that oncologistRafil Dhafir could be released from jail pending his trial on charges of sending money to terrorist groups in Iran. An article from the Syracuse Post-Standard on the argument can be found here
Wednesday, August 11, 2004
I had thought the issue of whether "released time" policy under which a school district could allow students to leave school to participate in religious instruction violated the Establishment Clause had been resolved in 1952 when the Supreme Court decided Zorach v. Clauson
. However, the plaintiffs in Pierce v. Sullivan West Central School District
made an "as applied" challenge to the policy. They were no more successful that the plaintiff in Zorach
. Although a New York regulation allowed school districts to allow students to leave for religious instruction, this regulation provided that "released time" could only be at the end of the morning or afternoon session for no more than an hour per week. The school district in Pierce
, however, allowed the "released time" to take place in the middle of the morning session. During that period, the remaining students had no organized activities. They awaited the return of the students taking religious instruction.
The plaintiffs complained that the way the program was implement violated their Establishment Clause rights because it humiliated them, left non-participants in the program with nothing to do, conveyed a message of endoresement of religion, violated the regulation by allowing students to leave in the middle of the morning session and enabled the students receiving religious instruction to bring religious literature into the classrooms. The school district, while admitting that the policy did not comply with the regulation, argued that it did not violate the Establishment Clause. The District Court granted summary judgment to the school district.
The Second Circuit affirmed. It found that Zorach
controlled the case. The Establishment Clause was not violated because no religious instruction took place in the school itself, no expenditure of public funds supported the program and the public school did not promote the instruction beyond collecting permission slips from the parents.
The decision can be found here
Wow! Can you say that three times?
This case involved the issue of whether the survivor of a person who died while engaged in the practice of autoerotic asphyxiation, was entitled to life insurance benefits where there was an exclusion for intentionally self-inflicted injuries. As this is a family blog, for those of you not familiar with the practice, click here
for an explanation. The district court granted summary judgment to the insurance company, holding that the practice constituted an intentional self-inflicted injury.
On August 12, 2003, the Second Circuit, by a 2 to 1 majority, voted to affirm. A judge of the Court requested a poll to have the appeal reheard en banc. While the poll was pending, one of the judges on the panel changed his mind, and a new opinion in Critchlow v. First Unum Life Insurance Co.
, which can be found here
, was issued. The dissent can be found here
. Henceforth in the Second Circuit, autoerotic asphyxiation is not an intentional self-inflicted injury for insurance purposes.
It's great to be back.
Wednesday, August 04, 2004
Emergency! Save this blog!
Oh, don't worry. I'm not really going anywhere, but the number of hits this site is getting is amazingly low. It's down to an average of 11 per day. I know that weekends bring the average down, but really! Don't people care about the Second Circuit? Well, it's up to you my loyal readers (all 11 of you), to reverse this trend. Tell your friends about this blog. If you have a blog of your own, link to this blog. Visit more often. And if you know of any way to increase the visibility of this blog, don't keep it to yourself. Tell me.
Well, not exactly fishing, but I will be in attendance at the American Bar Association Annual Meeting from August 5 through 10 and, in that I am not one of those laptop carrying, Wi-Fo using bloggers, I, most likely, will not be blogging (although anything is possible). I'll try to do another post or two on any cases that come out today, but if I don't, see you next week.
If any of you are going to be at the ABA Meeting and would like to meet me, I'll be staying at the Courtyard Marriott Hotel -- Downtown. Give a call.
Stephen T. Mitchell is a criminal attorney who ahd been part of the panel of attorneys certified to serve as compensated, court-appointed counsel for indigent criminal defendants. The committee that certifies such counsel denied his recertification and terminated his appointment to the panel. Mitchell sued, claiming that the committee discriminated against him on the basis of his race and in retaliation of his complaints of racial discrimination.
The District Court dismissed the case. It held that the committee was an adjunct of the Court and was entitled to absolute immunity from damages. It also held that Mitchell was not entitled to injunctive relief because injunctive relief in a section 1983 action against a judicial officer for an act taken in that officer's judicial capacity unless a declaratory decree was violated or declaratory relief was unavailable. Finally, the Court dismised the claim for declaratory relief under the Rooker-Feldman
doctrine. That doctrine prohibits federal courts from reviewing decisions of state courts. The Court noted that, in this case, there was no decision made by any court, but reasoned that the decision of a body acting as an arm of the state judiciary was the functional equivalent of a judgment of a state court, which could not be reviewed by a federal court.
The Second Circuit held that the Rooker-Feldman
doctrine did not apply. Federal courts were not precluded from reviewing "executive action, including determinations made by a state administrative agency." The committee was acting as an administrative body and was not conducting judicial proceedings. The Court also held that the committee's "decision was, in its effect, legislative rather than judicial," and, thus, not protected by the doctrine.
The Second Circuit also held that the defendants were not entitled to absolute immunity because their acts were not judicial or integrally related to a judicial proceeding.
The decision in Mitchell v. Fishbein
can be found here
Tuesday, August 03, 2004
Court refuses to vacate arbitration award. Surprise!
Tatung Co. lost an arbitration to Lucent Technologies Inc. to the tune of $12,551,613 plus interest. It decided its next step was to attack the arbitrators. First, it complained that it did not receive a disclosure form that revealed that one of the arbitrators had been a litigation consultant to Lucent in an unrelated case. Second, it argued that it had not been revealed that two of the arbitrators had owned an airplane together from 1974 to 1990. The district court confirmed the award, stating that Tatung's argument was "a classic example of a losing party seizing upon a pretext for invalidating the [arbitration award]." The District Court found that vacatur of the award would serve no public purpose in a case where the disclosure was made to the AAA, but not forwarded to the parties. Finally, the Court found that the disclosures were not such as would suggest partiality or warrant vacating the award.
The Second Circuit agreed. While the Court agreed that where an arbitrator hid a conflict, such action might suggest evident partiality so as to warrant vacatur. But that rule must be applied on a case by case basis. Where the arbitrator made the disclosure, even though the AAA did not follow through, no presumption of bias can be made. And requiring vacatur whenever a disclosure was accidently not made would run counter to the policy of encouraging and supporting arbitration. The Court also noted that Tatung knew of the policy of providing disclosures, yet it never asked about the missing disclosure until after it lost.
The Court further agreed with the District Court that the joint ownership of an airplane by two of the arbitrators, which ended over a decade ago, was too insubstantial to warrant vacatur of the award.
Finally, the Court agreed with the District Court that the fact that an arbitrator served as a litigation consultant for Lucent in an unrelated case did not warrant vacatur. The arbitrator's relationship had materially ended before Lucent appointed him an arbitrator.
Tatung had asked the Second Circuit for leave to take discovery regarding the conflict if it did not vacate the award. Becasue Tatung had not sought that relief from the District Court, the Second Circuit declined to do so.
The decision in Lucent Technologies Inc. v. Tatung Co.
can be found here
Virginia Gambale and Deutsche Bank AG settled a sexual harassment lawsuit and filed a stipulation dismissing the case. The settlement agreement provided that the terms thereof would be kept confidential. The District Court, however, disclosed certain provisions of the agreement in a sua sponte
order which unsealed certain documents relating to the action. The Bank appealed from the order, claiming that once the action was dismissed, the Court no longer had jurisdiction, and, even if the Court had jurisdiction, the order was otherwise improper. The Second Circuit, however, disagreed and upheld the order. The Court, however, remanded the case to the District Court with an instruction to maintain under seal the transcript of a conference in whcih the parties revealed to the Court the confidential amount that the Bank was paying Gambale, unless all confidential information and direct and indirect references to confidential information are redacted from the transcript.
The Second Circuit held that while the filing of a stipulation dismissing the case divests a Court of all jurisdiction over the case, it does not follow that the filing of such a stipulation divests the Court of the authority to either dispose of material in its files as it thinks appropriate or to modify or vacate its own protective orders with respect to such documents. The Second Circuit stated: "The records and files are not in limbo. So long as they remain under aegis of the court, tehy are superintended by the judges who have dominion over the court." Given the public's common law right to access to judicial documents, a district court that decides that such access is appropriate in a case "acts within its jurisdiction when it modifies or vacates a protective order to allow that access, irrespective of whether it does so before or after a stipulation of dismissal has been filed."
The Second Circuit, however, noted that the amount paid by the Bank to Gambale to settle the lawsuit "stands on starkly different footing." The amount is set out in the settlement documents that are not part of the court record. Hence, there is no presumption of access with respect to this information. While not precluding the possibility that some case could require such disclosure, the Court held that this was not such a case. Indeed, the Court noted that an agreement to keep the terms of a settlement confidential could facilitate settlement, a salutory result. Although the amount of the settlement was disclosed on the record at a conference, the Court found that the Bank's interest in confidentiality outweighed the public interest in disclosure.
The Second Circuit held that it was a serious abuse of discretion for the District Court to have revealed the settlement amount in its unsealing order. That order is available on Westlaw and Lexis, and the Court noted that it was unable to put the genie back in the bottle.
The decision in Gambale v. Deutsche Bank AG
can be found here
Monday, August 02, 2004
In a prior post
, I reported on the case of Hemstreet v. Greiner
, in which the Second Circuit affirmed the District Court's grant of a writ of habeas corpus because of ineffective assistance of trial and appellate counsel. The Second Circuit has sua sponte
vacated that opinion and remanded to the District Court for reconsideration. Since the decision came down, the witness who had claimed to have been intimidated by detectives, which alleged intimidation was the predicate for the relief granted, has recanted. Given the highly unusual circumstances, the Court reconsidered its prior decision and vacated and remanded to the District Court. The new decision can be found at the Second Circuit website
. It was decided on August 2, 2004.
. Isaac Jacob Sharvit was found guilty of engaging in a conspiracy to dstribute and possessing with intent to distribute pills containing ecstasy. He moved for a new trial on the ground of ineffective assistance of counsel, which was denied, based primarily on the affidavit of his trial counsel, who rebutted all of Sharvit's contentions. He appealed.
During the pendency of his appeal, Sharvit's trial counsel was indicted for conspiracy to defraud the United States by submitting fraudulent appplications for appointment of counsel under the Criminal Justice Act. The indictment also stated that she had made false statements to the United States District Court and to criminal investigators and that she attempted to dissuase another person from making certain communications to law enforcement personnel. According to a New York Times article, there were allegations that the attorney abused prescription drugs and laundered money on behalf of a client. Sharvit brought these facts to the attention of the Second Circuit in his reply brief. The Government did not deny any of the allegations.
The Second Circuit remanded the case to the District Court for further fact finding, although the Court noted that the usual procedure for bringing an ineffective assistance claim is on habeas review. The case, which was decided on July 30, 2004, can be found here
Inducement of Agent to Travel Between States for a Fraudulent Purpose.
In United States v. Thomas
, the Second Circuit held that a conviction for inducing someone to travel between states for a fraudulent purpose, a violation of 18 U.S.C. 2314, can stand even if the person induced was an agent of the person cheated, and not the actual person. In so holding, the Court agreed with the Seventh and Ninth Circuits. The decision can be found here. An article on the case from the New York Law Journal can be found here