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.

Graham again. Intellectual property lawyer C. E. Petit has more to say about the Martha Graham case here.

Update. 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.

POST 100! 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.

WorldCom again! 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.

Interesting article. 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.

Article III Groupie of the Underneath Their Robes blog has advised me of a post spotlighting Guido Calabresi of the Second Circuit. It's pretty hilarious, as is much of the stuff on A3G's blog.
You may recall my post on Judge Katzmann's second-place finish in A3G's Super Hotties of the Federal Judiciary contest.

Blakely procedures. 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.

IRS Hell. 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.

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.

Banned. 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.

New blog. 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.

Trademark case. 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.

Flippery Fish. 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.

Futile. 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.

No bail. 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.

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.

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.