William H. Pauley 3

This case arose from the liquidation of Bernard L. Madoff Investment Securities LLC after the exposure of its massive Ponzi scheme, with Trustee Irving Picard suing Madoff's sons Mark and Andrew to recover alleged fraudulent transfers, disallow their claims against the estate, and assert common law claims including breach of fiduciary duty, negligence, and unjust enrichment. The sons moved to dismiss the common law claims on grounds including preemption by the Martin Act and the doctrine of in pari delicto, but the Bankruptcy Court denied the motion in relevant part. The District Court denied the sons' request for leave to file an interlocutory appeal, reasoning that the common law claims overlapped directly with the determination of their proofs of claim for compensation and other amounts, allowing the Bankruptcy Court to retain authority to resolve them under Stern v. Marshall without requiring an Article III court at this stage, and that an appeal would not materially advance the overall litigation since other claims would proceed regardless.

business & regulatoryprocedurecriminal law

This case involved Eatoni Ergonomics suing Research in Motion (RIM) for alleged violations of Section 2 of the Sherman Antitrust Act and New York's Donnelly Act, claiming that RIM maintained monopoly power in markets for QWERTY and reduced QWERTY smartphones through a course of anticompetitive conduct stemming from a 2005 patent dispute settlement, including refusing collaboration and denying access to its Blackberry platform as an essential facility. After prior arbitration resolved related contract and fraud claims against Eatoni, the court addressed the amended complaint's exclusive focus on antitrust allegations. The court granted RIM's motion to dismiss with prejudice, holding that Eatoni failed to state a plausible claim because it did not adequately allege willful acquisition or maintenance of monopoly power through anticompetitive acts, as individual lawful unilateral actions cannot aggregate into a violation, and RIM had no antitrust duty to share its intellectual property or collaborate when alternatives existed for Eatoni.

business & regulatoryprocedure

The case involves the Bank of New York Mellon, as trustee for hundreds of mortgage securitization trusts, filing a petition in New York state court under Article 77 to obtain approval of a large-scale settlement with Countrywide and Bank of America regarding claims of breached representations and warranties on toxic mortgage loans. Walnut Place entities, certificate holders in some of the trusts, removed the proceeding to federal court, and BNYM moved to remand it to state court. The court denied the motion to remand. It reasoned that the Article 77 proceeding constitutes a civil action subject to federal removal, that the mass settlement implicates substantial federal interests in financial market integrity, and that no exceptions like the CAFA home-state rule barred federal jurisdiction.

business & regulatoryprocedure

This securities class action, consolidated under In re Smith Barney Transfer Agent Litigation, alleged violations of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 and breach of fiduciary duty under the Investment Advisers Act against Smith Barney Fund Management LLC and related defendants, stemming from the same facts as a prior SEC settlement. After six years of litigation including motions to dismiss, an appeal, discovery, and class certification efforts, it emerged that the appointed Lead Plaintiff, Operating Local 649 Annuity Trust Fund, had never purchased the securities at issue due to a mislabeling of similar-named funds on its statements. The court granted Local 649's withdrawal as Lead Plaintiff because it was never a proper plaintiff with standing, denied the request to amend the complaint to add a new lead plaintiff at that time, stayed discovery, and ordered a new briefing schedule for appointment of lead plaintiff and counsel to ensure suitable class representatives.

business & regulatoryprocedure

This case involves a dispute between the Zappa Family Trust and Rykodisc, Inc. over rights to Frank Zappa's sound recordings under a 1994 agreement and 1999 settlement, with claims and counterclaims alleging copyright infringement and breach of contract related to compilations like Strictly Commercial, restricted tracks, digital distribution on iTunes, and the album Lather. The court granted Ryko's motion for partial summary judgment in part, finding that the 1994 agreement transferred broad rights to exploit Subject Masters in various formats including vinyl and that certain CD sales and digital uses did not violate restrictions, while denying summary judgment on other claims such as those involving Vault Masters and implying an issue of fact on an implied license for Lather. ZFT's motion for partial summary judgment was denied entirely. The reasoning centered on contractual interpretation of transferred rights, retained vault materials, use restrictions on specific masters, and evidence of awareness or implied consent from conduct and prior royalty payments.

business & regulatoryproperty

The case concerned ownership of a 1917 Egon Schiele drawing that Bakalar purchased in good faith in 1964 from a New York gallery. Defendants Vavra and Fischer, heirs to Austrian Jewish collector Fritz Grunbaum's estate, counterclaimed for conversion and replevin, alleging the work had been seized or sold under duress during the Nazi era. On remand, the district court applied New York law instead of Swiss law and again entered judgment for Bakalar, holding that the defendants' claims were barred by laches given their decades-long delay in pursuing the property. The court reaffirmed factual findings that the drawing had reached Switzerland through Grunbaum's sister-in-law before entering the U.S. market and denied the defendants' related motion as moot.

propertyprocedure

The case involved several nonprofit pregnancy counseling centers challenging New York City Local Law 17, which defined "pregnancy services centers" based on factors like offering ultrasounds or having medical equipment and required them to post signs and make oral disclosures about whether they had licensed medical providers, provided referrals for abortion or emergency contraception, and encouraged consultation with licensed providers. The plaintiffs alleged the ordinance compelled speech in violation of the First Amendment and moved for a preliminary injunction. The court granted the injunction, finding the law likely unconstitutional because it regulated noncommercial speech intertwined with the centers' messages on abortion and was not narrowly tailored to address deceptive practices, as existing anti-fraud laws were deemed sufficient and the disclosures applied broadly regardless of actual deception.

free speechabortioncivil rights

This case centers on a commercial dispute between Hard Rock Cafe International (USA), Inc. and Hard Rock Hotel entities over rights to use "Hard Rock" trademarks under a 1996 licensing agreement covering territories west of the Mississippi River. The plaintiff brought claims for breach of contract, trademark dilution, infringement, and unfair competition, while the defendants asserted counterclaims for breach of contract, breach of the covenant of good faith and fair dealing, and tortious interference with business relations. The court denied dismissal of the plaintiff's breach of contract claim and certain counterclaims, granted arbitration for quality-control disputes under the agreement's arbitration clause, dismissed claims against most equity-holder defendants for insufficient allegations of direct involvement, and dismissed the tortious interference counterclaim for failing to meet pleading standards. These rulings turned on interpretation of the license agreement's provisions regarding best efforts, sublicensing, web links, and reserved rights, along with application of Fed. R. Civ. P. 12(b)(6) and Twombly standards.

business & regulatoryproceduretorts & liability

The case involved a residential building owner challenging the FTA and MTA's decision not to prepare a supplemental environmental impact statement under NEPA for the final design of a subway ventilation facility at 69th Street and Second Avenue. The plaintiff argued that changes in the facility's size, depth, and appearance from the original FEIS conceptual plans constituted significant new information requiring further review. The court granted summary judgment to the defendants, finding their determination that no supplemental review was needed was not arbitrary and capricious because the environmental impacts were adequately considered within the study area and the design changes did not rise to a level requiring supplementation. The court also granted the motion to strike certain affidavits submitted by the plaintiff.

environmentbusiness & regulatoryprocedure

In this antitrust case, plaintiffs Robert Ross and Randal Wachsmuth sued American Express, alleging that it conspired with Visa, MasterCard, and various banks to fix foreign currency conversion fees charged on credit card transactions and to include mandatory arbitration clauses in cardholder agreements, in violation of the Sherman Act. American Express moved for summary judgment, arguing lack of evidence of conspiracy and that plaintiffs lacked standing due to settlements by other defendants. The United States District Court for the Southern District of New York denied the motion, finding genuine issues of material fact as to Amex's participation in the conspiracy based on its pricing studies, internal communications, and market behavior that could support an inference of agreement. The court also rejected the standing argument, noting that the claims against remaining defendants were not mooted by settlements.

business & regulatory

This case involves an appeal by Wells Fargo Bank and its counsel from a bankruptcy court's sanctions and contempt order against them for allegedly failing to comply with a mediation order in the Chapter 11 bankruptcy of A.T. Reynolds & Sons, Inc. The mediation concerned disputes over utility payments and unpaid wages related to the sale of the debtor's assets. The district court reversed the bankruptcy court's order, finding that Wells Fargo had submitted a mediation statement and attended the mediation, and that their pre-mediation concerns about the scope of issues and party participation were legitimate and did not constitute bad faith or noncompliance. The court held that the findings of violation were clearly erroneous and that the requirements for civil contempt were not satisfied.

procedurebusiness & regulatory

Elsevier Inc. sued UnitedHealth Group, Inc. and its subsidiaries for breach of contract and contributory copyright infringement, claiming that UHG employees outside the licensed Ingenix users accessed Elsevier's ScienceDirect database and downloaded copyrighted articles without authorization under the parties' 2005 license agreement and 2006 renewal. Elsevier moved for partial summary judgment on infringement claims involving two specific articles, while defendants moved for partial summary judgment arguing that Elsevier could not establish infringement or proper copyright registration. The court denied both motions, concluding that genuine disputes of material fact existed regarding whether the accesses were by unauthorized users and that Elsevier's registration of the journal sufficed to cover the articles, precluding summary resolution.

business & regulatoryprocedureproperty

This case involved an appeal by creditors CVI GVF (Lux) Master S.A.R.L. and Santa Fe Partners from a Bankruptcy Court order in the Lehman Brothers bankruptcy denying their request to treat late-filed claims as timely. The claims arose from guarantees issued by Lehman Brothers Holdings Inc. for obligations of a subsidiary, but the creditors missed the September 22, 2009 general bar date for proofs of claim after learning of the guarantees only in October 2009. The Bankruptcy Court found that the guarantees were discoverable on a public website three months before the deadline, so any delay was not excusable neglect, and that allowing late claims would prejudice the debtor due to the massive scale of the claims process. The District Court affirmed, holding that the Bankruptcy Court did not abuse its discretion in weighing the factors under Bankruptcy Rule 9006(b)(1).

business & regulatoryprocedure

In United States v. Keyspan Corp., the government brought antitrust claims alleging that Keyspan, an electricity generator, violated Section 1 of the Sherman Act by entering into a financial swap agreement that gave it an indirect interest in a competitor's capacity sales, reducing its incentive to bid competitively in New York City electricity auctions and thereby raising prices for consumers. The parties proposed a consent decree settling the claims, which included disgorgement of profits, and the court addressed whether the Department of Justice could seek such equitable relief in a Sherman Act case. The court granted the motion to enter the consent decree, holding that disgorgement is available under the court's equity powers in antitrust actions and that the proposed settlement was in the public interest under the Tunney Act.

business & regulatory

This case is a putative class action by investors in Smith Barney mutual funds against fund managers and executives alleging securities fraud under §§ 10(b) and 20(a) of the Securities Exchange Act and fiduciary duty breaches under § 36(b) of the Investment Company Act, based on alleged overcharges for transfer agent services and misleading fee disclosures. Following a partial appellate remand, the district court granted in part and denied in part the defendants' renewed motion to dismiss, dismissing claims by mere holders of shares, claims related to funds in which no named plaintiff invested, and all claims against defendant Jones, while permitting the remaining § 10(b) and § 20(a) claims against other defendants to proceed. The court denied as moot the plaintiffs' motion to lift the PSLRA discovery stay. The core reasoning addressed pleading standards for materiality and loss causation, standing requirements for securities claims, and the elements of control-person liability under the federal securities laws.

business & regulatoryprocedure

In this bankruptcy appeal, Michael Pascazi challenged a bankruptcy court order denying him standing to object to a claim by Fiber Consultants, Inc. against the estate of Fiber Optek Interconnect, Corp. The district court affirmed the denial of standing, ruling that Pascazi, as a Chapter 7 debtor, lacked a pecuniary interest because there was no reasonable possibility of a surplus after all creditors were paid, and that the presence of a trustee precluded standing for creditors or equity holders. The court reasoned that under the Bankruptcy Code, only parties in interest with a direct stake may object to claims, and exceptions require specific showings not met here, applying equally to motions for reconsideration.

procedurebusiness & regulatory

This case involved Agence France Presse seeking a declaratory judgment of no copyright infringement in photographs taken by Daniel Morel during the 2010 Haiti earthquake, while Morel asserted counterclaims and third-party claims for direct and contributory copyright infringement under the Copyright Act, violations of the Digital Millennium Copyright Act, and false advertising under the Lanham Act against AFP, Getty Images, CBS, Turner Broadcasting System, and others. The court granted in part and denied in part the defendants' motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). It dismissed the Lanham Act claims, reasoning that the alleged misrepresentations about authorization and authorship did not concern the nature, characteristics, qualities, or geographic origin of the photographs and were barred by Dastar Corp. v. Twentieth Century Fox Film Corp., and also dismissed vicarious infringement claims against CBS. The court allowed the direct copyright infringement claims against AFP and TBS, contributory infringement claims against AFP, and DMCA claims against AFP, Getty, TBS, and CBS to proceed, finding the allegations sufficient to state those claims.

propertyprocedurebusiness & regulatory

In United States v. Daugerdas, defendants faced charges of aiding and abetting tax evasion for designing, marketing, and implementing complex tax shelters such as the Short Options Strategy that allegedly lacked economic substance and business purpose. The defendants moved to dismiss multiple counts of the indictment, arguing that it failed to adequately allege the element of willfulness and that it violated due process by not providing fair notice. The court denied the motion, holding that the indictment sufficiently pleaded willfulness through detailed allegations of fraudulent opinion letters, backdated transactions, fabricated documents, and other deceptive practices intended to conceal the shelters' true nature from the IRS. The court further found that the due process claim lacked merit because the alleged conduct, including falsification and concealment, provided ample warning that the actions could be criminal.

criminal lawtaxes

The case involved environmental and animal welfare groups suing the Bureau of Land Management and Department of the Interior under the Administrative Procedure Act and statutes including the Wild Free-Roaming Horses and Burros Act, NEPA, and FLPMA to halt an ongoing gather removing approximately 60 wild horses from the North Piceance Herd Area in Colorado. Plaintiffs argued the removal violated land management plans and environmental requirements and sought a preliminary injunction. The court denied the injunction after an evidentiary hearing, finding plaintiffs failed to demonstrate a likelihood of success on the merits of their claims. The decision rested on the 1997 land use plan designating North Piceance for eventual horse removal to maintain ecological balance and multiple uses, the excess population relative to appropriate management levels, and the greater harms to the government and environment from halting the gather compared to plaintiffs' aesthetic interests.

environmentfederal powerprocedure

In this securities class action, lead plaintiff SLM Venture sued SLM Corporation (Sallie Mae) and officers Albert Lord and Charles Andrews for allegedly making misleading public statements about the company's earnings, underwriting guidelines for private student loans, and loan forbearance practices during the January 2007 to January 2008 class period, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The defendants moved to dismiss the second amended complaint under Rule 12(b)(6). The court granted the motion in part and denied it in part: it struck improper references to another plaintiff entity, dismissed all claims against Andrews for insufficient allegations of scienter, but allowed the claims against the company and Lord to proceed based on adequately pled facts regarding their knowledge and stock sales. The ruling focused on the particularity of confidential witness allegations and inferences of fraudulent intent for each defendant.

business & regulatory