Overview
The SDNY Blog is relaunching as a publication of Steptoe & Johnson LLP. We expect to post several times a week on decisions and other developments in the Southern District of New York. You can find us right here at www.sdnyblog.com, or follow us on Twitter or Facebook.
Here’s a quick summary of what's been happening in the Southern District while we were away:
- Judge Berman vacated the NFL’s four-game suspension of New England Patriots quarterback Tom Brady for his alleged role in deflating footballs used during the 2015 AFC Championship Game. Judge Berman concluded that “Brady had no notice that he could receive a four-game suspension for general awareness of ball deflation by others or participation in any scheme to deflate footballs, and non-cooperation with the ensuing Investigation.”
- Judge Marrero granted Goldman Sachs’s motion for summary judgment in a case accusing the firm of misleading investors in two CDOs allegedly structured so that Goldman could reduce its exposure to residential mortgage-backed securities (RMBS). Judge Marrero found that Goldman had no duty to disclose its “internal strategy,” and that Goldman's general market position was based information that was public and likely known to the plaintiffs and other sophisticated investors. Our previous coverage of the case is here.
- Judge Scheindlin granted a motion to certify a securities fraud class action against Barclays over alleged misstatements relating to bank’s role in the LIBOR scandal. Barclays argued that the case could not proceed as a class without a sufficiently rigorous “event study” to show that share prices efficiently incorporated new information. Judge Scheindlin concluded that an event study was not “always necessary,” and, in any event, found the class expert’s evidence to be sufficient. Our previous coverage of the case is here.
- Judge Swain granted summary judgment in favor of Tiffany and Company in its trademark infringement suit against Costco. She rejected Costco’s argument that “Tiffany” was merely a “generic descriptor for a particular type of ring setting,” as opposed to a “brand identifier.” Our previous coverage of the case is here.
- Judge Stein denied a request to preliminarily enjoin, on First Amendment grounds, New York state’s “policy of requiring registered charities to disclose the names, addresses, and total contributions of their major donors.” He found that the policy served an important purpose — namely to ensure that charities complied with the law. For example, Judge Stein wrote, a “charity’s multi-year filings . . . .may disclose that a single donor has consistently served as its primary source of funding, causing the Attorney General to question whether the charity is in reality a tool to evade taxes or launder money."
- Judge Rakoff stayed an SEC insider trading case based on a pending motion for certiorari in United States v. Newman, the Second Circuit case that narrowed the scope of liability for "tippees."
- Judge Crotty dismissed a defamation suit by Alex Rodriguez’s former lawyer Joseph Tacopina against the New York Daily News. The News had reported that Tacopina had been accused in an earlier lawsuit of having “abused painkillers and cocaine,” when, in fact, there were two different lawsuits — one referencing painkillers and another about cocaine. Judge Crotty found that the case could not proceed because the true facts would not “produce a different effect on a reader" than what was reported.
- Judge Furman dismissed claims against various stock exchanges and against Barclays related to the high-frequency trading (HFT) practices that were documented in Michael Lewis’ bestselling book Flash Boys: A Wall Street Revolt. Judge Furman found the stock exchanges were immune to the extent they were discharging regulatory functions, and found that the plaintiffs had not alleged any reliance on “manipulative” acts. Judge Furman added: “Lewis and the critics of HFT may be right in arguing that it serves no productive purpose and merely allows certain traders to exploit technological inefficiencies in the markets at the expense of other traders. They may also be right that there is a need for regulatory or other action from the SEC or entities such as the Exchanges and Barclays. Those, however, are debates and tasks for others.”
- Two competing decisions addressed the issue of whether the Securities and Exchange Commission’s scheme for appointing and removing administrative law judges (ALJs) violates the Appointments Clause of the U.S. Constitution. Judge Abrams denied Lynn Tilton’s motion for a preliminary injunction against the use of an SEC ALJ on the ground that the issue would have to be litigated by a direct appeal from any adverse ALJ finding, as opposed to via a collateral lawsuit. Judge Richard Berman, on the other hand, granted a similar request and enjoined the SEC’s pending proceeding against Barbara Duka before an ALJ. The matter is now before the Second Circuit, which has temporarily halted the ALJ proceedings against Tilton. For our previous coverage of this issue, see here, here and here.
- Judge Forrest largely denied a motion by UPS to dismiss claims by New York State that the company knowingly transported untaxed cigarettes. She rejected UPS’s argument that the complaint lacked sufficient allegations of knowledge because the complaint alleged that “UPS employees had observed and picked up those packages from smoke shops located on New York State Indian reservations, UPS’s policy is to enmesh itself deeply in its customers’ businesses, and UPS delivered cigarettes for businesses that have been the subject of federal criminal prosecution for trafficking in contraband cigarettes.”
- Judge Wood dismissed RICO claims brought by Ukrainian opposition leader Yulia Tymoshenko and others. Tymoshenko accused several Ukrainians and Americans of using U.S. corporations to deliver funds to Ukrainian government leaders in exchange for politically motivated prosecutions that led to imprisonment for Tymoshenko and other opposition leaders. She found that the fraud underlying the RICO claims was not pled with sufficient particularity because the complaint failed to allege the “specific statements that were made, when and where the statements were made, how statements were fraudulent, and most crucially, who was responsible for making them.”
