U.S. Second Circuit - The FindLaw 2nd Circuit Court of Appeals Opinion Summaries Blog

Recently in Contract Law Category

2nd Circuit Decertifies Class After Jury Returns $32M Verdict

A lesson of particular interest to class action civil procedure came out from a unanimous Second Circuit recently. That court of appeals affirmed a lower federal district court's decision to decertify a class of debtors on grounds of lack of commonality and typicality, even though the jury returned a $32 million verdict in favor of plaintiffs.

This ruling does not mean a free-for-all in courts, however. After all, the decertification took place before a final judgment in the case.

'Hustle' Case Reversed: BofA Escapes $1.3 Billion Penalty

The Second Circuit just handed Bank of America a huge win when it reversed the trial court's order for the mortgage lender to pay up to the tune of $1.27 billion. This penalty was initially ordered for alleged violations by its Countryside unit when the mortgage-crisis reached a fever pitch. The case became known as the "Hustle" case because of its focus on the banking industry tactic of continuing to issue bad loans despite their quality.

The case is a curious one and is sure to infuriate now disbanded members of "Occupy Wall Street." In the opinion of Michael Hiltzik of the L.A. Times, the decision amounted to a kangaroo decision that turned on the following issue: "When is a fraud not a fraud, but just, sort of, a lie?"

TWA Flight Attendants Finally Lose Legal Battle Over Seniority Rights

It looks like a long and bitter battle that first began in 2001 is finally coming to an end. The Second Circuit's Court of Appeals just sided with a lower district court decision, affirming that plaintiff's are not entitlement to the seniority order that had been lost when TWA was acquired by U.S. Airways in 2001.

The case was ironically made worse with the enactment of the McCaskill-Bond Act which largely owed its existence to the original US Air/ AA / TWA takeover.

Benihana Drama in the 2nd Circuit

This is a case about Benihana, burgers, and contracts. Benihana was founded in 1963 by Rocky Aoki, who would have been a serious contender for the title "Most Interesting Man in the World."

Unfortunately, the case doesn't really involve the considerable family drama surrounding the company after Aoki's death in 2008, which pitted Aoki's six children against his third (much younger) wife, who also happened to be the CEO of Benihana of Tokyo at the time. This case is about a 1994 agreement splitting the company into two entities.

2 Is the Loneliest Circuit: Only 1 SCOTUS Grant So Far This Term

Thus far, the Supreme Court has granted cert. to only one case from the Second Circuit. Gelboim v. Bank of America is a civil action brought by several investors against several banks, arising out of the LIBOR scandal of a few years ago.

LIBOR -- the London Interbank Offered Rate -- is an important interest rate in worldwide banking. It was discovered that several banks colluded to manipulate the interest rate, harming investors by giving them a lower interest rate on financial products than they would have had otherwise.

2nd Cir. Enjoins Indian Tribe's Payday Loan Business in N.Y.

How lucrative are "check cashing" businesses? Pretty lucrative, but states are increasingly regulating these bank-like industries that charge extremely high interest rates. Enter the Indian tribes! Payday lenders are teaming up with Indian tribes to utilize tribal sovereignty as an end-run around state usury laws, which the lenders claim don't apply to loans made on tribal land. As a result, the legality of these operations is a serious question. From Minnesota to California, states are cracking down on these tribal lending operations.

Yesterday, the Second Circuit Court of Appeals dealt a bit of a death blow to a New York-based Indian payday lender.

The past month was a busy one for fashion brands as two lawsuits made headlines (but thankfully had no effect on hemlines).

In the first suit, designer Rachel Roy is suing Jones Apparel Group ("Jones"), where she is trying to stop Jones from selling her brand for $14.6 million to Bluestar Alliance, allegedly in violation of several agreements between Roy and Jones, reports WWD. (subscription only)

In the next, Aeropostale is suing H&M for trademark infringement over the use of the phrase "Live Love Dream," says WWD. (subscription only)

Here's a breakdown of each case.

A putative class action brought by investors against multinational bank Barclays was revived by the Second Circuit last week, when the court vacated in part the district court's dismissal of the suit, reports Reuters.

While the Second Circuit agreed with Judge Shira Scheindlin (of New York City stop and frisk fame) that Barclay's SEC filings were not materially false, the court found her dismissal of the other claims, prior to discovery, premature.

Back in February we mentioned a pending shareholder lawsuit brought by Lululemon shareholders against the company. They claimed that during the class action period, September 7, 2012 and January 10, 2014, Lululemon mislead and defrauded shareholders, reports Reuters.

Last Friday, District Judge Katherine B. Forrest, of the District Court for the Southern District of New York, issued her opinion dismissing the complaint against Lululemon.

Can we get a collective Namaste?

The Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") was enacted to provide a framework for the cleanup of hazardous waste, and to allocate the cost of cleanup to those who create or maintain hazardous conditions. The question before the Second Circuit was a novel one: whether CERCLA creates a subcontractor's right of recovery against a landowner, when the landowner has already paid the contractor in full.

The Cleanup

Norampac discovered that the soil at the one of its sites was contaminated with lead, so Norampac contracted with AAA Environmental, Inc. for the cleanup. AAA subcontracted with Price Trucking, and Price Trucking completed all of its work.