Judge Sweet: Allegations of Bear Stearns’ Material Omissions Before Its Collapse Survive Summary Judgment

Yesterday, Judge Sweet found that there was sufficient evidence to survive summary judgment regarding allegations that Bear Stearns hid material information about its lack of liquidity and other problems during the financial crisis.  He rejected the defendants’ argument that the supposedly hidden risks were “publicly known as a result of Bear Stearns’ disclosures”:

Defendants’ opposition and cited disclosures demonstrate textbook disputes of material fact sufficient to defeat a motion for summary judgment.

For example, both Plaintiff and Defendants point to a disclosure stating “inability to raise money in the long- term or short- term debt markets, or to engage in repurchase agreements or securities lending, could have a substantial negative effect on [Bear Stearns’ ] liquidity. ” Defendants frame this as sufficient disclosure to alert Plaintiff to risks, defeating the possibility of a misstatement or omission. Plaintiff emphasizes that Defendants disclosed only the possibility but not the certainty that Bear Stearns was already experiencing negative pressure as a result of its reliance on repo financing.  . . .

“Nothing short of a complete failure of proof concerning an essential element of the nonmoving part y’s case will be sufficient to award summary judgment.” Celotex Corp . v . Catrett, 477 U.S. 317, 323 (1986). The disclosures Bear has identified are not so forthright and comprehensive that it can be said no dispute of material fact exists.

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Judge Rakoff Orders Uber Investigative Firm to Stop “Arguably Criminal Conduct,” Uber Will Pay Plaintiff’s Fees

In the latest chapter of the saga over Uber’s background investigations into an antitrust plaintiff and his counsel (see coverage here), Judge Rakoff has ordered Uber and its investigative firm, Ergo, to cease their background investigations and has enjoined Uber from using any information found during the investigation in the antitrust proceeding.  Uber had hired Ergo to investigate the plaintiff and plaintiff’s counsel, an Ergo allegedly made various misrepresentations to gain information from friends and colleagues of the plaintiff and plaintiff’s counsel.

Judge Rakoff did not reach the issue of monetary sanctions, as defendants “have reached an agreement to pay plaintiff a reasonable (though publicly undisclosed) sum in reimbursement of plaintiff’s attorneys’ fees and expenses incurred in conjunction with these matters.”  Judge Rakoff described the proceedings as a “sad day” and noted that: Continue Reading

Judge Failla Rejects “Fair Use” Defense for Gossip Website’s Screen Grabbing of Photos

In an opinion Wednesday, Judge Failla found that the website Gossip Cop was liable for posting screen grabs of copyrighted photos from other websites, and rejected Gossip Cop’s argument that doing so was “fair use.”  Gossip Cop’s fair use argument was premised on the fact that it commented on whether the underlying news stories associated with the photos were true or not, but Judge Failla found that the commentary had nothing to do with the photos themselves:

[A]llowing Defendant to copy Plaintiff’s images directly from third-party licensees and to frame that copying as “news reporting,” when Defendant’s articles provide no comment on the licensees’ use of the respective photographs — and thus, on the facts of this case, add no additional meaning or expression to those photographs — would effectively allow Plaintiff to license its images only once; after an initial licensee published the photo, third parties could then copy it with impunity.

Judge Failla noted that Gossip Cop achieved some success in the lawsuit by virtue of the court recognizing that, under different circumstances, screen grabbing photos could be fair use:

On some level, Defendant has lost the battle, but won the war; this Court agrees that its website may present images from other articles under a fair use theory, but concludes that its use of the three images in question did not constitute fair use.

Judge Furman Rejects “Brand Devaluation” Theory in GM Ignition Switch MDL

In a 102-page ruling Friday, Judge Furman granted in part, and denied in part, a motion to dismiss certain of the claims being pursued in the GM ignition switch MDL.

Perhaps most significantly, Judge Furman rejected the plaintiffs’ claims that were based on the theory that all GM customers – including those who bought GM cars without any defect — were injured because they “thought they were buying cars made by “a ‘brand that had a reputation for producing safe and reliable cars,’” but were really buying cars from a cost-cutting company whose misconduct “result[ed] in lower resale values across the board” for the plaintiffs.

Judge Furman noted that the theory was concededly unprecedented, and emphasized that a major new legal claim should be created by the legislature, not the courts: Continue Reading

Roger Ailes Petitions to Compel Arbitration of Gretchen Carlson’s Sex Discrimination Claims

Fox News Chair Roger Ailes filed a petition in the SDNY today seeking to compel arbitration of sex discrimination and harassment claims that Gretchen Carlson, a former Fox anchor, filed in New Jersey state court. Mr. Ailes argues that Ms. Carlson’s choice to only sue Mr. Ailes (and not Fox) does not allow her to avoid her contractual obligation to resolve disputes by confidential arbitration:

Ms. Carlson not only improperly filed her public Complaint in the New Jersey Superior Court, as opposed to filing it with the AAA, she has repeatedly violated her confidentiality obligation so that she, her counsel, and their public relations firm (aptly-named Ripp Media) could vilify Mr. Ailes publicly, try this case in the newspapers, on-line and on television, and coerce him to settle. Ms. Carlson’s counsel has been on a non-stop tour of major media outlets ever since . . . .

In a transparent attempt evade the Agreement and her contractual commitment to arbitrate, Ms. Carlson named only Mr. Ailes as a defendant in her Superior Court action, rather than naming Fox as well.  At the same time, however, she could not avoid identifying Mr. Ailes in her Complaint by his corporate title, the “Chairman and CEO of Fox News.”  Such gamesmanship did not permit Ms. to ignore her contractual obligations, file in Superior Court, and publicly engage in smear campaign against Mr. Ailes. Her lead counsel, an experienced New Jersey plaintiff-side employment lawyer, knows better. As addressed below, both Second Circuit and Third Circuit law squarely hold that an employee cannot avoid a binding arbitration agreement with her employer by merely naming her employer’s corporate officer (such as Chairman and CEO Ailes) as the defendant.

The case has not yet been assigned a judge.

Second Circuit Denies Tom Brady’s Rehearing Petition in DeflateGate Case

In a short order today, the Second Circuit denied the NFL Players Association and Tom Brady’s petition for a panel rehearing or rehearing en banc in the DeflateGate case.  The decision leaves intact Brady’s four game suspension for his role in deflating footballs used during the 2015 AFC Championship Game.

Our coverage of the original Second Circuit decision reversing Judge Berman is here; our full coverage of the DeflateGate case is here.

Gender Dysphoria Class Action Will Proceed to Trial Before Judge Rakoff

Last week, Judge Rakoff held that a class action of transgender individuals challenging the coverage of gender dysphoria treatments under New York’s Medicaid program will proceed to trial.  Specifically, the class challenged the New York Department of Health (“DOH”)’s exclusion of coverage for gender reassignment and hormone therapy for individuals under 18, and a blanket ban on “cosmetic” procedures (even if deemed medically necessary). Continue Reading

Judge Castel Rules Rolling Stone Article on UVA Rape Did Not Defame Fraternity Members

In an opinion Tuesday, Judge Castel dismissed a case brought by three fraternity members against Rolling Stone magazine and one of its writers, Sabrina Erdely, who authored a discredited account of a woman referred to as “Jackie” claiming to have been gang raped at a fraternity at the University of Virginia.

Judge Castel found that the article was not specific enough to defame the plaintiffs.   For example, the article quotes Jackie as saying that the attackers encouraged one another with statements like “Don’t you want to be a brother?” and “We all had to do it, so you do, too” – language that Judge Castel found couldn’t plausibly suggest that every fraternity member was a rapist: Continue Reading

Judge Rakoff Won’t Stay Petrobras Securities Trial, Calls Delay “Bane” of U.S. Legal System

Last week, Judge Rakoff denied a request from the defendants in a group of Petrobras securities cases to stay a September trial date pending the Second Circuit’s consideration of an interlocutory appeal of class certification.  The defendants argued that the Second Circuit appeal was on an expedited schedule, and that significant expense could be saved in the event the case had to be re-tried.  The plaintiffs opposed the stay, arguing that a delay amid Brazilian political upheaval (including issues of Petrobras’ viability) would only serve to prejudice the plaintiffs.

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