Judge Rakoff Stays Antitrust Action Against Uber Pending Appeal Over Arbitrability

As part of the ongoing Uber antitrust litigation, Judge Rakoff granted today the defendants’ request to stay the proceeding pending an interlocutory appeal of his prior order denying defendants’ motion to compel arbitration (see our coverage here).

Judge Rakoff noted that the while the defendants had not made a “strong showing” that they would succeed on the merits, the need for clarity from the appellate court warranted a stay:

So what are we left with? Of the two “most critical” factors (the first [success on the merits] and the second [irreparable harm]), the defendants have carried their burden on one factor (the second factor) and have failed to carry it on the other (the first factor) . . . . In this unusual situation, the Court believes that . . . it can take account of still another factor: the need for further appellate clarification of what constitutes adequate consent to so-called “clickwrap,” “browsewrap,” and other such website agreements. Even if defendants do not prevail on their appeal, such a clarification will be materially helpful to this Court in the further conduct of the litigation. For example, . . . . [the] Court’s future consideration of class certification could also be affected, both because the agreement that is the subject of the Order also contains a class action waiver and because the outcome of the appeal might also bear on who determines the validity of that waiver. In these and other respects, the conduct of this lawsuit will be materially affected by the Second Circuit’s ruling on the pending appeal, regardless of whether the appeal is ultimately successful or not.

Our complete coverage of the Uber antitrust case is here.


Judge Gardephe: It is Not Defamatory to Suggest That Anti-Aging Doctors Fined for Misconduct Are “Quacks”

In an opinion yesterday, Judge Gardephe dismissed a defamation complaint brought by two prominent doctors who practice “anti-aging” medicine (see coverage of them in the New York Times here) over an article on a nonprofit consumer advocacy website called “Quackwatch” reporting that they had agreed to pay fines to the Illinois licensing authorities for improperly using the term “M.D.” after their names.  The doctors have medical degrees from a school in Belize that does not qualify for the M.D. designation in Illinois.

Judge Gardephe found that, to the extent the article’s placement on a website called “Quackwatch” would imply the doctors are “quacks,” the doctors had not shown that the implication was false:

[T]he term “quack” is defined as “a person who falsely pretends to have medical skills or knowledge.” . . . . To the extent that the placement of the Article on the Quackwatch Website implies that Plaintiffs “falsely pretend[ed] to have medical skills or knowledge,” Plaintiffs have not pled facts sufficient to demonstrate that such an implication is false. Plaintiffs’ settlements with the State of Illinois bar them from continuing to identify themselves as having M.D. degrees. A claim for defamation by implication must be based on a ‘”misleading omission[] or false suggestion[].”‘

The defendant was represented pro bono by Steptoe & Johnson LLP.

Judge Schofield Dismisses ERISA Claims Related to FX Price Fixing

In an opinion yesterday, Judge Schofield dismissed a  case brought purportedly on behalf of various ERISA benefit plans against banks accused of fixing prices in the FX markets.  Judge Schofield ruled that the banks could not be sued under ERISA because they were not fiduciaries to the plans or even “functional” fiduciaries, but were instead mere counterparties:

Plaintiffs describe the following “typical fact pattern”: “Defendant bank A enters into an FX transaction with an ERISA plan that is tied to a benchmark rate. Defendant bank A enters into the transaction knowing full well that it is participating in an ongoing conspiracy with defendant banks B, C, and D to manipulate benchmark FX rates.” Contrary to Plaintiffs’ suggestion that such an arrangement would make bank A an ERISA fiduciary, this scenario describes a counterparty relationship between that bank and the plan to transact at a specified rate, and the plan has not granted the bank any control or authority over that rate.

Because the Complaint does not allege any indicia of control over Plan assets or an ongoing contractual relationship between any Plan and any Defendant in which the Defendant bank unilaterally decided when to enter into FX transactions and at what prices, the Complaint does not adequately plead Defendants’ authority over Plan assets.

Judge Furman: GM’s Ignition Switch Compensation Program Is Admissible to Rebut Claim for Punitive Damages

In an opinion today resolving various in limine motions in one of the bellwether cases in the GM ignition switch litigation, Judge Furman ruled that GM could introduce evidence of its voluntary settlement program, in light of the fact that the plaintiff planned to seek punitive damages:

Given  . . . the likelihood that [the plaintiff] will ask the jury to award punitive damages to punish New GM for putting millions of drivers at risk, the Court concludes that New GM should be entitled to show that it attempted to make amends after the recalls were announced by voluntarily establishing a settlement program with lower burdens of proof than the judicial system and paying out close to $600 million as part of that program. Such evidence is particularly probative with respect to the amount of punitive damages to award (if they are awarded), as the jury could conclude that there is less need for punishment and deterrence.

Judge Karas Refuses to Dismiss Dog Owner’s Claim to Have Been Duped Over Bacon Content of “Beggin’ Strips”

Last week, Judge Karas denied in part a motion to dismiss a putative class action against Nestle Purina, maker of the “Beggin’ Strips” line of dog treats.  The suit, on behalf of New York consumers who purchased the treats, alleged that Nestle Purina’s advertisements created the impression that bacon was a key ingredient in the treats, while in reality in was only a minor ingredient.  Judge Karas declined to dismiss the case as a matter of law at this stage, as he could not say as a matter of law that no reasonable consumer would believe that the treats were “predominantly made out of real pork bacon” based on the allegations in the complaint.

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Judge Abrams Rejects Neighbor’s Claim that Apple Store Is a Nuisance

In an opinion yesterday, Judge Abrams dismissed a suit by an Upper East Side resident complaining about the opening of an Apple Store “eighty-seven and one-half” feet from his home.  The plaintiff claimed that “there will be a massive increase in pedestrian traffic,” that “the very existence of an Apple store creates and multiplies crowds,” and that Apple’s product launch schedule will cause “the occupation of the neighborhood, its sidewalks, and its streets, by long lines of Apple customers.”  He also complained about the risk of “[m]obile food trucks” popping up and “noisy Rock N Roll concerts.”

Judge Abrams found that the plaintiff lacked standing to sue for this type of spectulative harm: “Despite having amended his complaint more than five months after Apple’s Store opened . . . [the plaintiff] does not allege that this feared parade of horribles has occurred and, indeed, [his] briefing acknowledges that “no disturbances have yet occurred since the June 13, 2015 store opening.”


Second Circuit Agrees With Judge Forrest that Aluminum Consumers Lack Antitrust Standing for Alleged Conspiracy Between Warehouses and Traders

In an opinion yesterday, the Second Circuit affirmed Judge Forrest’s ruling (covered here) dismissing claims by consumer and commercial end-users who alleged that aluminum trading firms and warehouses conspired to increase the price of aluminum.  The Second Circuit ruled that the plaintiffs lacked antitrust standing because they did not participate in the markets where the wrongdoing was alleged to have occurred: Continue Reading

Judge Castel Dismisses RICO Claims in Case Over Alibaba Selling Counterfeit Goods

Today, Judge Castel dismissed RICO claims brought against Alibaba Group Holding by a group of luxury goods makers including Gucci and Yves Saint Laurent.  The complaint accused Alibaba of providing services and a market platform to merchants that Alibaba should have known were selling counterfeit goods.

Judge Castel specifically considered the plaintiffs’ claims that Alibaba’s online marketplace and the merchants that used it constituted a criminal enterprise under RICO.  Judge Castel rejected this argument, holding that lack the coordination necessary to create a RICO enterprise: Continue Reading

Judge Swain Dismisses Infringement Claims Concerning Video Game Featuring LeBron and Kobe’s Tattoos

Yesterday, Judge Swain dismissed claims by Solid Oak Sketches, LLC alleging that Take-Two Interactive Software and other defendants infringed Solid Oak’s copyrights by prominently featuring eight tattoos of five NBA players (including LeBron James and Kobe Bryant) in Take-Two’s popular NBA 2K16 video game (see previous coverage here).

Judge Swain held that the plaintiffs could not recover under the Copyright Act because the first infringement occurred before the marks were registered: the tattoos were registered in 2015, and the alleged infringement first occurred when NBA 2k14 was released in 2013.  The parties also disputed whether the series of “2K” video games were a single work or separate works, and Judge Swain held that they were a single work: Continue Reading

Judge Rakoff Rules That Uber’s Customer Arbitration Clause Is Not Conspicuous Enough to Be Enforceable

In an opinion today, Judge Rakoff denied a motion to compel arbitration of antitrust claims against Uber’s CEO because he found that the arbitration clause was too concealed for the plaintiff to have reasonably agreed to it.  (See our prior posts on the case here.)

When a user enters his or her credit card information, there is a button that says “Register,” and below that, in a “barely legible” font, it says:  “By creating an Uber account you agree to the Terms of Service and Privacy Policy.”  The phrase “Terms of Service” is a hyperlink to terms that include a mandatory arbitration clause.

Judge Rakoff acknowledged that there is extensive case law upholding arbitration agreements when users must click a button stating “I agree” to the terms of use (so called “clickwrap” agreements), but found that the facts here were towards the other end of the spectrum, where the clauses are not enforceable: Continue Reading