In an opinion last week, the Second Circuit, reversing a decision by Judge Furman (covered here), held that Citibank could sue to recoup almost $500 million that it had sent, in error, to certain lenders of a struggling borrower, Revlon.

Citibank was the administrative agent for the loans, and, based on a technical error, wired the full principal balance (nearly $900 million) before the maturity date. Judge Furman applied the “discharge for value” defense to conclude that even a mistaken payment need not be returned where it pertains to a valid debt.

The Second Circuit concluded, however, that the defense is inapplicable so long as the recipient is on “inquiry notice” of the mistake. Inquiry notice was shown by the fact that there was no prior notice of any loan repayment, as the transaction documents required, and by the fact that Revlon was not expected to have the funds to repay:
Continue Reading Second Circuit: Citibank Can Recoup $500 Million Accidental Debt Repayment

In an opinion today, Judge Furman dismissed a putative class action against a retailer, Bonobos, whose customer data (names, addresses, emails, and the like) was stolen and posted online. Judge Furman found that the plaintiff, Bradley Cooper, did not allege a level of impending harm or risk that was sufficient to establish standing to sue. Judge Furman contrasted the facts at issue with those in other cases where more sensitive information was stolen (like Social Security numbers), giving rise to high risk of identity theft.

Cooper had sought to establish standing based on his alleged risk of “credential stuffing,” which is described in the opinion as a “technique in which [hackers] enter credentials gained from a hack into third-party websites, hoping that they will match an existing account because the consumer has reused the same password elsewhere,” but Judge Furman was not persuaded:
Continue Reading Judge Furman Dismisses Data Breach Class Action Because Stolen Information Didn’t Give Rise to “Impending” Harm

Last week, Judge Furman ruled, following a bench trial, that some of the recipients of accidental wire payments of almost $900 million were entitled to keep the proceeds. Citibank, acting as the administrative agent for the loans, had intended to wire $7.8 million in interest payments to a series of lenders, but through an error had also sent an additional wire of almost $900 million – representing the entire principal amount of the underlying loan.

Judge Furman concluded that the lenders could keep the funds under New York’s “discharge-for-value” defense:
Continue Reading Judge Furman: Lenders Can Keep Accidental Loan Repayment Arising from Bank Error of “Perhaps Unprecedented Nature and Magnitude”

A class action complaint filed last week against online brokerage firm Robinhood accuses the company of manipulating the open market after it removed GameStop’s stock from its trading platform in the midst of volatile trading last month.  GameStop (ticker symbol GME), a struggling retailer of video games and accessories, saw its stock rise almost 1,700% in one day as small investors drove up the price of the stock as part of an effort encouraged by the Reddit page Wall Street Bets (see full NYT coverage here).  The Southern District complaint is one of 30 cases across the country, reports Law360.

According to the complaint:
Continue Reading Class Action Seeks Damages Over Robinhood’s Removal of GameStop Stock from Trading Platform After Meteoric Rise

In an opinion today, a three-judge SDNY panel comprised of Judge Furman and Circuit Judges Wesley and Hall invalidated a Presidential memorandum which stated that, in apportioning Congressional seats, “it is the policy of the United States to exclude from the apportionment base aliens who are not in a lawful immigration status.” (The three-judge structure was triggered by 28 U.S.C. § 2284(b), which governs cases about Congressional apportionment.)

The panel concluded that the memorandum conflicted with a statutory mandate to apportion Congressional seats based on the census results alone:
Continue Reading Three-Judge SDNY Panel Invalidates President Trump’s Directive to Exclude Undocumented Immigrants in Apportioning Congressional Seats

In an opinion today, Judge Furman granted a motion for sanctions against the Department of Justice for failing to review and produce hundreds of relevant documents in the litigation over when a citizenship question could be included in the 2020 Census (see our previous coverage here).  The case centered on whether the inclusion of the citizenship question was a proper exercise of executive authority. The withheld documents provided evidence that the question was included to assist in political redistricting efforts, and that the stated justification (that the question was added to help enforce the Voting Rights Act) was pretextual.

While Judge Furman agreed that the conduct was sanctionable, he noted that the most appropriate remedy – judgment in favor of the plaintiffs – had already occurred:
Continue Reading Judge Furman Sanctions DOJ in Census Citizenship Question Case

In an opinion today, Judge Furman certified for interlocutory appeal a question about calculating economic losses in the GM ignition switch litigation (covered here).  One reason for doing so, he ruled, was that in the context of an MDL, where there are powerful pressures to settle, these sorts of questions would never otherwise be the subject of a final judgment that would be heard in an ordinary appeal:
Continue Reading Judge Furman: Interlocutory Appeals More Appropriate In MDL Context, Where Cases Are More Commonly Settled, Precluding Ordinary Appellate Review

In an opinion Tuesday, Judge Furman ruled that the complaint in an “international saga” of fraud in the art world must be filed publicly and without redactions, even though it contained sensitive information about transactions facilitated by the international auction house Sotheby’s.

Plaintiffs hired an art dealer to assist in purchasing a world-class art collection, and the dealer allegedly defrauded them of approximately $1 billion by purchasing the artworks himself and re-selling them to plaintiffs at inflated prices.  Plaintiffs claim that Sotheyby’s aided and abetted the fraud.  Sotheby’s sought to keep certain portions of the complaint under seal, but Judge Furman held that confidentiality concerns were insufficient because the information at issue went to the very heart of the case:
Continue Reading Judge Furman: Sensitive Pricing Information Can’t Be Sealed Where It Goes to the “Heart of the Litigation”

The Supreme Court today, in an opinion by Chief Justice Roberts, largely affirmed Judge Furman’s conclusion (see here) that the Commerce Department’s decision to add a citizenship question to the 2020 census was based on a rationale —  to help enforce the Voting Rights Act — that was pretextual, and agreed that the matter must be remanded back to the agency to reconsider:
Continue Reading Supreme Court Agrees With Judge Furman that Census Citizenship Question Was Added Based on “Contrived” Rationale