Second Circuit

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Yesterday, the Second Circuit overturned Judge McMahon’s December 2021 decision rejecting the Purdue Pharma bankruptcy on the grounds that the Bankruptcy Code did not permit releases of third-party direct claims against non-debtors. As we previously covered, Judge McMahon’s opinion found that the bankruptcy court lacked authority to issue releases in favor of the Sackler family. 

While acknowledging that both sides put forth arguments “about fairness and accountability, particularly as it relates to the Sacklers, in releasing parties from liability for actions that cause great societal harm” the Second Circuit concluded that the only questions it needed to resolve were (1) whether the Bankruptcy Code permits nonconsensual third-party releases of direct claims against non-debtors, and (2) if so, were such releases proper here in light of all equitable considerations and the facts of this case. The Court answered both questions in the affirmative:…

Continue Reading Second Circuit, Reversing Judge McMahon’s Order, Affirms Purdue Pharma Bankruptcy

On Wednesday, Judge Vyskocil denied a request by Manhattan District Attorney Alvin Bragg for a TRO enjoining the enforcement of the subpoena issued to Mark F. Pomerantz by Congressman Jim Jordan in his role as Chair of the House Committee on the Judiciary. We previously covered DA Bragg’s TRO and Complaint here.

Before addressing the merits of the TRO request, Judge Vyskocil faulted DA Bragg for filing the order to show cause for the TRO without notice to Defendants and before serving them with the Complaint. She characterized the first 35 pages of the Complaint as “nothing short of a public relations tirade against former President and current presidential candidate Donald Trump,” before concluding “that this action is merely a motion to quash a subpoena dressed up as a lawsuit.”…

Continue Reading Judge Vyskocil Denies DA Bragg’s Request to Enjoin Pomerantz’s Testimony, but Second Circuit Grants Stay Pending Appeal

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 last week, the Second Circuit affirmed Judge Cote’s decision (covered here) finding that the force majeure clause in a contract relating to an art auction was triggered by the COVID-19 pandemic.

Judge Cote had found that COVID-19 qualifies as a “natural disaster” within the clause, and the appellant argued that there was at least fact question as to whether the pandemic was truly a natural disaster, insofar as it may have been the result of a leak from a Chinese lab of man-made, genetically engineered viral material. The Second Circuit decided it need not resolve that issue, and seized on different language in the same clause about circumstances beyond the parties’ “reasonable control”:…
Continue Reading Second Circuit: COVID-19 Pandemic Triggers Contractual Force Majeure Clause for Circumstances Beyond the Parties’ “Reasonable Control”

Last week, the Second Circuit affirmed Judge Schofield’s decision last year to to deny the motion by Donald Trump, the Trump Corporation, and other Trump family members to compel arbitration of claims related to the multi-level marketing scheme ACN (see our previous coverage here).  Defendants argued that, because the plaintiffs had agreed to arbitrate any claims they might have against ACN, the same arbitration clause should force arbitration of any claims against the Trump defendants related to their endorsement of ACN.

The Second Circuit agreed that equitable estoppel did not apply:…
Continue Reading Second Circuit Affirms Judge Schofield’s Denial of Motion to Compel Arbitration for Trump-Related Multi-Level Marketing Scheme Claims

This week, the Second Circuit issued two orders reversing in part the district court’s decision dismissing claims brought by former Knicks player Charles Oakley, all stemming from a 2017 incident at Madison Square Garden where Oakley was forcibly removed from the stands during a Knicks game by the arena’s security (see our previous coverage here).

The Second Circuit concluded that the allegations of excessive force were best left for a jury to decide:…
Continue Reading Second Circuit Allows Charles Oakley’s Assault and Battery Claims to Proceed, But Agrees Defamation Claims Should Be Dismissed

In an opinion yesterday, the Second Circuit affirmed Judge Torres’s decision (covered here), to reinstate the Democratic Primary on June 23.

The Board of Elections argued that the cancellation was necessary to limit the spread of COVID-19, but the Second Circuit concluded that this “justification is overstated for at least two reasons”:…
Continue Reading Second Circuit Upholds Reinstatement of Democratic Primary

Earlier today, the Second Circuit reversed a decision by Judge Ramos that had invalidated an executive order targeting “sanctuary cities” that did not cooperate with federal law enforcement on immigration issues (see our previous coverage here).

Judge Ramos had held that the order was arbitrary and capricious under the Administrative Procedures Act, and impinged on the powers of state and local governments.  The Second Circuit disagreed, noting that the federal government has broad power to enforce immigration policy:…
Continue Reading Second Circuit Reverses Judge Ramos on “Sanctuary Cities,” Allows Executive Order Cutting Funding