In an order today, the Second Circuit granted the defendants’ Rule 23(f) motion for leave to file an interlocutory appeal of Judge Marerrro’s decision to certify a class of investors in a Madoff feeder fund. As we reported in February, Judge Marerro had certified the class over the defendants’ arguments that individualized issues of reliance and the question of whether foreign jurisdictions would accept the binding effect of a U.S. opt-out class action precluded class treatment.
Supreme Court Sides with Judge Sweet Over Federal Circuit on Patenting of Genes
As we reported last year, the Supreme Court granted cert to answer the question of whether human genes are patentable — a question that Judge Sweet had answered “no” in a 2010 opinion. The Federal Circuit disagreed, and reversed Judge Sweet on that question in 2011. Today the Supreme Court ruled, in a 9-0 opinion, that DNA is not in fact subject to patent, reversing the Federal Circuit’s ruling to the contrary. The SCOTUSblog has more.
Judge Pauley Rules that Unpaid Interns Are “Employees” Under FLSA
In a ruling on Tuesday, Judge Pauley granted the motion of two unpaid movie studio interns for a judgment that they were “employees” covered by federal and state labor laws. Judge Pauley found that the interns, who worked on the production of the movie Black Swan, did not meet the definition of “trainees” exempted from the labor laws because the work they did benefited the studios and was similar to work done by paid employees, rather than work that was designed to educate and benefit them.
Considering the totality ofthe circumstances, Glatt and Footman were classified improperly as unpaid interns and are “employees” covered by the FLSA and NYLL. They worked as paid employees work, providing an immediate advantage to their employer and perfonning low-level tasks not requiring specialized training. The benefits they may have received-such as knowledge ofhow a production or accounting office functions or references for future jobs-are the results of simply having worked as any other employee works, not of internships designed to be uniquely educational to the interns and oflittle utility to the employer. They received nothing approximating the education they would receive in an academic setting or vocational school. This is a far cry from Walling [v. Portland Terminal Co., 330 U.S. 148 (1947)], where trainees impeded the regular business of the employer, worked only in their own interest, and provided no advantage to the employer. Glatt and Footman do not fall within the narrow “trainee” exception to the FLSA’s broad coverage.
Judge Pauley also granted the motion of another plaintiff seeking certification of a class of plaintiffs consisting of unpaid studio interns with claims under New York labor laws and conditional certification of a collective action under the FLSA. For more on this decision, see this New York Times article.
Judge Preska Vacates Copyright Infringement Victory for EMI on Standing Grounds
In an opinion filed Monday, Judge Preska vacated a $100,000 damages award for record company EMI when it turned out that the wrong corporate entity had brought the suit. After winning summary judgment on its copyright infringement claims, it came to light that the holders of the copyrights were in fact wholly-owned subsidiaries of EMI — not EMI itself — who were not named as plaintiffs in the case.
A.C.L.U. Sues Obama Administration Over Collection of Telephone Records
In a complaint for declaratory and injunctive relief filed today, the A.C.L.U. and N.Y.C.L.U. challenged the legality of the federal government’s “dragnet acquisition of Plaintiffs’ telephone records under Section 215 of the Patriot Act.” The complaint arises “[i]n response to information published by the media [that] the government has acknowledged that it is relying on Section 215 to collect ‘metadata’ about every phone call made or received by residents of the United States,” which the complaint characterizes as “akin to snatching every American’s address book—with annotations detailing whom we spoke to, when we talked, for how long, and from where.”
The organizations sued in their capacity as customers (or former customers) of Verizon, alleging that their communications have been monitored pursuant to a program ”that has been in place for seven years and that collects records of all telephone communications of every customer of a major phone company.”
The government’s surveillance of their communications (hereinafter “Mass Call Tracking”) allows the government to learn sensitive and privileged information about their work and clients, and it is likely to have a chilling effect on whistleblowers and others who would otherwise contact Plaintiffs for legal assistance. This surveillance is not authorized by Section 215 and violates the First and Fourth Amendments. Plaintiffs bring this suit to obtain a declaration that the Mass Call Tracking is unlawful; to enjoin the government from continuing the Mass Call Tracking under the VBNS order or any successor thereto; and to require the government to purge from its databases all of the call records related to Plaintiffs’ communications collected pursuant to the Mass Call Tracking.
For more, see this New York Times article.
Brune & Richard Trial Victory: Judge Sweet Rejects MBIA’s Claim to $120 Million CDO Note
In a lengthy opinion yesterday resolving a 14-day bench trial, Judge Sweet rejected claims by bond insurer MBIA that Patriarch Partners, a private equity firm, was liable for over $120 million in damages for allegedly breaching a complex contract related to a 2003 CDO transaction. Patriarch had agreed, under certain conditions, to use up to $120 million of a CDO note to help reduce MBIA’s insurance exposure on certain MBIA-insured structured finance deals. Judge Sweet ruled that Patriarch’s obligations had not come due under the contract, and entered judgment in Patriarch’s favor.
Hillary Richard of Brune & Richard was lead trial counsel for Patriarch.
Panel Consolidates S&P Rating Cases Before Judge Furman
The U.S. Judicial Panel on Multidistrict Litigation today granted Standard & Poor’s motion to consolidate seventeen state law consumer fraud and securities actions brought against it in fifteen different states. The cases, brought by the states’ attorneys general, challenge S&P’s “representations about its impartiality and objectivity in the rating of structured finance securities.” The panel moved the cases to the SDNY over the states’ objections, rejecting the states’ argument that centralizing the case in New York would inconcenience the states and be unprecedented for litigation of this type.
Even though we have never centralized litigation comprised solely of sovereign enforcement actions such as these, centralization is appropriate in light of the significant factual overlap among all actions. The inconvenience to S&P of litigating in numerous different districts, as well as state courts, is high, and centralization allows for all parties to obtain substantial efficiencies in dealing with common issues. If the actions were properly removed to federal court – a question which we are neither empowered nor inclined to answer – then S&P could be subjected to conflicting pretrial schedules and, perhaps, discovery and other dispositive motion rulings. There is also the risk, despite plaintiffs’ current assurances of cooperation, that they may individually seek overlapping discovery or relitigation of rulings with which they disagree in the various courts. Relatedly, the plaintiffs’ promises of cooperation are belied by their filing of fifteen separate, albeit similar, briefs regarding the relatively narrow issue of centralization. Judicial efficiency will be enhanced by allowing a single judge – as opposed to fifteen – to rule on the remand motions and other pretrial matters, if necessary.
The case has been assigned to Judge Furman.
Jury Verdict Thrown Out When Witness Sues Over Breach of Contract to Testify
Judge Carter on Tuesday ordered a new trial for the City of New York and two police officers after a jury had awarded a plaintiff more than $600,000 for unlawful arrest and excessive force. The basis for the reversal, which came after Judge Carter had denied the defendants’ motion for judgment as a matter of law: The plaintiff’s girlfriend, who had been a key witness corroborating the plaintiff’s version of events, sued the plaintiff in state court in the Bronx for breach of the contract they had signed promising her 20% of the verdict in return for her testimony.
New York Cab Drivers File Class Action Complaint Over Use of GPS Tracking in Cabs
In a putative class action complaint filed last Friday, New York City cab drivers sued the City of New York, Mayor Bloomberg and others, over what they claim to be an invasion of their Fourth Amendment rights. The suit alleges that use of GPS in cabs to police over-billing constitutes a warrantless search of cab drivers suspected of no wrongdoing.
Because GPS tracking is a search under the federal and state constitutions, use of GPS technology to track individuals must be authorized by a warrant based on probable cause or by a recognized exception to the warrant requirement. Nevertheless, the New York City Taxi and Limousine Commission (TLC) has prosecuted hundreds of individuals for overcharging passengers. . . [often] on the basis of GPS tracking evidence, without even a single complaining witness complaining or testifying against them.
Though in prior instances federal courts have dismissed similar cases, the plaintiffs in their complaint cite to the recent Supreme Court case U.S. v. Jones as giving new life to Fourth Amendment challenges to the use of GPS.
In United States v. Jones, 132 S.Ct. 945 (2012), a decision issued on January 23, 2012, the United States Supreme Court held the that the state’s installation of a GPS device in a vehicle and its use of that device to monitor the vehicle’s movements constitutes a “search” under the Fourth Amendment to the Federal Constitution. In 2009, the New York Court of Appeals had reached the same conclusion in People v. Weaver, 12 N.Y.2d 433, 882 N.Y.S.2d 357 (2009).
(For more, see this Bloomberg Businessweek article.)
Judge Oetken Dismisses Suit Over Brand-Name Drug Coupons
In two orders yesterday, Judge Oetken dismissed claims brought by healthcare consumer advocacy group Community Catalyst against Bristol-Myers Squibb and Pfizer. In the Bristol-Myers opinion, Judge Oetken dismissed antitrust and racqueteering claims based on the alleged practice of drug manufacturers to cover the cost of insurance co-pays for their brand-name drugs. The advocacy group had alleged that such practices had the effect of driving up overall health care spending. Judge Oetken did allow the group to replead its claim for racketeering fraud for failure to factor the discounts into its reported drug prices.
In the Pfizer opinion, Judge Oetken granted the same plaintiffs’ motion to voluntarily withdraw the complaint in order to pursue the same claims in a separate matter already commenced in a different (purportedly more favorable) jurisdiction. (For more, see this Reuters piece.)
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