18 Nov
2014

Judge Scheindlin Awards Stolen 7-Carat Diamond to Innocent Buyers Under UCC “Merchant Entrustment” Rule

In an opinion yesterday, Judge Scheindlin granted summary judgment to two plaintiffs who sought to confirm their rightful ownership of a 7.44 carat diamond.  The original owners (referred to as “WGDC”) had lent the diamond to a stylist named Derek Khan, who was in the business of arranging for celebrities to wear his clients’ jewelry, and who apparently stole the diamond at some point in the past.

Under the UCC’s “merchant entrustment” rule, an owner who entrusts goods to a “merchant” — someone who (1) “deals in goods of the kind” or (2) “”holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction” — bears the risk of an improper sale to innocent third parties.

WGDC argued that Mr. Khan could not be a “merchant” because he was in the fashion business, not in the business of buying and selling diamonds, but Judge Scheindlin disagreed:

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17 Nov
2014

Judge McMahon Rules Against Sirius in Copyright Class Action Regarding Songs Predating 1972 Copyright Act

In an opinion Friday, Judge McMahon denied the satellite radio company Sirius’s motion for summary judgment in a proposed class action by members of the band The Turtles asserting New York common law copyright claims for songs recorded prior to the 1972 federal Copyright Act, which preempted later state law claims.  Further, since it appeared the facts were not in dispute, Judge McMahon ordered Sirius to show cause by December 5 why summary judgment should not be entered against it.

Judge McMahon recognized that her ruling (and a recent similar one in California) would likely cause great disruption to satellite radio providers and others who have generally not paid to broadcast pre-1972 recordings, but said that those concerns should be directed to the legislative branches of government:

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12 Nov
2014

Judge Pauley Criticizes Attorneys Creating Their Own “Caselaw” By Citing Signed Orders They Drafted in Other Cases

In opinion today reducing the attorney’s fees awarded to class counsel in an FLSA case, Judge Pauley criticized the plaintiffs’ attorneys for supporting their fees by citing “caselaw” suggesting that one-third of the recovery is an appropriate amount, when those cases were really signed orders drafted by counsel in other cases:

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06 Nov
2014

Judge Gorenstein Rejects Broad Version of Bank Privilege to Withhold Documents Related to “Suspicious Activity Reports”

In an opinion yesterday, Magistrate Judge Gorenstein rejected the Bank of China’s attempt to withhold from discovery documents that the bank claimed were privileged because they relate to “Suspicious Activity Reports” (or SARs) that financial institutions must file with regulators to alert them of suspicious customer behavior.

Federal regulations state that “any information that would reveal the existence of a SAR” is generally confidential.  The bank established a process for investigating suspicious conduct, and the culmination of the process is a committee vote as to whether or not to file a SAR.  According to the bank, “documents produced at each step of this process are protected by the SAR privilege since they result from the implementation of BOC’s policies and procedures for the filing of SARs.” Judge Gorenstein disagreed.

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31 Oct
2014

Second Circuit Affirms Judge Torres’ Denial of Police Unions’ Request to Intervene in Stop-and-Frisk Cases

The opinion’s introduction summarizes the holding as follows:

We hold that the police unions’ motions to intervene are untimely and do not assert an interest that the law seeks to protect. The unions knew, or should have known, of their alleged interests in these controversial and public cases well before they filed their motions in September 2013. For years now, “stop‐and‐frisk” has been the subject of extensive public filings and intense media scrutiny. Whatever the merit of the unions’ claim that Judge Scheindlin’s rulings were incorrectly premised “upon statistical evidence purporting to place 4.4 million stops at issue,” allowing the unions to revive a now‐settled dispute by intervening at this late juncture would substantially prejudice the existing parties and unduly encroach upon the City’s inherent discretion to settle a dispute against it. In other words, granting the unions’ motions in the wake of the November 2013 mayoral election would essentially condone a collateral attack on the democratic process and could erode the legitimacy of decisions made by the democratically‐elected representatives of the people.

Furthermore, the police unions’ interests in their members’ reputations and collective bargaining rights are, as a matter of law, too remote from “the subject of the action” to warrant intervention as a “party.” We stress that our holding is limited to the particular and highly unusual circumstances presented here and should in no way be construed to encourage premature intervention in cases of public concern where government defendants have discretion to settle.

Judge Torres’ prior ruling was covered here, and other posts on stop-and-frisk are here.

30 Oct
2014

Judge Furman Dismisses Class Action Accusing Match.Com of Using Photos It Does Not Own to Make Phony Dating Profiles

In an opinion today, Judge Furman dismissed a class action brought by a company called Meltech, which owns the rights to certain pictures of an adult movie actor known professionally as Melissa Midwest, against against Match.com and various affiliated dating websites.  Meltech alleged that Match and the other websites used photos of Ms. Midwest without authorization to make fake dating profiles.

Meltech withdrew its copyright claims because it had not actually registered any copyrights for the photos, and Judge Furman found that Meltech could not use the Lanham Act as an “end-run” around the copyright laws:

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24 Oct
2014

The SDNY Celebrates its 225th Anniversary

This November marks the 225th anniversary of the District Court for the Southern District of New York, and the court has announced a series of events to commemorate and celebrate that anniversary. Events kick off on November 4 with a special session and reception, and will include a reenactment of the Pentagon Papers case, a performance of a patent trial – “American Pin v. National Button” – and panels on the judicial lives of Judges Edward Weinfeld, Learned Hand, and Constance Baker Motley. A full listing of events is here.

The Southern District – which convened for the first time on November 3, 1789 – is the oldest federal court in the United States, pre-dating by several weeks the organization of the U.S. Supreme Court, which did not hold its first session until February 1790. A history of the court, published in 1962 by the Federal Bar Association of New York, New Jersey & Connecticut, can be found here.

21 Oct
2014

Herbalife Case Raises Second Challenge to Constitutionality of SEC ALJs

A complaint filed yesterday is the second SDNY suit (see our post on the first one, here) to argue that SEC ALJ’s are too insulated from accountability to the executive branch, in violation of Article II of the Constitution.

The underlying case involves administrative charges against Jordan Peixoto, who allegedly shorted Herbalife stock in advance of a presentation by the hedge fund Pershing Square accusing Herbalife of being a pyramid scheme. Peixoto allegedly received the information from a friend (Filip Szymik) who was roommates with an analyst at Pershing Square.

Peixoto argues that the case was brought administratively to avoid having a jury rule on weak evidence and on a novel application of the insider trading laws:

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10 Oct
2014

NYLJ Publishes Q&A With Judge Berman

The article includes the following answer detailing Judge Berman’s most interesting cases:

The most rewarding part of the job has to do with the breadth and sometimes the significance of the cases. Mine have included: a) two “three judge” cases (election redistricting and a challenge to the Communications Decency Act); b) two cases which were ultimately decided by the U.S. Supreme Court, one involving the importation of wine into New York State and another relating to civil RICO (Yes, I went to both oral arguments in Washington, D.C.); c) the New York City “subway search” case which was resolved after a compelling bench trial; d) the case that authorized the use of credit cards in New York City taxis (You’re welcome); e) the trial of a non-U.S. national for attempting to kill U.S. government officials (CIA, FBI and military officers) in Afghanistan; f) overseeing the District Council of New York City Carpenters Union trusteeship which calls upon my undergraduate degree in Industrial and Labor Relations; and g) the recent trial involving counterfeit wine which sold for $20-$30 thousand per bottle.