16 Sep
2014

Judge Torres Rejects Commerce Clause Challenge to Higher EZ Pass Rates for Passes Bought Outside New York

In an opinion today, Judge Torres granted the MTA summary judgment in a suit challenging the practice of charging higher bridge and tunnel tolls to customers using EZ Pass cards (or transponders) purchased out of state. She found no discrimination against out-of-staters because they, too, are free to purchase discounted, in-state EZ Pass transponders:

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10 Sep
2014

Judge Hellerstein Rules That Searchable TV Database Service is “Fair Use”

In an opinion dated yesterday, Judge Hellerstein ruled that a service called “TVEyes,” which “monitors and records all content broadcast by more than 1,400 television and radio stations twenty-four hours per day, seven days per week, and transforms the content into a searchable database for its subscribers,” was “fair use” under the copyright laws, and thus largely granted summary judgment against the plaintiff, Fox News.

The decision was based on the fact that the service is “transformative”:

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05 Sep
2014

Judge Swain Dismisses GM “Channel Stuffing” Securities Class Action

In an opinion yesterday, Judge Swain dismissed a securities class action accusing GM of “channel stuffing” — forcing excess inventory onto dealers to create the appearance of improving revenue — because the inventory at dealerships was fully disclosed:

The fundamental flaw of Lead Plaintiff’s thesis is that is own Amended Complaint reflects public knowledge of the excessive inventory problem, through press coverage and GM disclosures, at all relevant times, and acknowledges that GM’s disclosure in the Registration Statement identified the importance of customer-level sales figures in gauging revenue and inventory levels. Lead Plaintiff cites documentation demonstrating that GM disclosed information regarding its increasing inventories at the time the Registration Statement became effective. Moreover, GM’s Form 8-K, filed days before the IPO, fully disclosed inventory levels and sales levels for the previous month, and fully reflected growing dealer inventory volumes relative to sales.

Our prior post on the case is here.

04 Sep
2014

Judge Cote Allows Credit Default Swap Antitrust Action to Proceed

In an opinion today, Judge Cote largely denied motions to dismiss from various banks and others accused of colluding to maintain control of the market for credit default swaps. According to the complaint, a joint venture led by Citadel tried to establish a clearinghouse called CMDX that would potentially threaten the defendants’ market dominance, and the defendants responded by conspiring to block critical market participants, ISDA and Markit, from granting licenses that would be necessary for the clearinghouse to function.

Judge Cote rejected the defendants’ arguments that the pleadings were not detailed enough to suggest a conspiracy:

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30 Aug
2014

Judge Forrest Dismisses Aluminum Antitrust Case; Rules Price Increase “Unintended Consequence” of Parallel Conduct

In an 85-page ruling today, Judge Forrest dismissed a group of cases alleging that trading firms and warehouse operators conspired to increase the price of aluminum. The opinion states that the motion consisted of more than 2,600 pages of material, and refers to the fact that the parties delivered a tutorial to Judge Forrest on the workings of the aluminum trading market.

The ruling was primarily based on the fact that the allegations amounted to parallel, rational market behavior, not a conspiracy:

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26 Aug
2014

Jay Z Moves to Block Court-Ordered Deposition in Suit Over Roc-A-Fella Logo

In papers filed yesterday, music mogul Jay Z (Shawn Carter) moved by order to show cause to block a court ordered deposition.  In the underlying suit, the plaintiff claims to be owed compensation for having created the logo for Jay Z’s record label, Roc-A-Fella. Jay Z argues that, despite the court having earlier ordered the deposition for this week, discovery has since confirmed that he would have no relevant knowledge, and that the deposition would be purely for harassment:

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20 Aug
2014

Judge Berman: Insurer Not on the Hook for $30 Million Judgment in Counterfeiting Case

In an order today, Judge Berman ruled that insurance company USF&G was not obligated to reimburse Ashley Reed Inc. for a $30 million judgment against it for selling counterfeit Fendi bags.  The USF&G policy insured against “Advertising Injury,” which Judge Berman ruled was separate from the company’s actual counterfeiting of the bags.

Defendants have failed to meet their burden of demonstrating coverage under the Policies because the Ashley Reed Defendants’ liability in the Fendi (and BCF) Actions was not based upon the “advertising” of counterfeit Fendi products.  Rather, their liability was premised upon their “offering for sale and selling certain [counterfeit] fashion accessories.”  As the Second Circuit has held, “[a] complaint does not claim an advertising injury if it alleges only the manufacture, importation, and sale of infringing goods without claiming harm arising from advertising.”

18 Aug
2014

Judge Scheindlin: Supreme Court’s Halliburton Decision Did Not Change Plaintiff’s Burden of Proving “Price Impact” in Securities Fraud Case

In a brief order today, Judge Scheindlin denied a request by French conglomerate Vivendi to file, in light of the Supreme Court’s recent decision in the Halliburton II case, a new Rule 50(b) motion three years after its initial post-trial motion was denied. As Judge Scheindlin explained:

In the Supreme Court’s own words, it granted certiorari in Halliburton II to address two issues: (1) “to resolve a conflict among the Circuits over whether securities fraud defendants may attempt to rebut the Basic [Inc. v. Levinson] presumption at the class certification stage with evidence of a lack of price impact”; and (2) “to reconsider the presumption of reliance for securities fraud claims that [the Supreme Court] adopted in Basic. The Court said yes to the first question and no to the second.

Vivendi had argued that Halliburton II created new law under Rule 10b-5, requiring a plaintiff to prove that a misleading statement had an impact on the price of a security. But, Judge Scheindlin ruled, that has always been the rule, and was the rule when Vivendi’s prior Rule 50(b) motion had been denied. Halliburton II merely requires that “[d]efendants must be afforded an opportunity before class certification to defeat the [Basic]presumption through evidence that an alleged misrepresentation did no actually affect the market price of the stock.”

In its prior motion, Vivendi had argued that the plaintiffs had failed to show how or whether any of 57 alleged misstatements caused price inflation, instead relying on evidence that the misstatements “hade a role” in causing or “maintaining” inflation in the stock.  As Judge Scheindlin ruled, that issue had already been litigated at the district court, and Vivendi’s argument would have to be made to a higher court:

Halliburton II made no mention of how a plaintiff can prove price impact, and certainly did not address the maintenance theory of inflation relied upon by plaintiffs in Vivendi. While this is surely an interesting issue, the district court has made its ruling. Vivendi’ s opportunity to challenge this theory of price impact, and the adequacy of the proof supporting it, lies with the Court of Appeals and perhaps the Supreme Court.

14 Aug
2014

Judge Marrero Rejects SAC’s Argument that SEC Disgorgement Amount Fully Covered Investor Damages

In an opinion today, Judge Marrero denied SAC Capital’s motion to dismiss a class action brought by investors in Wyeth and Elan stock who traded contemporaneously with trades that SAC allegedly made based on inside information.

SAC argued (among other things) that it already disgorged to the SEC an amount larger than the amount sought in the complaint for some of the claims, but Judge Marrero found that the precise amount of any offset would have to be determined in discovery:

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