15 Dec
2014

Judge Sweet Blocks Activis From “Product Hopping” Alzheimer’s Drug To Avoid Triggering Laws Requiring Substitution of Generics

In a 135-page opinion issued Thursday, but made public for the first time Friday in redacted form, Judge Sweet granted the New York Attorney General’s motion to enjoin drug maker Activis from dropping a twice-a-day Alzheimer’s drug called Namenda IR, whose patent protection is about to expire, in favor of a once-a-day version called Namenda XR.

The switch was allegedly motivated to prevent triggering state laws requiring pharmacists to substitute generics that are “AB-rated” to the brand name drug — i.e., have the same active ingredient, “form, dosage, strength, and safety and efficacy profile.”  These laws can cause a sharp decline in revenue when a patent expires (referred to as the “patent cliff”).

As Judge Sweet explained, companies may try to avoid the “patent cliff” through a practice called “product hopping”:

Read On
11 Dec
2014

Judge Kaplan Denies Motion Challenging SEC Administrative Proceedings As Unfair

In an opinion today, Judge Kaplan denied the motion of CDO manager Harding Advisory and its principal Wing Chau to preliminarily enjoin SEC administrative proceedings against them.  The hearing has already been completed, but they await a decision that is expected next month.  As we reported in March, the plaintiffs initially moved to stay the proceedings before they even began (see our prior post here), but that motion was denied.

Harding and Mr. Chau’s basic allegation is that administrative proceedings are so lacking in procedural protections that they violate due process, especially as compared to federal court.  Judge Kaplan concluded, however, that they could make those arguments within the administrative process itself – i.e., through an appeal to the Commission and then to the Second Circuit.  The cumbersome nature of that route, Judge Kaplan ruled, does not deny the plaintiffs due process:

Read On
09 Dec
2014

In Suit Over Record Label Logo, Judge Ellis Spares Jay Z From Deposition But Precludes Him from Trial Testimony

In an Order yesterday, Magistrate Judge Ellis blocked the deposition of music mogul Jay Z (Shawn Carter) in a copyright case relating to the logo for Jay Z’s record label, Roc-A-Fella.  However, the price to be paid for sparing him from the deposition was that Jay Z would not be allowed to testify at trial:

It is clear that, no matter how “important” or busy, all people are amenable to the Federal Rules of Civil Procedure. Anyone with knowledge of relevant facts in a case may be deposed. Carter has provided an affidavit that says he does not recall nor have any knowledge of the facts alleged in the Complaint . . . .

[A] sworn affidavit in which an affiant denies knowledge or recollection of relevant facts is, for evidentiary purposes, the equivalent of a deposition during which a deponent makes identical denials . . . . [A] witness who swears before trial that he has no personal knowledge of relevant facts may not avoid discovery by later claiming “sudden recollection” and testifying at trial.

Our prior post on the case is here.

08 Dec
2014

DOJ Accuses Deutsche Bank of Using Fraudulent Conveyance to Avoid $100 Million Taxable Gain

From the government’s press release summarizing the complaint:

Deutsche Bank acquired a corporation in the fall of 1999 that held stock with a very low cost-basis, such that the sale of this stock would trigger more than $100 million in taxable gain as a result of the appreciation in value of the stock. In order to avoid paying taxes on the stock’s built-in gain, Deutsche Bank entered into an arrangement with a firm that created three shell companies . . . [that] collectively served as an underfunded special-purpose vehicle with no function other than to be stuck with a tax bill that it could never pay.

The case is before Judge Kaplan

04 Dec
2014

Judge Cote Employs Forensic Examination to Determine Brief Was Served Too Late

In an opinion today, Judge Cote granted Tory Burch summary judgment in a case concerning knock-off merchandise.  The motion was deemed unopposed based the defendants’ misconduct, including spoliation and fabrication of evidence.  In a particularly notable passage, the opinion discloses that the Court ordered a forensic examination of the defendants’ opposition papers, and, from that examination, determined that those papers were served too late:

Read On
01 Dec
2014

Judge Scheindlin: Auditors’ Failure to Investigate Tax Preparer’s Opinions is Not Fraud

In an opinion last week, Judge Scheindlin denied the plaintiffs in a securities class action leave to amend their complaint to assert securities fraud claims against the company’s auditors, PriceWaterhouseCoopers and Ernst & Young. The proposed amendment would have alleged that PwC and E&Y took at face value the erroneous opinion of a third party tax preparer (referred to as “Frankel”), which the plaintiffs argued is as reckless and fraudulent as simply taking management representations as true:

Read On
25 Nov
2014

Judge Scheindlin Urges Congress to Adopt Process to Certify Novel Questions of Foreign Law

In an opinion yesterday, Judge Scheindlin dismissed for lack of standing claims brought by a plaintiff (“FTE”) claiming that the defendants had misappropriated trademarks to the Stolichnaya vodka brand.  The Second Circuit held last year that FTE lacked standing, and the Russian Federation thereafter issued a degree apparently aimed at curing the issue.  Judge Scheindlin’s opinion yesterday concluded that, under Russian law, the decree nonetheless failed to cure the standing problem, but she expressed discomfort with having to resolve an important Russian law question of first impression:

Read On
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:

Read On
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:

Read On
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:

Read On