Second Circuit

Subscribe to Second Circuit via RSS

We’ve been blogging about the Second Circuit’s decision in NECA-IBEW Health & Welfare Fund v. Goldman Sachs (pdf), which held that a named plaintiff in a securities fraud suit might have standing in some situations to assert class action claims regarding securities that he or she never purchased. Yesterday, the Supreme Court denied (pdf) Goldman’s petition for certiorari (pdf) in that case. We’ll continue reporting on the aftermath of the Second Circuit’s decision.

In the meantime, defendants facing these sorts of claims should remember that the Second Circuit’s novel standing test requires that the claims regarding the unpurchased securities raise…
Continue Reading Supreme Court Denies Review In NECA-IBEW Case

I previously blogged about the Second Circuit’s troubling decision in NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co. (pdf), 693 F.3d 145 (2d Cir. 2012), which invented a “class standing” doctrine allowing a named plaintiff in a class action to assert Securities Act claims regarding securities that he or she never purchased. In the wake of that decision, plaintiffs have filed a flurry of motions to reconsider district court decisions that had dismissed claims like these for lack of standing.

So far, a few courts have granted those motions and revived some or all of the previously dismissed…
Continue Reading Plaintiffs Seek to Revive Securities Fraud Class Actions Under Second Circuit’s “Class Standing” Doctrine

A number of courts recently have weighed in on a question we’ve blogged before—whether lawsuits by state attorneys general seeking restitution on behalf of private citizens are subject to removal under the Class Action Fairness Act of 2005 (pdf) (“CAFA”). These rulings have broad implications for the litigation of these quasi-class actions.  They also are of substantial importance to determining whether securities fraud actions filed by state attorneys general are precluded by the federal Securities Litigation Uniform Standards Act of 1998 (pdf) (“SLUSA”).
Continue Reading Are Quasi-Class Action Suits By State AGs Removable Under CAFA (Or, For Securities Fraud Cases, Barred By SLUSA)?

A few months ago, I posted about a Second Circuit decision that threatens to open the floodgates to securities class actions, NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co., 693 F.3d 145 (2d Cir. 2012).  In that decision, the Second Circuit ruled that even though a plaintiff in an individual action may assert securities claims only as to securities that it purchased, a plaintiff may bring a class action involving securities that it did not purchase.  According to the Second Circuit, a plaintiff has “class standing” to bring such claims if it purchased at least one of…
Continue Reading DRI Amicus Brief Argues That Second Circuit’s Expansive View Of “Class Standing” In Securities Cases Should Be Rejected

One oddity of the law in the Second Circuit is the unbalanced standard of review that the court sometimes applies to class certification decisions. On a dozen or so occasions over the last twenty years, the Second Circuit has proclaimed that it is “noticeably less deferential when the district court has denied class status than when it has certified a class.” Shahriar v. Smith & Wollensky Restaurant Group, Inc., 659 F.3d 234, 250 (2d Cir. 2011); see also, e.g., Brown v. Kelly, 609 F.3d 467, 485 (2d Cir. 2010). But the Second Circuit has never explained…
Continue Reading Is The Second Circuit Placing A Thumb On The Scale When It Reviews Orders Granting Class Certification?

The Supreme Court has just granted certiorari in American Express Co. v. Italian Colors Restaurant, No. 12-133.   Earlier today, my colleague Andy Pincus previewed the issue presented to the Court, which is (in a nutshell) whether plaintiffs may avoid their agreements to arbitrate on an individual rather than class-wide basis by contending that they cannot “effectively vindicate” their federal claims without the use of the class device.

Since AT&T Mobility LLC v. Concepcion, the majority of courts have enforced arbitration agreements that waive class actions.   But a distinct minority of courts, relying on the Second Circuit’s decision…
Continue Reading Supreme Court Grants Certiorari in American Express Arbitration Case

When the Supreme Court convenes for its private conference today, the Justices will consider whether to grant certiorari in a case presenting one of the most significant questions regarding the meaning of the Court’s ruling in AT&T Mobility v. Concepcion that remains unresolved in the lower courts.

Following the Concepcion decision, opponents of arbitration tried to convince lower courts to limit Concepcion’s holding that arbitration clauses could not be invalidated on the ground that they required individual arbitration and prohibited class proceedings. The overwhelming majority of those arguments were rejected by district courts and courts of appeals, as explained in this article.

But a two-judge panel of the Second Circuit earlier this year endorsed the bizarre assertion that Concepcion applies differently depending on whether the claim to be arbitrated arises under state or federal law. In In re American Express Merchants’ Litigation, the panel held that agreements to arbitrate disputes on an individual basis need not be enforced when a plaintiff provides evidence that the costs of vindicating a federal claim make it “economically irrational” to pursue such a claim without the class-action procedure. Amazingly, the court found that the affidavit of the plaintiffs’ own economic expert provided sufficient “evidence” to invalidate the arbitration clauses. In other words, arbitration clauses that could be enforced with respect to a state claim might be unenforceable if the same plaintiff brought a virtually identical claim under federal law.

As noted in an earlier blog post, American Express filed a petition for a writ of certiorari seeking review of the Second Circuit’s ruling (American Express Co. v. Italian Colors Restaurant, No. 12-133) and Mayer Brown authored an amicus brief supporting the petition on behalf of the Chamber of Commerce, Business Roundtable, American Bankers Association, and National Association of Manufacturers.Continue Reading Supreme Court Poised To Decide Whether To Grant Certiorari In Major Arbitration Case (In re American Express)

The Wall Street Journal recently published an editorial urging the Supreme Court to grant the petition for certiorari (pdf) in Whirlpool Corp. v. Glazer—a petition filed by my colleagues Stephen Shapiro, Jeffrey Sarles, and Tim Bishop. The petition seeks review of a decision by the Sixth Circuit (pdf), which affirmed the certification of a class of Ohio purchasers of front-loading Whirlpool washing machines that allegedly are defective because a small fraction may emit moldy odors due to laundry residue. (The action is a bellwether case; many identical class actions have been filed across the country against…
Continue Reading Wall Street Journal Editorial Calls for Supreme Court Review in Whirlpool Corp. v. Glazer

Can a plaintiff who bought a security in one offering bring a class action on behalf of purchasers in other offerings if the plaintiff alleges a misstatement common to all of the offerings? In cases under Sections 11 and 12 of the 1933 Securities Act—particularly those involving mortgage-backed securities—the consensus view had been that a plaintiff lacked standing to assert class claims regarding offerings in which the plaintiff did not buy. On September 6, the Second Circuit rejected that consensus view in NECA-IBEW Health & Welfare Fund v. Goldman Sachs & Co. (pdf)., creating a split with the First Circuit’s decision in Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp. (pdf), 632 F.3d 762 (1st Cir. 2011). Plaintiffs’ lawyers may seek to use the NECA-IBEW decision to broaden class litigation against securities issuers and underwriters.
Continue Reading NECA-IBEW: Second Circuit Rules That Plaintiffs Sometimes Have Standing to Bring Class Claims Covering Securities Offerings Other Than Ones in Which They Bought

Since Concepcion, the plaintiffs’ bar has been searching for ways to avoid agreements to arbitrate on an individual basis. Because their efforts have largely failed so far, the new frontrunner is the argument that class procedures are necessary to permit “vindication of federal statutory rights.” Most courts to consider the argument have rejected it, but it has gained some real traction in the Second Circuit, which refused to enforce American Express’s arbitration agreement in the context of federal antitrust claims by a group of merchants. After the Second Circuit denied en banc review by a sharply divided vote, American…
Continue Reading Can Plaintiffs Dodge Concepcion By Arguing That They Need Class Actions To Vindicate Federal Statutory Claims?