Deborah A. Batts

This case arose from losses suffered by investors in three hedge funds (Ascot, Gabriel, and Ariel) after Bernard Madoff's Ponzi scheme was revealed; the funds had placed substantial assets with Madoff through their manager, J. Ezra Merkin, and his related entities. Plaintiffs, including NYLS and other investors, sued Merkin, Gabriel Capital Corporation, and the BDO auditor defendants, alleging violations of federal securities laws (Sections 10(b) and 20(a) of the Exchange Act) as well as state common-law claims for fraud, breach of fiduciary duty, negligence, and related theories, based on failures to disclose the Madoff investments and to conduct adequate due diligence or audits under GAAS and GAAP. The court granted the defendants' motions to dismiss the complaints in full under Rules 9(b), 12(b)(1), 12(b)(2), and 12(b)(6). Dismissal rested primarily on insufficient allegations of scienter for the federal claims against the auditors, SLUSA preemption of certain state-law claims, and lack of personal jurisdiction or supplemental jurisdiction over remaining claims.

business & regulatoryproceduretorts & liability

This case involved an appeal by Helen-May Holdings from three orders of the U.S. Bankruptcy Court for the Southern District of New York in the Chapter 7 case of Kollel Mateh Efraim. Helen-May had sought an administrative claim under 11 U.S.C. § 503(b)(1)(A) for daily occupancy penalties arising from a failed 2004 real estate contract and occupancy agreement for a resort property in New York, after the debtor failed to close and later entered bankruptcy. The bankruptcy court had set the claim at zero following an evidentiary hearing, finding Helen-May failed to prove the reasonable value of the debtor's post-petition use of the property. The district court affirmed the orders in full, holding that the bankruptcy court's factual findings were supported by the record and that Helen-May had not met its burden of proof.

business & regulatorypropertyprocedure

This case is a putative securities fraud class action brought by institutional investors against Morgan Stanley and several of its current and former officers under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Plaintiffs alleged that starting in December 2006 the company took large, risky positions in subprime mortgage-related credit default swaps, then made material misstatements and omissions during the June-to-December 2007 class period to hide the exposure and resulting losses, thereby inflating the stock price. Defendants moved to dismiss under Rules 9(b) and 12(b)(6) and the PSLRA, arguing insufficient allegations of falsity, scienter, and loss causation. The court granted the motion in full, holding that the complaint failed to plead the falsity of certain statements with the required specificity and failed to adequately allege loss causation for others.

business & regulatoryprocedure

Mental Hygiene Legal Service brought a pre-enforcement facial challenge to seven provisions of New York's Sex Offender Management and Treatment Act (SOMTA), which authorizes civil management, including detention and commitment, for certain sex offenders after completing prison terms or other state custody. The suit targeted procedures for securing petitions, involuntary detention pending trial, treatment of defendants found incompetent to stand trial, retroactive findings of sexual motivation, and related record disclosures. Prior rulings dismissed one claim and enjoined two provisions allowing detention without an individualized dangerousness finding and civil commitment based on clear-and-convincing evidence of unadjudicated conduct; the current decision addresses the parties' cross-motions for summary judgment along with standing and abstention issues.

criminal lawcivil rights

In Cariou v. Prince, photographer Patrick Cariou sued artist Richard Prince, Gagosian Gallery, and Lawrence Gagosian for copyright infringement after Prince incorporated photographs from Cariou's book Yes, Rasta into his Canal Zone series of paintings without authorization. The parties filed cross-motions for summary judgment, with defendants asserting fair use under 17 U.S.C. § 107 and that the conspiracy claim was legally barred, while plaintiff sought a liability determination. The court granted summary judgment to Cariou on the infringement claim, holding that the use was not fair use because the paintings were insufficiently transformative, used substantial portions of the original creative works, and did not serve a different purpose, while dismissing the conspiracy claim. It further ordered injunctive relief including destruction or delivery of infringing items and notification to purchasers.

property

This case involved Marvel Entertainment and Marvel Characters suing Kellytoy for breach of contract, copyright infringement, and trademark infringement, alleging that Kellytoy exceeded the scope of their licensing agreements by selling unauthorized products such as pet toys and sports sets, shipping goods to countries outside the licensed territories, and miscalculating royalties; Kellytoy counterclaimed for return of funds paid by mistake. The court granted partial summary judgment to Marvel on claims involving unauthorized pet toy sales in 2005-2006, sales outside licensed territories, and royalty miscalculations, while granting partial summary judgment to Kellytoy on pet toy sales in 2004 and dismissing some of Marvel's claims related to website content and certain product categories. The reasoning centered on undisputed facts from an audit report showing specific unauthorized sales, interpretations of the license agreements and amendments regarding permitted products and territories, and the absence of evidence establishing liability for certain other allegations like international shipments by a non-party affiliate.

business & regulatoryprocedure

This case involved plaintiffs Alki Partners and Alki Fund alleging that defendants, including Vatas Holding and related individuals and entities, engaged in a scheme to artificially inflate the price of RemoteMDX stock through off-market share purchases and transfers, leading to substantial losses when the scheme collapsed. The complaint asserted violations of federal securities laws under Sections 10(b) and 20(a) of the Securities Exchange Act, along with various state law claims such as fraud, breach of contract, and violations of Washington securities statutes. Defendants moved to dismiss on jurisdictional and substantive grounds. The court granted the motions to dismiss in full, primarily due to insufficient allegations establishing personal jurisdiction over the foreign defendants under federal securities laws, with related state claims also failing to support jurisdiction.

business & regulatoryprocedure

The case involved Dimitrios Skaftouros's petition for a writ of habeas corpus under 28 U.S.C. § 2241 challenging extradition proceedings to Greece on charges of being an accessory to homicide, following a magistrate judge's issuance of a certificate of extraditability under the U.S.-Greece extradition treaty. The district court granted the petition and dismissed the extradition proceedings. The court determined that the Greek arrest warrant was invalid because it was not properly served or supported by the required documentation under Greek law to extend the statute of limitations, causing the limitations period to expire and rendering the offense non-extraditable under Article V of the treaty. Review was limited to jurisdiction, extraditability of the offense, and probable cause, and the warrant defect was dispositive.

criminal lawprocedure

Plaintiff Barbara Kearney sued her former employer, ABN AMRO, alleging pay discrimination on the basis of sex and age under Title VII, the New York State and City Human Rights Laws, and the New York Labor Law, as well as retaliation for complaining about her salary. The district court granted the employer's motion for summary judgment. The court concluded that Kearney was not similarly situated to the four male investment bankers she identified as comparators because her duties were primarily administrative, compliance-related, and event-planning oriented, while the comparators performed lead roles in equity originations, deal-closing, and client pitches. The retaliation claim failed because Kearney never informed the employer that her salary complaints were based on alleged sex or age discrimination. With the federal claims dismissed, the court declined to exercise supplemental jurisdiction over the remaining state-law claims.

labor & employmentcivil rights

This case is a putative class action securities fraud lawsuit brought by institutional investors against Security Capital Assurance, Ltd. (SCA), its parent XL Capital, several SCA executives, and various underwriters. Plaintiffs alleged that defendants made misleading statements about SCA's exposure to subprime residential mortgage-backed securities and collateralized debt obligations, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act and Sections 11, 12(a)(2), and 15 of the Securities Act, causing investor losses when SCA's stock declined. Defendants moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). The court granted the motions to dismiss in full but granted plaintiffs leave to file an amended complaint.

business & regulatory

The case involved freelance photojournalist Robert Kalfus suing New York Presbyterian Hospital, its Special Patrolmen, the City of New York, and an NYPD lieutenant after his May 2007 arrest and detention by hospital security officers while he waited outside the hospital to photograph New York Yankees manager Joe Torre visiting his brother, a patient. Kalfus brought federal claims under 42 U.S.C. § 1983 and related state-law claims including false arrest, malicious prosecution, assault and battery, and negligent hiring and training. The court granted summary judgment in full to the City defendants and to the hospital defendants on all claims except the excessive-force allegations arising from incidents inside an elevator. The court reasoned that the record contained no evidence supporting conspiracy or negligent-hiring claims, that the officers acted pursuant to hospital policy restricting unauthorized press access, and that material factual disputes remained only on the excessive-force issue.

civil rightsfree speechcriminal lawprocedure

The case involved SDCERA, a public pension fund, suing the founder, managers, and chief trader of the Amaranth hedge fund and its advisor for federal securities fraud, common law fraud, gross negligence, breach of contract, breach of fiduciary duty, and related claims. Plaintiff alleged that defendants misrepresented the fund as a diversified multi-strategy vehicle with robust risk controls, when it was in fact a concentrated natural gas bet that collapsed in 2006, causing SDCERA over $150 million in losses. The court denied defendant Hunter's Rule 12(b)(2) motion for lack of personal jurisdiction but granted all defendants' motions to dismiss the complaint in full under Rules 12(b)(6) and 23.1, holding that the securities fraud allegations lacked the required particularity, the contract claims failed to identify any breached term given the broad discretion disclosed in the offering documents, and the remaining claims suffered from similar pleading deficiencies or standing problems.

business & regulatoryprocedure

This case arose from plaintiff James Kansas's personal injury claim after he tripped on a two-inch protruding steel plate marked "ECS" in a Manhattan crosswalk, which Empire City Subway had installed during excavation work for Verizon; Kansas sued both Empire and the City of New York. Empire moved to strike NYC's answer or impose Rule 37 discovery sanctions for late initial disclosures and alleged failures to produce witnesses or documents, while NYC moved for summary judgment. The court denied Empire's sanctions motion, finding no bad faith by NYC and no prejudice to Empire, and granted NYC summary judgment in full, dismissing NYC from the case. The core reasoning was that NYC had no actual or constructive notice of the defect, as its records searches and inspections turned up no complaints, violations, or reports, and neither plaintiff nor Empire offered contrary evidence.

proceduretorts & liability

This case involved Louis Vuitton Malletier suing Apex Creative International Corp. and related defendants for trademark infringement, counterfeiting, unfair competition, and trade dress violations under the Lanham Act, stemming from the defendants' sale of counterfeit handbags. The defendants did not answer the complaint or participate in proceedings, resulting in entry of a default judgment. The district court adopted the magistrate judge's report and recommendation in full, awarding the plaintiff $72,000 in damages plus $22,234 in attorney's fees and $8,308.90 in costs for a total of $102,542.90, on the basis that no objections were filed and the record showed no clear error.

business & regulatoryprocedure

This case involves a class action lawsuit by former Foot Locker employee Geoffrey Osberg against the company and its retirement plan, alleging that the 1996 conversion of the traditional pension plan to a cash balance plan violated multiple provisions of ERISA. The plaintiff claimed the change caused age-based disparities in benefit accrual rates, inadequate notice to participants, a deficient summary plan description, and breaches of fiduciary duty through misleading communications about the plan's effects, including a wear-away period. Defendants moved to dismiss on grounds including lack of standing, statute of limitations, and failure to state a claim. The court granted the motion in part and denied it in part, dismissing certain counts while permitting others to proceed and allowing limited amendment of the complaint.

labor & employmentbusiness & regulatory

This case centers on a dispute over $56 million in death benefits from life insurance policies on Arthur Kramer that were placed in trusts, with beneficial interests later assigned by his adult children to stranger investors in an alleged STOLI arrangement. Plaintiff Alice Kramer, as estate representative, seeks a declaratory judgment that the benefits belong to the estate, while defendant insurers seek to void the policies, and trustees and investors argue the benefits are payable to the current assignees who paid premiums. The opinion addresses diversity jurisdiction among parties from multiple states and rules on multiple motions to dismiss counterclaims, cross-claims, and third-party complaints. The court dismisses various claims for lack of supplemental jurisdiction, finding they are not sufficiently related to the core action, and rejects attempts to use declaratory judgment to circumvent incontestability rules on insurable interest.

procedurebusiness & regulatory

In this case, pro se plaintiff Owusu sued HSBC Bank over disputes involving his checking account, credit card application, overdraft protection, bounced checks, and alleged billing errors or tampering with account records. The district court reviewed objections to a magistrate judge's report recommending summary judgment for the defendant. The court found the objections nonspecific, repetitive of prior arguments, and unsupported by admissible evidence, noting that at the summary judgment stage the plaintiff could not rely on unproven allegations from the complaint. It therefore adopted the report and granted the defendant's motion for summary judgment.

business & regulatoryprocedure

The case involved a dispute over a stolen $775,000 rent check that Burson sent to a JP Morgan Chase lockbox for payment to its landlord but which was intercepted by a Chase employee, fraudulently endorsed, and deposited at Morgan Stanley. After settlements and claim assignments, Morgan Stanley brought cross-claims against Chase alleging violations of the Uniform Commercial Code and common-law negligence in the operation of the lockbox facility. The court denied Chase's motion to dismiss, holding that the pleadings sufficiently stated a UCC claim and that Chase owed a duty to foreseeable non-customers like Burson because the pattern of repeated check deposits made harm reasonably foreseeable, with a bailment arising from receipt of the check that avoided the economic-loss bar to negligence recovery.

business & regulatorytorts & liabilityprocedure

This case concerns restaurant employees who sued Uncle Jack's Steakhouse under the Fair Labor Standards Act, alleging that the employer withheld a portion of their tips while paying below the minimum wage in violation of the tip credit rules. The plaintiffs moved for conditional certification of a collective action under FLSA section 216(b) so that other similarly situated hourly workers could opt in, along with court-approved notice and access to employee contact information. The court granted conditional certification and notice, finding that the plaintiffs had met the minimal burden at this pre-discovery stage by submitting affidavits and allegations showing a factual nexus of a common unlawful policy affecting potential class members. It approved discovery of names, addresses, emails, and phone numbers but denied access to social security numbers without a further showing of need, and set deadlines for amended notice and opt-in consents.

labor & employment

The case involved General Motors and its subsidiary suing Fiat and its subsidiaries to compel compliance with the dispute resolution procedures in their Master Separation Agreement regarding a contract dispute over investments in their former joint ventures. The defendants sought to stay or dismiss the action, arguing the dispute should be arbitrated under the European Powertrain Cross Supply Agreement, while plaintiffs moved for summary judgment. The court denied the defendants' motion and granted summary judgment to the plaintiffs, holding that the dispute falls under the arbitration provisions of the Master Separation Agreement. The reasoning centered on the parties' intent, as evidenced by the agreements executed on the same day, including cumulative remedies clauses that preserved the Master Separation Agreement's dispute resolution process despite the ECSA's merger clause.

business & regulatoryprocedure