Second Circuit Denies En Banc Review of Decision Upholding Private Damages Remedy under the Religious Freedom Restoration Act

Case Name: Tanvir v. Tanzin

Date of Opinion: February 14, 2019

Opinion by: En banc. Judge Pooler and Chief Judge Katzmann Concur in Denial of Rehearing En Banc; Judges Jacobs, Cabranes, and Sullivan Dissent

Summary:

In the underlying case, plaintiffs sued federal law enforcement officials and officers alleging that they were put on a national “No Fly” list, despite not posing an aviation threat, in retaliation for their declining to serve as FBI informants reporting on fellow Muslims. Plaintiffs alleged defendants’ actions constituted a substantial burden on their exercise of religion in violation of the Religious Freedom Restoration Act (“RFRA”).  The United States District Court for the Southern District of New York dismissed the complaint, in relevant part, on the ground that the RFRA does not permit private parties to recover monetary damages against federal officers sued in their individual capacities. Plaintiffs appealed and, on June 25, 2018, a Second Circuit panel consisting of Chief Judge Katzmann and Circuit Judges Pooler and Lynch reversed, holding that the RFRA does permit private recovery of money damages against federal officers sued in their individual capacities.

Following the June 2018 decision, an active judge of the Second Circuit requested a poll on whether to rehear the case en banc. A majority of the Second Circuit declined the en banc review, and Judge Pooler issued a written concurrence, joined by Chief Judge Katzmann, in support of the panel’s original ruling that the RFRA permits a private action for monetary damages.  Judges Jacobs and Cabranes each issued a written dissent to the denial of the en banc review and joined the other, and Judge Sullivan joined both dissents.

The concurring judges contend that, contrary to the position taken in the dissenting opinions, the holding that a private action for monetary damages exists in this case is grounded in the express provisions for relief set out in the RFRA, and is not a judicially implied right of action that represents an extension of the Supreme Courts’ 1971 decision in Bivens v. Six Unknown Named Agents of the Federal Bureau of NarcoticsContinue reading

Second Circuit Rules in Favor of Prisoner’s Habeas Corpus Petition, Holding that Confrontation Clause Was Violated During his Murder Trial

Case Name: Orlando v. Nassau Cty. Dist. Atty’s Off.

Date of Opinion: February 11, 2019

Opinion by: Judge Droney (majority); Judge Shea (dissent)

Summary: 

In December 2004, a man named Bobby Calabrese was shot and found dead in Long Beach, New York. The following week, Nassau County police detectives interviewed Mark Orlando and Herva Jeannot, who officers believed had been with Calabrese that night. The two men were questioned in separate rooms at the police station. Jeannot confessed to shooting Calabrese and stated that Orlando had hired Jeannot to murder Calabrese in order to avoid paying a gambling debt to Calabrese.  During his questioning, Orlando gave two different statements to the police–one before being told that Jeannot had incriminated him, and one after being so informed–but he consistently denied being involved in the murder.  Orlando and Jeannot were later both charged with murder for their involvement in Calabrese’s death, and the two men were tried separately.

At Orlando’s trial, Detective McGinn testified for the prosecution and recounted Jeannot’s confession about Orlando’s involvement in the murder. Defendant’s counsel objected on hearsay and Confrontation Clause grounds, but the trial judge allowed the testimony, stating that the testimony was not being offered for the truth of the contents of the statement, but rather to give a clear picture to the jury of what was going on during the interrogation of Orlando. The trial court gave the jury a limiting instruction to use McGinn’s testimony only when considering the circumstances under which Orlando may have made statements and for no other purposes. The trial court also instructed the jury to completely disregard any statement allegedly made by Jeannot when considering evidence against Orlando. McGinn then resumed testifying and stated that after Orlando learned of Jeannot’s confession, Orlando changed his account of the events that night. The jury ultimately convicted Orlando of murder in the second degree, and Orlando was then sentenced to twenty-five years to life in prison. Jeannot was also convicted of the murder in a separate trial.

In 2009, Orlando appealed his conviction to the New York Supreme Court, Appellate Division. Orlando argued that Detective McGinn’s testimony as to Jeannot’s statement had been inadmissible hearsay and also violated Orlando’s Sixth Amendment right to confront witnesses through cross examination, since Jeannot did not testify at his trial. The Appellate Division rejected this argument and found that the trial court properly instructed the jury to use the testimony for the limited purpose of explaining the detective’s actions and their effect on Orlando, and not for the truth of Jeannot’s statement. The New York Court of Appeals denied Orlando’s leave to appeal.

Orlando then filed a pro se petition for writ of habeas corpus pursuant to 28 U.S.C. § 2254 in the United States District Court for the Eastern District of New York. The district court denied the petition, and Orlando appealed.

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Second Circuit Applies “Primary Beneficiary” Test to Distinguish “Employees” from “Bona Fide Students” in For-Profit, Vocational Training Context, Upholding Dismissal of Former Cosmetology Student’s Claims for Compensation for Services Performed in Student Salon During Training

Case Name: Velarde v. GW GJ, Inc., et al.

Date of Opinion: February 5, 2019

Opinion by: Judge ­­­­­Carney

Summary:

The Second Circuit considered whether Glatt’s “primary beneficiary” test, used to distinguish “employees” from “bona fide interns” under state and federal wage laws, applies to individuals enrolled in a for‐profit vocational academy who are preparing to take a state licensure examination and who must first fulfill state minimum training requirements.

In 2014, Plaintiff-Appellant Patrick Velarde sued the Academy, a for‐profit cosmetology training school operated by the individual defendants, for unpaid wages in violation of the Fair Labor Standards Act (“FLSA”) and Articles 6 and 19 of the New York Labor Law (“NYLL”). Velarde had enrolled in defendants’ program in April 2011, completed the 1,000-hour course of study in November of that year, and became a licensed cosmetologist in New York in 2012. In his suit, Velarde alleged he was required to perform cosmetology services without compensation in the Academy’s student salon as a part of his vocational training at the Academy for becoming a licensed beautician, and that this requirement violated state and federal wage laws.

The United States District Court for the Western District of New York granted judgment on the pleadings to the Academy, reasoning under the test established in Glatt v. Fox Searchlight Pictures, Inc, 811 F.3d 528 (2d Cir. 2015) that Velarde was not an “employee” entitled to compensation under the FLSA and NYLL statutes because he was the “primary beneficiary” of his relationship with the Academy. On appeal to the Second Circuit, Velarde argued the district court erred in applying Glatt’s primary beneficiary test in his situation as he was not an intern. Instead, he reasoned, he was an “employee” entitled to compensation based on the “immediate advantage” that the Academy received from his labor in the form of customer payments for the salon services.

Although the Second Circuit agreed with Velarde that the Academy’s benefits from his work during his time in the program was relevant to determining if it “employed” him for FLSA purposes, it reiterated its holding in Glatt that this was merely one factor bearing on the analysis. It agreed with the district court that Glatt’s primary beneficiary test, developed as a way to distinguish between “employees” and “bona fide interns,” properly applies to distinguishing between “employees” and “bona fide students” in the vocational training context. Continue reading

Second Circuit Holds That Wrongfully-Convicted Man’s Case Against NYPD Officers and NYC Can Go Forward

Case Name: Bellamy v. City of New York, et al.

Date of Opinion: January 29, 2019

Opinion by: Judge Walker (majority); Judge Jacobs (dissent)

Summary:

In May 1994, Kareem Bellamy was arrested and charged with the murder of James Abbott, a man who was fatally stabbed near a phone booth outside of a C-Town Supermarket in Far Rockaway, Queens, New York. A grand jury indicted him, and Bellamy was ultimately convicted of murder in the second degree under N.Y. Penal Law § 125.25(2) (depraved indifference murder) and criminal possession of a weapon in the fourth degree under N.Y. Penal Law § 265.01(2) following a full trial in November 1995. He was sentenced to 25 years-to-life in prison. The state appellate court affirmed Bellamy’s conviction, and he was denied leave to appeal to the New York Court of Appeals.

In 2007, Bellamy filed a motion to vacate the final judgment on the grounds that new evidence had been discovered which proved his innocence. The new evidence cited by Bellamy included the confession of another individual to the murder and the recanting of a key witness who claimed to have been pressured to testify by Detective John Gillen of the New York City Police Department (“NYPD”). After lengthy post-conviction hearings pertaining to the validity of the evidence and credibility of key witnesses, the court ordered vacatur of Bellamy’s judgment and his release from prison. The Second Department affirmed, leave to appeal to the Court of Appeals was denied, and Bellamy was released from prison. By the time he was released, Bellamy had spent over 14 years in New York state prison.

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Second Circuit Upholds Securities Fraud Indictment and Conviction Despite a Senior FBI Official’s Extensive Leaks to the Press During the Investigation

Case Name: United States v. Walters

Date of Opinion: December 4, 2018

Opinion By: Judge Chin

Summary:

In April 2017, defendant-appellant William T. Walters, a professional gambler, was convicted of securities fraud and related crimes following a jury trial in the United States District Court for the Southern District of New York.  Walters was sentenced to 60 months imprisonment and a fine of $10, and was ordered to forfeit $25,352,490 and pay restitution of $8,890,969.33.  On appeal to the Second Circuit, Walters argued that his indictment should be dismissed because a Federal Bureau of Investigation (FBI) Special Agent’s repeated leaks about the investigation to The Wall Street Journal (WSJ) and The New York Times (NYT) violated the grand jury secrecy provision of Federal Rule of Criminal Procedure 6(e) and the Fifth Amendment’s Due Process Clause. Walters also challenged the district court’s orders on forfeiture and restitution.

The FBI and United States Attorney’s Office (USAO) began investigating Walters for suspicious trading activities in 2011.  FBI Special Agent Chaves served as the supervising agent for the FBI’s investigation.  In 2013, following a referral by the Financial Industry Regulatory Authority (FINRA), the investigation expanded to Walters’s and others’ trading related to a Dallas Company, Dean Foods, and Walters’s close relationship with Thomas Davis, a member of the Dean Foods Board of Directors.  Beginning a year later, in mid-2014, the WSJ and NYT published a series articles revealing confidential and highly detailed information about the ongoing insider trading investigation of Walters, including that Walters may have received tips from an insider about Dean Foods. One WSJ article published in August 2015 named Davis as a target of the investigation.  In early 2016, Davis agreed to cooperate with the government.  That May, following the presentation of evidence including Davis’s testimony, the grand jury issued a multi-count indictment against Walters for securities fraud and related charges related to insider trading in Dean Foods and a second company.

Late in 2016, the district court granted Walters’s motion for an evidentiary hearing on whether the news leaks constituted a violation of FRCP 6(e), but shortly before the scheduled hearing, the government acknowledged a likely FRCP 6(e) violation, informing the court that it had learned that Agent Chaves was the source of the confidential leaks to reporters.  The government noted that Chaves had been referred to appropriate authorities within the FBI and USAO for investigation for his professional misconduct and the district court cancelled the hearing. Walters then moved to dismiss the indictment on the basis that he was prejudiced by the leaks and, in the alternative, that they constituted “’systematic and pervasive’ prosecutorial misconduct . . .  and a violation of the Due Process Clause.” The district court denied that motion.  Following a three-week jury trial, Walters was convicted on all counts in April 2017.  Walters’s motion for a new trial was denied and he appealed.  His appeal renewed the arguments raised in his prior motions to dismiss the indictment. Continue reading

Second Circuit Joins Third and Seventh Circuits in Ruling that Mere Registration of a Copyright Ownership Does Not Alone Trigger the Running of the Statute of Limitations for a Copyright Ownership Challenge

Case Name: Wilson, et. al. v. Dynatone, et. al.

Date of Opinion: November 14, 2018

Opinion By: Judge Leval

Summary:

This case concerns a dispute between John Wilson, Charles Still, and Terrance Stubbs (collectively “Plaintiffs”) and Dynatone Publishing Company, UMG Recordings, Inc., and Unichappell Music, Inc. (collectively “Defendants”) over ownership for copyright renewal terms for music compositions and sound recordings. The district court granted Defendants’ motion to dismiss under Fed. R. Civ. P. 12(b)(6) for untimeliness (on grounds that the statute of limitations had begun running as soon as the Defendants registered their claim of ownership), but the Second Circuit vacated.  The Defendants moved for reconsideration.

In this brief opinion, the Second Circuit re-affirmed its earlier conclusion that the statute of limitations does not begin accruing on a copyright ownership claim as soon as another party has registered its arguably infringing copyright.  As the Second Circuit explained, that interpretation of Section 205(c) of the Copyright Act would mean that “after authoring a work, an author would need to constantly monitor the Copyright Office registry to be sure that no one has registered a spurious claim of authorship, on pain of losing their ownership of the copyright three years after the spurious registration.”  That is an “intolerable and unrealistic burden.”

The Second Circuit noted that both the Seventh and Third Circuits had ruled similarly, but acknowledged that the First Circuit had instead implied otherwise, albeit in a case where the plaintiff also had actual notice of the infringement.

Summary Prepared by: Rachel Thanasoulis

 

Second Circuit Holds New York Plaintiffs Asserting § 1983 Federal Malicious Prosecution Claim Must Demonstrate Criminal Proceedings Terminated in Manner Affirmatively Indicating Their Innocence

Case Name: Lanning v. City of Glens Falls et al.

Date of Opinion: November 7, 2018

Opinion By: Judge Lohier

Summary:

In 2012, the plaintiff was engaged in a divorce and custody dispute with his estranged wife, who was dating Ryan Ashe, a Glens Falls police officer. Lanning was arrested twice that same year after his estranged wife and Ashe falsely reported that Lanning had threatened them in violation of a previously issued order of protection. The charges stemming from those arrests were subsequently dismissed in 2014 during a jury trial. Three traffic tickets issued to him while his criminal charges were pending in 2013 in a traffic stop performed by Ashe were also dismissed.

Thereafter, the plaintiff, David Lanning Jr., sued the City of Glens Falls and other law enforcement officials for malicious prosecution in violation of the Fourth Amendment under 42 USC § 1983. In his complaint, Lanning did not specify a reason for the dismissal of the criminal charges. Appellees moved to dismiss and, in his papers opposing the motion to dismiss, Lanning contended that the charges were dismissed for lack of sufficient evidence and lack of jurisdiction. The United States District Court for the Northern District of New York dismissed Lanning’s claim of malicious prosecution in connection with his first arrest for failure to rebut the presumption of probable cause established by the indictment and failure to plead Ashe’s personal involvement in the prosecution. The District Court likewise dismissed the plaintiff’s claim of malicious prosecution in connection with his second arrest, finding that criminal proceeding had not terminated in Lanning’s favor, a required element of a § 1983 claim. Lanning appealed.

The Second Circuit affirmed, agreeing that Lanning had failed to adequately allege in his § 1983 claims for malicious prosecution that the criminal proceedings brought against him were terminated in his favor. Lanning had argued that the court should apply the standard adopted by the New York Court of Appeals for favorable termination under the applicable state tort of malicious prosecution that termination of the underlying proceeding “is not inconsistent with” innocence. The Second Circuit disagreed, however, clarifying that federal law defines the elements of a § 1983 malicious prosecution claim and state tort law serves only as a source of persuasive, but not binding, authority in defining the elements. In so ruling, the Second Circuit relied on the Supreme Court’s ruling in Manuel v. City of Joliet that common law principles were meant “to guide rather than to control the definition of § 1983 claims[.]” The Second Circuit held that “prior decisions requiring affirmative indications of innocence to establish ‘favorable termination’” continue to govern § 1983 malicious prosecution claims irrespective of developments in state malicious prosecution law.

The Second Circuit also dismissed Lanning’s additional constitutional claim of selective enforcement in violation of the Fourteenth Amendment Equal Protection Clause, holding that he did not provide any evidence that the defendants treated him differently than other individuals against whom reports of criminal activity had been made.

Summary Prepared By: Matla Garcia Chavolla

Second Circuit Vacates Injunction That Had Enjoined Release of Lynyrd Skynyrd Movie

Case Name: Ronnie Van Zant, Inc. v. Artimus Pyle – Second Circuit

Date of Opinion: October 10, 2018

Opinion by: Per Curiam; Judge Newman & Judge Hall (concurring)

Summary:

Defendant-Appellants appeal a permanent injunction decree issued by the United States District Court for the Southern District of New York that prohibited the release and distribution of a film surrounding the plane crash of the Lynyrd Skynyrd Band.

The Lynyrd Skynyrd band was founded in the 1960s by Ronnie Van Zant (“Ronnie”), Gary R. Rossington, and Allen Collins. In 1975, Artimus Pyle joined the band as a drummer. On October 20, 1977, the band was in a plane crash that killed lead singer, Ronnie, and several other members. Pyle, Rossington, and Collins survived the crash. Following the tragic crash, Ronnie’s widow, Judith and the surviving members entered into an oath, in which they agreed to never use the Lynyrd Skynyrd name ever again. For a period of ten years, the promise was honored. However, in 1987, the surviving band members embarked on a Lynyrd Skynyrd tribute tour. Judith took issue with the use of the band’s name and sued the members in the United States District Court for the Southern District of New York. At the conclusion of that suit, the district court issued a Consent Order limiting the members’ ability to use the band’s name and the biographical material of Ronnie, while allowing the surviving members “to exploit their life stories and portray their experiences with the band in movies.” That Consent Order is the basis for this present appeal.

Thereafter, in 2016, Pyle agreed with Cleopatra Records, Inc. to film a movie about Lynyrd Skynyrd and the events surrounding the 1977 plane crash. The contract provided that the story would be told “’through the recollections and experiences of Pyle.’” When plaintiffs, former band members and their trustees and representatives, learned of the film via press release, they sent a cease and desist letter to Cleopatra Records, Inc. Cleopatra Records, Inc. responded, asserting that it had no agreement with the plaintiffs and that it had a First Amendment right to produce and distribute the movie, and moved forward with the movie production. Plaintiffs sought judicial redress in the United States District Court for the Southern District of New York. After reviewing the final script, the district court ultimately concluded that the plaintiffs were entitled to a permanent injunction prohibiting the distribution of the film and other related activities. The defendants appealed this decision, Continue reading

Second Circuit Allows Derivative Shareholder Lawsuit to Go Forward Even After Plaintiff Loses her Financial Stake in the Entity, Distinguishing Between Standing and Mootness

Case Name: Klein v. Cadian Capital Mgmt., LP – Second Circuit 

Date of Opinion: October 2, 2018

Opinion By: Judge Pooler (majority); Judge  Lohier (dissent)

Summary:

Appellant Terry Klein brought a derivative lawsuit suit as a shareholder of Qlik Companies. She alleged that a group of funds (referred to collectively as the “Cadian Group”) owned more than ten percent of Qlik and engaged in short-swing transactions in Qlik stock in 2014, in violation of Section 16(b) of the Securities Exchange Act. Subsequently, the action was stayed pending resolution of a motion in a related case. While the action was stayed, a private equity company bought out Qlik in an all-cash merger. As a result of that merger, Klein lost any financial interest in the litigation.

After the stay was lifted, Cadian Group moved to dismiss the action for lack of standing. Klein moved to substitute Qlik itself as a plaintiff under Rule 17(a)(3) of the Federal Rules of Civil Procedure. The United States District Court for the Southern District of New York granted the Cadian Group’s motion to dismiss and denied Klein’s motion to substitute. The District Court reasoned that Klein’s lack of continuing financial interest in the litigation caused her to lose standing, which made the case moot. In the alternative, the District Court found that Qlik could not be substituted under Rule 17(a)(3) because Klein had not made an “honest mistake” in failing to include Qlik as a plaintiff.

The Second Circuit disagreed, and vacated the ruling.  The court explained that Klein had already established her standing by virtue of the fact that she had a personal stake at the outset of the litigation.  The only question, therefore, was whether the case was now moot.  As the court put it, the standing doctrine “evaluates a litigant’s personal stake as of the outset of litigation,” while the mootness doctrine “determines what to do if an intervening circumstance deprives the plaintiff of a personal stake in the outcome of the lawsuit, at any point during litigation after its initiation.”

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Second Circuit Affirms the Constitutionality of New York’s Zero Emission Credit Program for Nuclear Power Plant Subsidies

Case Name: Coalition for Competitive Electricity, et al. v. Zibelman, et al. – Second Circuit

Date of Opinion: September 27, 2018

Opinion By: Judge Jacobs

In August 2016, the New York Public Service Commission (PSC) adopted a Zero Emissions Credit (“ZEC”) program as part of a plan to reduce greenhouse-gas emissions. The ZEC program subsidizes qualifying nuclear power plants, giving state-created and state-issued credits certifying zero-emission produced by participating nuclear plants. The ZEC program credit price for each MWh of electricity generated is calculated by PSC as the hypothetical environmental damage that would result from nuclear plan retirement, based upon federal task force estimates of damage from carbon emission. The price was $17.48 for the first two years of the ZEC program and, beginning in 2019, is to be calculated by PSC every two years with possible reduction based upon “renewable energy penetration” in the New York energy market and forecasts of wholesale electric energy prices.

In October 2016, plaintiffs, a group of electrical generators and trade groups, brought suit in the United States District Court for the Southern District of New York, challenging the constitutionality of the ZEC program, alleging that it is preempted by the Federal Power Act (“FPA”) and that it violates the dormant Commerce Clause.  Continue reading