Business Law

Allegations of fraudulent inducement come in many contexts. Today, this Blog looks at a fraudulent inducement claim in the context of a merger. Kainz v. Bernstein , No. 19 Civ. 2499 (LLS) (S.D. N.Y. Nov. 13, 2019) ( here ). As this Blog has noted, one of the more challenging elements of a fraudulent inducement cause of action for a plaintiff to satisfy is the justifiable reliance element. To satisfy this element, a plaintiff must demonstrate that he/she exercised the means of

It has been some time since this Blog has written an article about whistleblowers and qui tam actions. Those articles typically involved lawsuits arising under the Federal False Claims Act (“Federal False Claims Act”). In today’s post, this Blog looks at City of New York v. Siemens Elec., LLC , 2019 N.Y. Slip Op. 29251 (Sup. Ct., N.Y. County Aug. 7, 2019) ( here ), a qui tam action brought under the New York False Claims Act (“NYFCA”) ( here ) against, among others, Siemens

In New York, Section 3211(a) of the Civil Practice Law and Rules (“CPLR”) provides the primary mechanism by which a party can make a motion, before a responsive pleading, to dismiss one or more causes of action alleged against that party. A “cause of action” subject to dismissal under CPLR § 3211(a), includes counterclaims, cross-claims, and third-party claims. There are several grounds under CPLR § 3211(a) on which a party may move to dismiss.  These include (but are not lim

Last week was a rough one for Facebook, Inc. (FB-NASDAQ). On July 24, 2019, the social network giant, agreed to pay a $100 million fine to the Securities and Exchange Commission (“SEC”) ( here ) to settle claims related to the Cambridge Analytica scandal and a $5 billion penalty to the Federal Trade Commission (“FTC”) to settle claims concerning misleading disclosures related to the company’s privacy practices ( here ). The settlements are the culmination of investigations by

Derivative actions are brought by current shareholders of a company to redress the harm (monetary or equitable) incurred by the company as the result of officer/director self-dealing, breaches of fiduciary duty, and/or other wrongdoing; to restore shareholder value caused by mismanagement and the waste of corporate assets; and to enhance and strengthen internal controls and the company’s governance policies and procedures. Very often, shareholder derivative actions are filed

It has been a little over one year since President Trump signed into law the Senior Safe Act of 2018 (“Act”) ( here ). Enacted as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the Act is designed to “enlist[] financial institutions as allies in the fight against financial abuse of older adults by allowing banks, credit unions, investment advisers and brokers to report suspected fraud to law enforcement without fear of being sued, as long as they

There are numerous ways in which a defendant can respond to a summons and complaint.  Among other options, a defendant can interpose an answer or move to dismiss some or all of the complaint.  The time to respond to the complaint depends on, among other things, the manner of service of process ( see, e.g. , CPLR 308 ; CPLR 320 ).  CPLR 3211(f) , which grants an automatic extension of time to interpose an answer to a complaint in the event that a motion to dismiss is made, pro

On April 10, 2019, the Appellate Division, Second Department, reversed the denial of motions to dismiss fraud claims alleged in connection with the purchase and sale of a $6.2 million home in Harrison, New York. Comora v. Franklin , 2019 N.Y. Slip Op. 02671 (2d Dept. Apr. 10, 2019) ( here ). The decision addresses whether contractual disclaimers can preclude a fraudulent concealment claim. As readers of this Blog know, we recently addressed this issue here and here . Under Ne

In June of 2018, this Blog wrote about the United States Supreme Court’s decision to grant certiorari in a case concerning the scope of investor protection laws. ( Here .) In Lorenzo v. SEC , No. 17-1077 (certiorari granted on June 18, 2018), the Court agreed to consider whether an individual who passed along false statements about a company’s financial condition could be found liable for engaging in securities fraud under the scheme liability provisions of the Securities and

As a general matter, a faithless servant is one who acts contrary to the interests of his/her employer. When an employee or agent acts faithlessly, he/she must forfeit the compensation earned (whether wages or commissions) as a result of the wrongful act. A question that sometimes arises is whether an at-will employee is subject to the faithless servant doctrine. In TMT Entertainment Group, Inc. v. Gasparro , 2019 N.Y. Slip Op. 30542(U) (Sup. Ct., N.Y. County Mar. 4, 2019) (

A shareholder’s derivative action is a lawsuit “brought in the right of a … corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates of the corporation or of a beneficial interest in such shares or certificates.” Marx v. Akers , 88 N.Y.2d 189, 193 (1996) (quoting Business Corporation Law § 626 (a)). Derivative claims against corporate officers and directors belong to the corporation itself. Auerbach v. Bennett , 47 N.Y.2d 619, 631

On January 4, 2019, the United States Supreme Court granted the petition for a writ of certiorari ( here ) filed by, among others, Emulex Corporation (“Emulex”), a Delaware corporation, that merged with Avago Technologies Wireless (USA) Manufacturing Inc. (“Avago”) (“Petitioners”). Emulex Corp. v. Varjabedian , 18-459. The question presented by the petition concerned whether “Section 14(e) of the Securities Exchange Act of 1934 <“exchange act”> supports an inferred private r

Statutes of limitations are an important part of litigation. A plaintiff who sits on his/her rights can be denied access to the courthouse for failing to timely assert his/her claim(s). While such a result seems unfair, the courts do not always agree. But, when the plaintiff fails to timely assert a claim because of the words or actions of the would-be defendant, the courts are more forgiving, exercising their legal and equitable powers to estop the defendant from dismissing

On November 2, 2018, the U.S. Securities and Exchange Commission (the “SEC” or “Commission”), Division of Enforcement (the “Division”), released its annual report for the fiscal year ended September 30, 2018 (“FY 2018”) (the “Report”) ( here ). The Report highlights the Division’s enforcement-related actions and key initiatives for the fiscal year and reveals an agency focused on pursuing cases affecting retail investors, such as investment adviser fraud, as well as actions d

This Blog has written about judicial dissolution under Limited Liability Company Law (“LLCL”) § 702 many times over the past year or so. ( E.g. , here ,  here  and  here .) A common theme that runs through these posts (and the cases on which they are based) is the difficulties litigants encounter when seeking judicial dissolution.   Yu v. Guard Hill Estates, LLC , 2018 N.Y. Slip Op. 32008(U) (Sup. Ct., N.Y. County Aug. 15, 2018) ( here ), a recent decision issued by Justice S

It’s official. New York City has passed a law, 45-0 in a city council vote, which is designed to help enforce existing rules that ban short-term rentals. The new law will require that Airbnb share the names and addresses of hosts in New York City. here.=">here.</a>"> Not Everyone Agrees The law has been met with mixed feelings. While people such as Mayor Bill de Blasio support the bill, others like Chris Lehane, head of global policy at Airbnb, find the new policy to be unnec

Earlier this month, a new report by the federal government’s auditing division raised concerns regarding how the Department of Veteran Affairs handles employees and managers found to be involved in apparent acts of retaliation. Alarming Findings The report shares some very serious findings. According to the U.S. Government Accountability Office’s (GAO) report, VA whistleblowers are much more likely to face discipline or removal after reporting misconduct than are their colle

Prosecuting a mortgage foreclosure action in New York can be an arduous and time-consuming process.  This is particularly so for residential mortgage foreclosures since the promulgation of a host of rules by the New York State Legislature stemming from the mortgage crisis of the late 2000s.  Some of the new rules have been addressed previously in this Blog (“ Appellate Division, Second Department Tells Foreclosing Residential Lender to ‘SHOW ME THE EVIDENCE,’” “ The Second D

Last month, the Commodity Futures Trading Commission (“CFTC” or the “Commission”) announced that it had paid whistleblowers more than $45 million in awards.  In one case, the CFTC awarded approximately $30 million to a whistleblower ( here ), the largest amount ever awarded by the CFTC, and in the other, the CFTC awarded more than $70,000 to a whistleblower living in a foreign country, the first of its kind under the CFTC Whistleblower Program ( here ). The awards reflect th

Over the past year, the Centers for Disease Control and its parent agency, the Department of Health and Human Services (HHS), made several decisions that undermined the rights of whistleblowers . In December, for example, the CDC recommended that employees avoid using certain words (including “diversity” and “entitlement”) when preparing budget documents for Congress. Under Federal law, the government is prohibited from restricting the free speech of its employees without cla