There is an old idiom that says: “the devil is in the details.” It generally means that although something may seem simple, the details are complicated and likely to cause problems. This aptly describes pleading a fraud claim under New York law. To state a claim for fraud, a plaintiff must allege a material misrepresentation of fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages. Eurycleia Partners, LP v. Seward & K

Certain issues regarding Labor Law §240 were discussed in “Be Helpful at Your Own Peril” , an article posted on this Blog on October 20, 2017. Again, Labor Law § 240 was enacted, inter alia , to protect construction workers from height related injuries. In discussing the purpose behind Labor Law § 240, the New York Court of Appeals stated: The legislative purpose behind this enactment is to protect workers by placing ultimate responsibility for safety practices at buildin

Standing to sue derivatively requires stock ownership in the corporation at the time the lawsuit is filed and at the time of the wrongful occurrence. As noted in a recent article posted by this Blog ( here ), these standing requirements are strictly enforced. Now comes another decision from the New York Appellate Division, Second Department, that reiterates the point that the absence of standing is the death knell of a shareholder’s derivative action. , 2017 N.Y. Slip Op. 085

In prior posts, this Blog has discussed the elements required to assert a shareholder’s derivative action. ( Here .) Today’s article focuses on the standing requirements needed to commence such an action and the consequences of not satisfying them. What is a Derivative Action? 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

Real property owners or lessees (“Owners”) often find that their real property is in need of improvement and/or repair (the “Work”). Sometimes the Work requires access to the property of an adjoining property owner (the “Neighbor”). In many instances, the Neighbor graciously permits access to the Owner’s contractors so that the Work can be performed. In such instances the parties can informally agree on how to resolve problems that may result from the Work. Sometimes the

On November 28, 2017, the United States Supreme Court heard arguments ( here ) in Digital Realty Trust v. Sommers , a case that will determine whether employees who report suspected violations of the securities laws internally can file suit against their employers under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act” or “Dodd-Frank”) for retaliation, even if they do not report their concerns to the Securities and Exchange Commission (“S

J.P. Morgan Securities, LLC ("J.P. Morgan") was recently fined $1.25 million by the Financial Industry Regulatory Authority ("FINRA") for how the securities firm handled criminal background checks. In particular, J.P. Morgan failed to conduct timely or adequate background checks on approximately 95 percent of its non-registered personnel, a total of about 8,600 employees. As noted by FINRA in the announcement of the settlement ( here ), under the federal securities laws, br

Yellowstone injunctions got their name from First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630, 290 N.Y.S.2d 721 (1968) . A commercial tenant that is faced with the threat of the termination of its commercial lease as a result of a lease default, must follow the procedures set forth in Yellowstone or it runs the risk of losing its lease. While Yellowstone was decided almost fifty years ago, commercial tenants continue to lose their valuable le

On November 3, 2017, Thrivent Financial for Lutherans (“Thrivent”) obtained a preliminary injunction that temporarily restrains the Department of Labor (the “Department” or the “DOL”) from enforcing an anti-arbitration provision in an exemption to the DOL’s fiduciary duty rule (the “Fiduciary Rule” or the “Rule”) against Thrivent. See Thrivent Financial for Lutherans v. Acosta , Case No. 16-cv-03289 (SRN/DTS) (D. Minn. Nov. 3, 2017). ( Here .) The decision was issued days af

According to a report issued jointly by the New York University Pollack Center for Law & Business and Cornerstone Research, the Securities and Exchange Commission (“SEC” or “Commission”) filed 33% fewer enforcement actions against public companies and their subsidiaries in fiscal year 2017 than in fiscal year 2016. The report ( here ), SEC Enforcement Activity: Public Companies and Subsidiaries, Fiscal Year 2017 Update (the “Report”), analyzes data from the Securities Enforc

Following months of hinting that the Department of Justice (“DOJ” or “Department”) would change its qui tam policies, Michael Granston (“Granston”), Director of the Civil Fraud Section, announced that the DOJ will now move to dismiss qui tam actions brought under the False Claims Act when it concludes that the actions lack merit. The announcement was made during a presentation at the Health Care Compliance Association’s Health Care Enforcement Compliance Institute on Octob

During the past year, Wells Fargo has faced a number of scandals. In addition to the bank account scandal ( here ) in which millions of accounts were set up under customers’ names without their permission, the bank forced thousands of customers into car insurance they did not need, and also charged improper rate-lock fees to mortgage applicants. Now, in a recent filing ( here ), Wells Fargo has disclosed that a number of employees have filed retaliation claims after they were

Many leases provide for a tenant’s option to purchase the subject real property. The recent case of Blackburn Food Corp., et. al. v. Ardi, Inc., et. al ., (Sup. Ct. Suffolk Co. October 25, 2107), illustrates the importance of, inter alia , careful drafting when dealing with real property purchase option agreements. The plaintiffs in Blackburn entered into a ten-year lease for real property. The lease contained an option, which, if exercised within the first three years of

It has been some time since this Blog has written about the False Claims Act (“FCA”). In today’s post, this Blog looks at the Seventh Circuit’s recent embrace of the proximate cause standard for claims arising under the FCA. In United States v. Luce ( here ), the Seventh Circuit overruled its longstanding precedent for alleging causation in cases arising under the FCA. In doing so, the Seventh Circuit joined its sister circuits in holding that the government and whistleblow

On November 2, 2017, the Securities and Exchange Commission (“SEC” or the “Commission”) announced (here) that it had charged Osiris Therapeutics, Inc. (“Osiris” or the “Company”), a Maryland-based biotech company, and four former senior executives with inflating reported revenue growth, improperly recognizing revenue and misleading investors. In its complaint (here), the SEC alleged that Osiris routinely overstated Company performance and issued fraudulent financial statemen

If a contracting party intends for the obligations under a contract to be executed by a business entity, it is critical that the person executing the contract on behalf of the entity clearly indicate that the contract is being signed in a representative capacity. This point was recently reiterated in James E. Cayne v. Alexandra Lebenthal , (Sup. Ct. New York Co. October 30, 2017) (the “Action”). The Defendant in Cayne is Alexandra Lebenthal, CEO of Lebenthal Holdings, LLC

Preliminary injunctions can be an important and potent weapon in business and commercial litigation. In New York, “ preliminary injunction may be granted … where it appears that the defendant threatens or is about to do … an act in violation of the plaintiff’s rights” with regard to the subject matter of the action, and which “render the judgment ineffectual ….” CPLR 6301. Whether to grant a preliminary injunction lies within the sound discretion of the court. Doe v. Axe

Parties to commercial and business disputes frequently encounter and litigate the threshold question whether their dispute must be arbitrated rather than litigated in court. But, before this question can be answered, there is an even more fundamental question that must be resolved: who decides whether a dispute is subject to arbitration – the court or the arbitrator? Courts have struggled with this question for years and continue to do so today. Generally, whether a claim is