716 F.3d 296
2d Cir.2013Background
- Terra Firma, a private equity firm, sued Citi after EMI Group auction, asserting fraudulent and other misrepresentation theories.
- Jury trial occurred and the district court granted summary judgment on negligent misrepresentation and tortious interference, with a jury verdict for Citi on fraudulent misrepresentation.
- Terra Firma contends Citi’s banker Wormsley made statements that induced Terra Firma to bid above EMI’s value, including alleged misstatements on Cerberus’s bidding status.
- The district court instructed the jury on reliance under English law in a manner Terra Firma argues misapplied a burden-shifting presumption.
- On appeal, the Second Circuit conducted de novo review of jury instructions and found an error in the reliance presumption that improperly shifted the burden to Terra Firma.
- The court vacated Citi’s judgment on the fraudulent misrepresentation claim and remanded for a new trial; other dismissals and judgments were affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the reliance instruction misapplied the English presumption | Terra Firma argues presumption is a jury-friendly burden-shift. | Citi contends presumption is procedural and not burden-shifting. | Instruction error; remand for new trial |
| Whether negligent misrepresentation should have been decided at summary judgment | Terms waived Citi's negligence liability, raising triable issues. | Agreement clearly waives negligence liability. | Affirmed summary judgment on negligent misrepresentation |
| Whether fraudulent concealment should have been dismissed as a matter of law | There was factual ambiguity allowing partial truth or late bid disclosure. | Insufficient evidence of concealment given theories not properly raised. | Affirmed dismissal of fraudulent concealment |
| Whether the district court’s evidentiary rulings were within discretion | Evidence and expert testimony should have been admitted. | District court acted within discretion to preclude certain evidence. | Affirmed evidentiary rulings |
Key Cases Cited
- Bank of China v. NBM LLC, 359 F.3d 171 (2d Cir. 2004) (juror instruction on burden of proof not harmless error)
- LNC Invs., Inc. v. First Fid. Bank, N.A., 173 F.3d 454 (2d Cir. 1999) (reversing for improper jury instruction on reliance standard)
- Cweklinsky v. Mobil Chem. Co., 364 F.3d 68 (2d Cir. 2004) (harmful error when incorrect burden-shifting instruction given)
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (U.S. 1973) (burden-shifting framework precedes trial)