Second Circuit

Are AI prompts, and their generative outputs, discoverable in litigation? A handful of recent district court cases suggest the answer depends on whether the AI prompts and outputs constitute attorney work product.

In Tremblay v. OpenAI, Inc., 2024 WL 3748003 (N.D. Cal. Aug. 8, 2024), the court held that AI prompts written by lawyers can constitute opinion work product when used for litigation-related purposes. The court explained that AI “prompts were queries crafted by counsel and contain counsel’s mental impressions and opinions about how to interrogate [an AI tool], in an effort to vindicate Plaintiffs’ copyrights against the alleged infringements.” In so doing, the court squarely rejected defendant’s argument that AI prompts and outputs only rise to the level of fact work product as opposed to opinion work product. That distinction is important, as opinion work product is offered near-absolute protection from disclosure whereas fact work product is discoverable upon a showing of substantial need for the materials and an inability to secure a substantial equivalent without undue hardship.

Continue Reading A Closer Look: The Discoverability of Artificial Intelligence Prompts

Last month in In re: Keurig Green Mountain Single-Serve Coffee Antitrust Litigation, the Southern District of New York denied certification to a proposed class of direct purchasers who alleged that Keurig, a manufacturer of branded coffee pods and brewers, violated antitrust laws by allegedly suppressing competition from generic coffee pod manufacturers.  Although the plaintiffs offered statistical evidence suggesting that Keurig’s coffee pod prices were elevated on average, the court held that individual issues of antitrust impact predominated over common questions because Keurig directly negotiated prices with large buyers that might fully offset any increase in average prices.

Continue Reading Aggregate Damages Model, List Prices Insufficient to Demonstrate Classwide Antitrust Injury, Says Federal District Court

On April 17, 2025, the Supreme Court issued its opinion in Cunningham v. Cornell University, No. 23-1007, 604 U.S. ___ (2025), a case addressing the pleading standard for prohibited-transaction claims under § 406(a) of the Employee Retirement Income Security Act of 1974 (ERISA).  Section 406(a) proscribes certain transactions between plans and “parties in interest” absent a statutory exemption enumerated under ERISA § 408.  The core question on appeal was whether plaintiffs must allege, as an element of a prohibited-transaction claim under § 406(a), that an exemption under § 408 does not render the challenged transaction lawful.

In a decision that is expected to have wide-ranging implications, the Court held that exemptions under § 408 provide affirmative defenses to liability under § 406(a).  Consequently, plaintiffs need not allege that any of the exemptions set forth in § 408 are unavailable to state a plausible claim for relief.  Rather, the burden falls on plan fiduciary defendants to plead and prove that an exemption under § 408 nullifies a plaintiff’s claim.

Continue Reading A Closer Look:  Supreme Court Rejects Heightened Pleading Standard for Prohibited-Transaction Claims under ERISA § 406(a)

On January 24, the Supreme Court granted certiorari in Laboratory Corporation of America Holdings v. Davis to address a long-unsettled issue central to class-action litigation: “Whether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.”

Continue Reading Supreme Court to Decide If Presence of Uninjured Class Members Defeats Class Certification

In certain circumstances and states, class action waivers may mitigate the exposure risks inherent in class action lawsuits. A decision from the Eastern District of New York illustrates some of the procedural challenges defendants may face in seeking to enforce a waiver at the outset of a case in some circumstances. See Berger v. JetBlue Airways Corp., 2024 WL 4107243, at *4 (E.D.N.Y. Sept. 6, 2024).

Continue Reading New York Federal Court Declines to Find Class Claims Waived at Pleadings Stage

Companies in the food, beverage, pharmaceutical, and other industries continue to face litigation regarding their products’ labeling, including as to whether certain representations on labels are deceptive or misleading.  In the Second Circuit and elsewhere, these lawsuits tend to turn on what an objective “reasonable consumer” would understand the representation at issue to mean, and whether that “reasonable consumer” would likely be misled under the circumstances.  In Bustamante v. KIND, LLC, 2024 WL 1917155 (2d Cir, May 2, 2024), the Second Circuit confirmed how important expert testimony can be to that question, and how efforts to exclude expert testimony can ultimately be the difference between winning and losing. 

Continue Reading A Closer Look: The Importance of Expert Testimony for “Reasonable Consumer” Claims

Last week, a divided Second Circuit panel affirmed a district court ruling denying a motion to compel arbitration of a putative class action seeking classwide equitable remedies under ERISA for alleged mismanagement of an employee stock ownership plan.  The Second Circuit found the defined contribution plan’s mandatory arbitration clause unenforceable because it limited plaintiff’s ability to assert a claim that would result in any relief other than individual relief, and specifically prevented him from pursuing the plan-wide remedy authorized by ERISA Section 502(a)(2).  The Court’s decision extends the “effective vindication exception” and raises questions about the extent to which plans can force individual arbitration of ERISA claims that apply to an entire plan.  

In Cedeno v. Sasson, 2024 WL 1895053 (2d Cir. May 1, 2024), the plaintiff asserted claims under ERISA Sections 502(a)(2) and 409(a), alleging that defendants breached fiduciary duties by purchasing stock shares for purportedly more than fair market value, saddling the Plan with tens of millions of dollars of debt and decreasing its value. 

Continue Reading Second Circuit Blocks Use of Arbitration Clause to Prevent Class Action ERISA Claims

In a short, unanimous opinion on April 12, 2024, the Supreme Court shut the door on “pure omission” claims under Rule 10b–5 and made clear that the Rule is limited to claims based on false or misleading statements.

The case, Macquarie Infrastructure Corp. v. Moab Partners, L.P., concerns alleged omissions in Defendant Macquarie’s SEC filings related to its subsidiary’s operation of bulk liquid storage terminals.  In 2016, the United Nations’ International Maritime Organization issued a regulation limiting this subsidiary’s ability to store high-sulfur fuel oil, its single largest product. Though the regulation was set to take effect in 2020, Macquarie did not discuss the regulation in its public filings.

Continue Reading Supreme Court rejects pure omission claims under SEC Rule 10b–5

On November 3, the Second Circuit reversed a lower court decision denying a motion to compel arbitration in a putative class action against Klarna.  See Edmundson v. Klarna, Inc., 85 F.4th 695 (2d Cir. 2023).  The decision offers guidance (and support) for companies looking to enforce similar “click-wrap” agreements with mandatory arbitration provisions.

Continue Reading A Closer Look: Second Circuit Steps In to Reverse Decision Refusing To Enforce “Click-Wrap” Mandatory Arbitration Agreement

In Moses v. New York Times Co., 2023 WL 5281138 (2d Cir. Aug. 17, 2023), the Second Circuit vacated and remanded the approval of a class action settlement because the district court applied the wrong legal standard in determining that the settlement was fair.  But in doing so, the court reiterated that incentive awards for class action representatives are permissible in the Second Circuit.

Continue Reading Second Circuit Holds that Rule 23(e) Prohibits Presumption of Fairness of Arm’s-Length Negotiated Class Settlements