Bessemer Trust Company, N.A. v. Branin, No. 08-2462 (2d Cir. 2012)
Annotate this CaseThis opinion or order relates to an opinion or order originally issued on August 24, 2010.
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08-2462-cv(L) Bessemer Trust Company, N.A. v. Branin 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2008 4 (Argued: June 3, 2009 Decided: April 5, 2012) 5 Docket Nos. 08-2462-cv(L), 08-2677-cv(XAP) 6 ------------------------------------- 7 BESSEMER TRUST COMPANY, N.A., 8 Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, 9 - v - 10 FRANCIS S. BRANIN, JR., 11 Defendant-Counterclaimant-Appellant-Cross-Appellee. 12 ------------------------------------- 13 14 Before: McLAUGHLIN, CALABRESI, and SACK, Circuit Judges. Appeal by the defendant and cross-appeal by the 15 plaintiff from a judgment of the United States District Court for 16 the Southern District of New York (John E. Sprizzo, Judge) 17 entered after a bench trial. 18 defendant liable to the plaintiff for improper solicitation of a 19 client's account under the so-called "Mohawk doctrine," where 20 that account and its associated "good will" had earlier been 21 transferred to the plaintiff by the defendant and others. 22 appeal, we certified a question to the New York Court of Appeals 23 as to the scope of the "Mohawk doctrine." 24 N.A. v. Branin, 618 F.3d 76, 93-94 (2d Cir. 2010). 25 our question, the Court of Appeals concluded, inter alia, that The district court found the On Bessemer Trust Co., In answer to 1 "while a seller [of a business and its 'good will'] may not 2 contact his former clients directly [to seek to attract them to 3 his new firm], he may, in response to inquiries made on a former 4 client's own initiative, answer factual questions." 5 Trust Co., N.A. v. Branin, 16 N.Y.3d 549, 559-60, 949 N.E.2d 462, 6 470, 925 N.Y.S.2d 371, 379 (2011) (internal quotation marks 7 omitted). 8 the district court in part and remand for further proceedings. 9 10 Bessemer In light of this response, we vacate the judgment of Vacated in part, decision reserved in part, and remanded. 11 12 13 14 15 16 DONALD I. STRAUBER, Chadbourne & Parke LLP (Gretchen N. Werwaiss, Marjory T. Herold, and Bernadette K. Galiano, on the brief), New York, NY, for PlaintiffCounter-Defendant-Appellee-CrossAppellant. 17 18 19 20 21 LOUIS P. DiLORENZO, Bond, Schoeneck & King PLLC (Michael I. Bernstein and Michael P. Collins, on the brief), New York, NY, for Defendant-CounterclaimantAppellant-Cross-Appellee. 22 SACK, Circuit Judge: 23 We return to consider this appeal further, in light of 24 the answer provided by the New York Court of Appeals in Bessemer 25 Trust Co., N.A. v. Branin (Bessemer V), 16 N.Y.3d 549, 949 N.E.2d 26 462, 925 N.Y.S.2d 371 (2011), in response to a question that we 27 had certified to it in Bessemer Trust Co., N.A. v. Branin 28 (Bessemer IV), 618 F.3d 76, 93-94 (2d Cir. 2010).1 1 The issue to In "Bessemer I," the district court found defendant Francis S. Branin, Jr., an investment portfolio manager, liable to Bessemer, a firm to which he had sold "good will," after one 2 1 which the Court of Appeals gave its attention and to which we now 2 give ours concerns what actions the defendant, a seller of, inter 3 alia, the "good will"2 of a business, may thereafter permissibly 4 take to woo former clients of the business to a competitor under 5 New York law. 6 are set forth at some length in our previous opinion in this 7 appeal, Bessemer IV. 8 think it necessary to explain our disposition of this appeal in 9 light of the New York Court of Appeals' answer to our certified 10 The facts of this case and its procedural history We recount them here only insofar as we question. 11 BACKGROUND 12 On August 18, 2000, defendant Francis S. Branin, Jr., 13 an investment portfolio manager and the largest shareholder of 14 the firm of Brundage, Story and Rose, LLC ("Brundage"), sold the 15 assets of the firm along with its client accounts and related of Branin's former clients transferred his account from Bessemer to Branin's new firm. See Bessemer Trust Co., N.A. v. Branin (Bessemer I), 427 F. Supp. 2d 386 (S.D.N.Y. 2006). In "Bessemer II," the district court granted Bessemer's motion for summary judgment on Branin's counterclaims. See Bessemer Trust Co., N.A. v. Branin (Bessemer II), 498 F. Supp. 2d 632 (S.D.N.Y. 2007). In "Bessemer III," the district court fixed the amount of money for which Branin was liable to Bessemer. See Bessemer Trust Co., N.A. v. Branin (Bessemer III), 544 F. Supp. 2d 385 (S.D.N.Y. 2008). In "Bessemer IV," inter alia, we certified a question to the New York Court of Appeals. See Bessemer Trust Co., N.A. v. Branin (Bessemer IV), 618 F.3d 76 (2d Cir. 2010). Finally, in "Bessemer V," the New York Court of Appeals answered our certified question. See Bessemer Trust Co., N.A. v. Branin (Bessemer V), 16 N.Y.3d 549, 949 N.E.2d 462, 925 N.Y.S.2d 371 (2011). 2 We follow the New York Court of Appeals' style by placing the term "good will" in quotation marks. See, e.g., Bessemer V, 16 N.Y.3d 549, 949 N.E.2d 462, 925 N.Y.S.2d 371 passim. 3 1 "good will" to Bessemer. 2 Although Branin originally stayed on at Bessemer as a "client 3 account manager," he soon became dissatisfied with his diminished 4 responsibilities. 5 Counsel LLC ("Stein Roe"), an investment management firm in 6 competition with Bessemer. 7 Bessemer IV, 618 F.3d at 80-81. He left Bessemer to join Stein Roe Investment Id. at 81-82. In negotiations with Stein Roe, Branin touted his 8 ability to bring his Bessemer clients, most or all of whom 9 originally moved with him as part of the sale of Brundage to 10 Bessemer, to Stein Roe. 11 twelve months of joining the firm[,] he would be able to transfer 12 [to Stein Roe] $1.5 to $1.8 million of the approximately $2.3 13 million in [annual] revenue that he was [then] generating for 14 Bessemer." 15 possible, however, that few or none of his Bessemer clients would 16 move their business." 17 Bessemer, Branin refrained from contacting any of his Bessemer 18 clients to inform them of his impending move" or to discuss 19 anything relating to it. 20 Id. at 82. He indicated "his hope that within "He informed Stein Roe that it was Id. "Prior to his resignation from Id. Once Branin joined Stein Roe, that company began 21 crafting and implementing a strategy to entice Branin's former 22 Bessemer clients to move their business to Stein Roe. 23 of this strategy involved maintaining Branin's current schedule 24 of fees so that clients would not have their fees increased if 25 they followed Branin to Stein Roe. 26 former assistant at Bessemer, who was otherwise of no interest to 4 Id. Id. Part Additionally, Branin's 1 Stein Roe as a prospective employee, was hired by the firm "to 2 help Branin transition as much of his client base to Stein Roe as 3 possible." Id. at 84 (brackets and internal quotation marks 4 omitted). "By the following summer, around thirty of Branin's 5 former clients, representing $205 million in assets, had 6 transferred their accounts from Bessemer to Stein Roe, accounting 7 for all but around $23 million of the assets Branin [had] managed 8 at Stein Roe." Id. at 82. 9 Branin did not initiate contacts with his clients in an 10 effort to assist Stein Roe in its strategy to obtain the Bessemer 11 clients. 12 they asked why he left Bessemer. 13 information about his new firm, he sent them Stein Roe's 14 promotional material. 15 "Branin's 'standard' answer to clients who asked why he left 16 Bessemer was that 'a firm like Stein Roe was far more appropriate 17 for me, . . . that the method of dealing with clients, that the 18 approach whereby portfolio managers managed the client portfolios 19 and interacted directly with the clients was more . . . 20 appropriate for my training and experience of 30 years in the 21 business.'" 22 (Bessemer I), 427 F. Supp. 2d 386, 391 (S.D.N.Y. 2006), in turn 23 quoting Joint Statement of Undisputed Facts, Ex. A to Pre-Trial 24 Order dated August 3, 2004) (ellipses in Bessemer I). 25 did not say or suggest that Stein Roe's approach would be better 26 or more appropriate for any particular client, nor is there Id. He did, however, respond to their inquiries if Id. Id. If they requested The district court found that Id. (quoting Bessemer Trust Co., N.A. v. Branin 5 "Branin 1 [record] evidence that Branin explicitly disparaged Bessemer." 2 Id. 3 "The evidence introduced at trial established that 4 Branin had individual meetings, either alone or with other Stein 5 Roe employees participating," with, among others, representatives 6 of the Palmer family, a former client with a large account at 7 Brundage and then at Bessemer. 8 the Palmer account for fifteen to twenty years at Brundage, 9 developing a close personal friendship with Carleton Palmer, III, Id. at 82-83. Branin had managed 10 who represented the family in its dealings with Bessemer. 11 83. 12 move to Stein Roe. 13 questions about the move. 14 according to Palmer's testimony, very spare. Id. at Branin did not notify Palmer and the Palmer family of his 15 Id. But Palmer did call Branin and ask him Id. Branin's responses were, Id. "Palmer followed up [on his inquiries] with a letter 16 requesting specific information as to how the Palmer account 17 might be handled at Stein Roe." 18 the Palmer family then scheduled back-to-back meetings on August 19 29, 2002 with Stein Roe and Bessemer to discuss the Palmer 20 account. Id. Palmer and other members of Id. 21 Branin helped Stein Roe prepare for these meetings by 22 telling other Stein Roe employees about Carleton Palmer and the 23 Palmers' investment philosophy. 24 testimony of Carleton Palmer, during the subsequent meeting 25 between Palmer and Stein Roe, Branin "pretty much sat over in the 26 corner and kept quiet," and "played almost no role," "other than Id. 6 According to the trial 1 to introduce Carleton Palmer to the firm and occasionally amplify 2 a point if he knew it was something [the Palmers] would be 3 interested in." 4 omitted). 5 Id. (internal quotation marks and citations The Palmers thereafter invited Branin to Ohio to make a 6 specific proposal on behalf of Stein Roe. 7 Id. 8 family that they would pay the same fees at Stein Roe that they 9 were then paying at Bessemer, and that the president of Stein Roe 10 Branin accepted. During the subsequent visit, "Branin informed the Palmer would be the 'number two' on the family account." 11 12 Id. Id. "The next day, . . . September 17, 2002, the Palmer family moved their account to Stein Roe." Id. 13 District Court Proceedings 14 On November 22, 2002, following the departure of the 15 Palmer family and several of Branin's other former Bessemer 16 clients from the firm, Bessemer filed the complaint in this 17 action in New York Supreme Court, New York County. 18 "Bessemer asserted claims for breach of contract and breach of 19 Branin's duty of loyalty to Bessemer based on Branin's allegedly 20 improper solicitation of clients and impairment of the [']good 21 will['] which Branin had sold to Bessemer in connection with the 22 sale of Brundage." 23 States District Court for the Southern District of New York based 24 on diversity of citizenship, and filed various counterclaims. 25 Id. Id. Id. at 84. Branin removed the case to the United 7 1 The district court denied the parties' cross-motions 2 for summary judgment on Bessemer's claims, and the case proceeded 3 to a bench trial as to liability. 4 a memorandum opinion and order on April 10, 2006, concluding that 5 Branin had violated New York law by impairing Bessemer's "good 6 will" in the Palmer account, but that Bessemer had not proven a 7 violation of law by a preponderance of the evidence with respect 8 to any other transferred account. 9 397 98. Id. The district court issued Bessemer I, 427 F. Supp. 2d at The district court then conducted a separate bench trial 10 on damages, and concluded that Branin was liable to Bessemer in 11 the amount of $826,335 plus prejudgment interest of $402,838, for 12 a total of $1,229,173. Bessemer III, 544 F. Supp. 2d at 390 93.3 13 Proceedings in this Court 14 Branin appealed the finding of liability and damages. 15 With respect to the district court's finding of liability as to 16 the Palmer account, we determined that New York law regarding the 17 liability of a seller of "good will" for soliciting former 18 clients - the so-called "Mohawk Doctrine," named after Mohawk 19 Maintenance Co. v. Kessler, 52 N.Y.2d 276, 419 N.E.2d 324, 437 20 N.Y.S.2d 646 (1981) -- was unclear as applied to the facts of 21 this case. 22 the following question to the New York Court of Appeals: 23 24 What degree of participation in a new employer's solicitation of a former Bessemer IV, 618 F.3d at 90. 3 We therefore certified The district court also granted Bessemer summary judgment on Branin's counterclaims, Bessemer II, 498 F. Supp. 2d at 639, which we affirmed on appeal, Bessemer IV, 618 F.3d at 91-93. 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 employer's client by a voluntary seller of that client's good will constitutes improper solicitation? We are particularly interested in how the following two sets of circumstances influence this analysis: (1) the active development and participation by the seller, in response to inquiries from a former client whose good will the seller has voluntarily sold to a third party, in a plan whereby others at the seller's new company solicit the client, and (2) participation by the seller in solicitation meetings where the seller's role is largely passive. Id. at 94. 15 16 The New York Court of Appeals's Answer to Our Certified Question 17 The New York Court of Appeals accepted and answered our 18 certified question. It noted that, "[u]nder New York common law, 19 a seller has an 'implied covenant' or 'duty to refrain from 20 soliciting former customers, which arises upon the sale of the 21 'good will' of an established business.'" 22 at 556, 949 N.E.2d at 468, 925 N.Y.S.2d at 377 (quoting Mohawk 23 Maintenance Co., 52 N.Y.2d at 283, 419 N.E.2d at 328, 437 24 N.Y.S.2d at 650). 25 perpetuity, is based on the principle that "the vendor is not at 26 liberty to destroy or depreciate the thing which he has sold; 27 there is an implied covenant, on the sale of [']good will['], 28 that the vendor does not solicit the custom which he has parted 29 with; it would be a fraud on the contract to do so." 30 (quoting Von Bremen v. MacMonnies, 200 N.Y. 41, 50-51, 93 N.E. 31 186, 189 (1910)). Bessemer V, 16 N.Y.3d This covenant, which is effective in Id. Thus, the seller of "good will" may not 9 1 "actively solicit" the customers associated with it. 2 949 N.E.2d at 468, 925 N.Y.S.2d at 377. 3 Id. at 557, Despite these general principles, a buyer of "good 4 will" assumes "certain risks" relating to the continuation of the 5 purchased business. 6 the seller of "good will" a binding promise not to compete, the 7 buyer risks loss of customers to him or her. 8 Id. Unless the buyer has also secured from Id. Rather than creating a "hard and fast rule [to] 9 determin[e] whether a seller of 'good will' has improperly 10 solicited his former clients" in response to our certified 11 question, the Court of Appeals instructed that "in making this 12 assessment on a case-by-case basis, the trier of fact must 13 consider the principles underlying the rule in Mohawk and the 14 factors involved within the relevant industry that may impair the 15 'good will' conveyed by the original seller." 16 N.E.2d at 469, 925 N.Y.S.2d at 378. 17 Id. at 557, 949 Among the factors to be considered in this inquiry are 18 whether the seller initiated contact with his or her former 19 clients associated with the sold "good will." 20 covenant' not to solicit former customers bars a seller from 21 taking affirmative steps to directly communicate with them," such 22 as by "send[ing] targeted mailings or mak[ing] individualized 23 telephone calls to his former customers informing them of his new 10 "The 'implied 1 business ventures."4 2 N.Y.S.2d at 378. 3 Id. at 557-58, 949 N.E.2d at 469, 925 The Court of Appeals explained that while a seller "is 4 not free to tout his new business venture simply because a former 5 client has fortuitously communicated with him first," he is 6 allowed to make certain responses to questioning initiated by the 7 former client. 8 of a former client, so long as such responses do not go beyond 9 the scope of the specific information sought." 10 949 N.E.2d at 469-70, 925 N.Y.S.2d at 378-79. 11 prompted," he may not "disparage[] the purchaser of his 12 business." 13 Nor may he "explain . . . why he believes his products or 14 services are superior" in response to a question from a former 15 client. 16 Id. The seller "may answer the factual inquiries Id. at 558-59, And "even if Id. at 559, 949 N.E.2d at 470, 925 N.Y.S.2d at 379. Id. When the seller of "good will" subsequently joins a 17 firm that competes with the buyer, he may "convey certain 18 information about his former client to his new employer," 19 including "a former client's investment preferences, financial 20 goals, and tolerance of risk." 21 convey to his new employer "information that is proprietary to a 22 purchaser of 'good will.'" 23 a "sales pitch" meeting, as the Palmer family did, the seller may Id. Id. However, the seller may not Should the former client request 4 The Court of Appeals made clear that the examples of impermissible conduct just discussed are intended to be "illustrative, not exhaustive." Id. 11 1 help his new employer prepare for the meeting and "may be present 2 when such meeting takes place, . . . [s]o long as [his] role is 3 limited to responses to factual matters." 4 Id. In sum, the Court of Appeals concluded, "while a 5 seller may not contact his former clients directly, he may, 'in 6 response to inquiries' made on a former client's own initiative, 7 answer factual questions[,] . . . [and] assist his new employer 8 in the 'active development . . . [of] a plan' to respond to that 9 client's inquiries. Should that plan result in a meeting with a 10 client, a seller's 'largely passive' role at such meeting . . . 11 [is permissible]." 12 N.Y.S.2d at 379 (second ellipsis in original; some alterations in 13 original). 14 Id. at 559-60, 949 N.E.2d at 470, 925 DISCUSSION 15 "In reviewing a district court's decision in a bench 16 trial, we review the district court's findings of fact for clear 17 error and its conclusions of law de novo." 18 Food, 237 F.3d 174, 178 (2d Cir. 2001). 19 legal standard applied by the district court and the facts it 20 emphasized in applying it, with the benefit of the Court of 21 Appeals's answer to our certified question, we conclude that the 22 district court's judgment as to Branin's liability must be 23 vacated. 24 White v. White Rose Having reviewed the First, the district court placed considerable weight on 25 the fact that Branin intended to transfer his former clients to 26 Stein Roe. It also emphasized the fact that Branin's employment 12 1 with Stein Roe was consummated with the understanding that he 2 would seek to take his Bessemer clients with him to Stein Roe. 3 See Bessemer I, 427 F. Supp. 2d at 393 ("In addition to Branin's 4 stated intent to transfer his clients, the 'lift-out template' 5 which marked his move to Stein Roe was completely dependent upon 6 him successfully transferring clients from Bessemer to Stein 7 Roe."). 8 evaluating the propriety of Branin's actions, the New York Court 9 of Appeals has made it clear that an intent to secure the While these facts may provide useful background for 10 business of former clients associated with sold "good will" is 11 not ipso facto improper. 12 solicit" his former customers, Bessemer V, 16 N.Y.3d at 557, 949 13 N.E.2d at 468, 925 N.Y.S.2d at 377 (emphasis omitted), a seller 14 of "good will" may "assist his new employer in the active 15 development of a plan to respond to" former clients' inquiries, 16 id. at 560, 949 N.E.2d at 470, 925 N.Y.S.2d at 379 (brackets, 17 internal quotation marks, and ellipsis omitted). 18 actions were an important part of Branin and Stein Roe's plan to 19 persuade Bessemer clients associated with the sold "good will" to 20 bring their business to Stein Roe. 21 "[P]rovided that he does not actively Those very The district court, in making its determination, relied 22 significantly on various actions taken by Branin to make Stein 23 Roe attractive to former clients and ease their transition to the 24 firm, but which were not in the nature of active solicitation. 25 These measures included Branin's hiring of his former secretary 26 to assist him in transferring clients, Bessemer I, 427 F. Supp. 13 1 2d at 394 ("Branin pushed for the hiring of [the former 2 secretary], and willingly absorbed over half of her compensation, 3 as a way to help him transition clients and to frustrate 4 Bessemer's use of someone who was acquainted with approximately 5 70% of his clients."), and Branin's retention of his fee schedule 6 from Bessemer, id. ("[H]aving the same fees as at Bessemer would 7 facilitate the movement of clients to Stein Roe."). 8 conduct may evidence an intent to transfer clients, it is clear 9 from the Court of Appeals's opinion that harboring such an 10 intent, and even taking some action in furtherance of that 11 intent, does not necessarily constitute legally impermissible 12 affirmative solicitation. 13 While this The district court also focused on Branin's stock 14 response to former clients, including Carleton Palmer, who called 15 and asked Branin why he moved from Bessemer to Stein Roe. 16 id. at 396 n.10. 17 was that "Stein Roe 'was far more appropriate for me' and for 'my 18 training and experience of 30 years in the business,'" was 19 "disingenuous and improper." 20 Whether Branin's response was factual in nature or instead the 21 equivalent of "tout[ing] his new business venture simply because 22 a former client has fortuitously communicated with him first," 23 "disparag[ing]" Bessemer, or explaining "why he believe[d] his 24 products or services [were] superior" to Bessemer's, Bessemer V, 25 16 N.Y.3d at 558-59, 949 N.E.2d at 469-70, 925 N.Y.S.2d at 378- See The court found that Branin's response, which Id. at 394 (citation omitted). 14 1 79, should be considered by the district court in the first 2 instance in light of the New York Court of Appeals's views. 3 The district court also appeared to place great weight 4 on the fact that Branin helped Stein Roe to organize a "dog and 5 pony" show to entice Palmer to move his business - "a 6 presentation which" the district court described as "perfectly 7 tailored to [Palmer's] liking by [Branin]." 8 Supp. 2d. at 397. 9 Branin had gathered from years of working with him, Stein Roe's Bessemer I, 427 F. "Armed with information about Palmer that 10 presenters steered clear of topics in which Palmer had little 11 interest and focused only on those things that were of interest 12 to him." 13 court pointed out, this gave Stein Roe a significant advantage 14 over Bessemer when it made a similar presentation to Palmer. 15 Id. at 396 (citations omitted). And as the district Id. But the Court of Appeals has now made clear that at 16 least some tailoring of presentations to former clients of a 17 seller of "good will" such as Branin is permitted. 18 "is free to convey certain information about his former client to 19 his new employer," including "a former client's investment 20 preferences, financial goals, and tolerance of risk." 21 V, 16 N.Y.3d at 559, 949 N.E.2d at 470, 925 N.Y.S.2d at 379. 22 Court of Appeals also noted that such a seller of "good will" 23 "may also aid his new employer in preparing for a 'sales pitch' 24 meeting requested by a former client." 25 "assist his new employer in the active development of a plan to 26 respond to that client's inquiries." 15 Id. Such a person Bessemer The Indeed, he may Id. at 560, 949 N.E.2d at 1 470, 925 N.Y.S.2d at 379 (brackets, internal quotation marks, and 2 ellipsis omitted). 3 Similarly, the district court found it "significant[]" 4 that, although Palmer described Branin's role in the "dog and 5 pony" show as "minor," Palmer testified that "Branin 6 'occasionally amplif[ied] a point if he knew it was something I 7 would be interested in from his relationship with me." 8 I, 427 F. Supp. 2d at 396 (citation omitted). 9 Appeals said explicitly that a seller of "good will" "may be Bessemer The Court of 10 present when such [a] meeting takes place." Bessemer V, 16 11 N.Y.3d at 559, 949 N.E.2d at 470, 925 N.Y.S.2d at 379. 12 remand, the court should therefore consider whether Branin's 13 "role" at the sale presentation was "limited to responses to 14 factual matters," id., and thus permissible. 15 also make this determination with respect to Branin's subsequent 16 meeting with Carleton Palmer in Ohio, during which Branin 17 "informed Palmer that he would pay the same fees as at Bessemer," 18 and that William Rankin, "the Chief Executive Officer of Stein 19 Roe and a man with whom Palmer was 'very impressed,' [would be 20 the] 'number two' on the Palmer account" if he moved to Stein 21 Roe. On The court should Bessemer I, 427 F. Supp. 2d at 396 (citation omitted). 22 Finally, the district court rejected Branin's argument 23 that "he cannot be found to have acted improperly because he was 24 simply responding to his clients." 25 The court thought this argument "unpersuasive and not supported 26 by New York law" because the leading cases "place no significance 16 427 F. Supp. 2d at 396 n.10. 1 on who initiates the communications between the seller of [']good 2 will['] and his now-former clients." 3 in answering our certified question, the Court of Appeals 4 explained to the contrary that "[a] trier of fact ought to 5 consider whether, following the sale of a business and its 6 [']good will,['] a seller initiated contact with his former 7 customers or clients. 8 where a seller, like Branin, remains in the industry." 9 V, 16 N.Y.3d at 557, 949 N.E.2d at 469, 925 N.Y.S.2d at 378. 10 Id. (emphasis added). But, Such initiation is particularly relevant Bessemer (emphases added). 11 We conclude, with the benefit of the Court of Appeals's 12 additional guidance (which was, of course, unavailable to the 13 district court at the time it was considering this case), that 14 the court's understanding of New York law was clearly in error. 15 We must therefore vacate the judgment of the district court, 16 insofar as it reflects the court's finding of liability against 17 Branin, and remand the matter to the district court for it to 18 apply New York law in accordance with the legal precepts set 19 forth in the New York Court of Appeals' answer to our certified 20 question and, of course, with the opinions of this Court. 21 "We express no view on how the district court should 22 resolve the matter . . . . We merely conclude that, in light of 23 the rulings of the New York Court of Appeals on the certified 24 questions, the district court's [judgment] . . . can no longer 25 stand." 26 199-200 (2d Cir. 2011). Commodity Futures Trading Comm'n v. Walsh, 658 F.3d 194, It will be for the district court in the 17 1 first instance on remand to decide whether this case in its 2 current posture is best suited for summary judgment practice or 3 for trial. 4 will review the district court's decision under the ordinarily 5 applicable standards of deference. Should this matter come before this Court again, we 6 In our prior opinion, we "reserve[d] decision on the 7 correct method for the calculation of damages" pending the New 8 York Court of Appeals answer to our certified question. 9 IV, 618 F.3d at 91. Bessemer Because we determine that the district 10 court's finding of liability must be vacated and the case 11 remanded for further proceedings, we again reserve decision on 12 the issue of damages. 13 if the district court finds Branin liable on Bessemer's claim and 14 the case is brought before us on appeal. 15 16 We will consider the issue, if necessary, CONCLUSION For the foregoing reasons, we vacate the district 17 court's judgment insofar as it found Branin liable to Bessemer, 18 and we remand to that court for further proceedings consistent 19 with this opinion and the New York Court of Appeals's opinion 20 answering our certified question. 21 Court in this case shall be assigned by the Clerk of Court to a 22 new panel (whether or not including one or more members of the 23 current panel) in the ordinary course. 24 Any further appeal to this Each party shall bear its or his own costs on appeal. 18
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