The 2nd Circuit reversed a lower court judge who had declined to dismiss for lack of standing a case brought by W.R. Huff Asset Management Co. on behalf of clients who were invested in Adelphia Communications Corp. before the company’s bankruptcy, the New York Law Journal reports. The case was brought against firms that provided underwriting, auditing or legal services to Adelphia, alleging they were complicit with Adelphia’s misleading statements and disclosures about its debt levels.
U.S. District Judge Jose Cabranes relied on the U.S. Supreme Court’s decision earlier this year in Sprint Communications Co. v. APCC Serv. Inc. where the Court held “that an assignee who holds legal title to an injured party’s claim has constitutional standing to remit all proceeds from the litigation to the assignor,” and said that one issue before the court in analyzing the standing issue is whether W.R. Huff suffered an “injury-in-fact,” “through some other means, such as an assignment of claims,” according to the Law Journal.
Cabranes noted that the court in Sprint found the assignees had “satisfied the injury-in-fact requirement because the assignment also transferred the assignor’s claims for injuries.”
“In our view, Sprint makes clear that the minimum requirement for injury-in-fact is that the plaintiff have legal title to, or a property interest in, a claim,” Cabranes said. He added that the Sprint decision “implicitly supports” prior case law that more than power-of-attorney is required because a grant of power-of-attorney does not transfer ownership in a claim.
The appellate court rejected W.R. Huff’s alternative arguments that it had been injured because its reputation was sullied and that it suffered “informational injury” — its right to receive truthful information about publicly-traded securities.
The 2 nd Circuit remanded the case for further proceedings, including the possibility that W.R. Huff will attempt to insert a plaintiff into the case who meets the standing requirements.
The opinion in W.R. Huff Asset Management Co. v. Deloitte & Touche is here .