2nd Circuit Sets First Precedent on Blocker Illusory Pleading Standard
In-house counsel for investment management firms and investors must track this ruling, as it establishes binding 2nd Circuit precedent governing the pleading standard for challenging common contractual blockers as illusory.
Akin Gump secured a U.S. Court of Appeals for the Second Circuit victory for Hudson Bay Capital Management, affirming full dismissal with prejudice of a $310 million lawsuit filed by Butterfly, the successor to Bed Bath & Beyond. The ruling is the first federal appellate decision to establish the pleading standard for plaintiffs seeking to challenge a contractual blocker as illusory, creating binding precedent for the 2nd Circuit. In-house counsel for investment management firms and investors that rely on these widespread contractual provisions should review the decision to update their drafting practices and litigation defense strategies to align with the new standard.