Shasha v. Malkin

Background

The case had been stayed while the parties pursued arbitration concerning the rollup and initial public offering of Empire State Realty Trust, Inc. After an arbitration proceeding lasting nearly two years produced an extensive panel decision, the plaintiffs moved to lift the stay and requested permission to file a second amended complaint.

Magistrate Judge Robert W. Lehrburger recommended lifting the stay, denying leave to file the proposed amended complaint, and dismissing the case. The plaintiffs filed objections to that recommendation.

The Objections

The plaintiffs first challenged the use of letter briefs. The court found no clear error in Judge Lehrburger’s conclusion that the seven letter briefs provided ample briefing and that additional formal briefing was not required or warranted. The court also noted that the judge’s individual practices applied unless otherwise ordered.

Second, the plaintiffs argued that the recommendation should have considered collateral estoppel, a rule that can prevent parties from relitigating an issue already decided. The court concluded that this separate analysis was unnecessary because the claims were barred by res judicata, the rule that generally prevents a party from bringing claims that were or could have been raised in an earlier proceeding involving the same operative facts. The court stated that the arbitration award was a final decision on the merits, that the parties were the same or legally connected, and that the claims were the same. It also noted that the arbitration panel had not ruled that any claims in the arbitration demand could not be arbitrated.

Third, the plaintiffs argued that the recommendation had been influenced by false or misleading statements from the defendants. The court rejected that objection. It found no indication that Judge Lehrburger accepted false statements as true and concluded that disputes about what the defendants argued during arbitration did not affect the res judicata analysis. The court also found that a quoted statement about the identity of the claims was accurate. Other objections, the court said, merely repeated arguments already presented.

Ruling

Judge Analisa Torres overruled the plaintiffs’ objections and adopted Judge Lehrburger’s report and recommendation in full. The stay was lifted, the plaintiffs’ motion for leave to amend the complaint was denied, and the case was dismissed. The Clerk of Court was directed to terminate all motions and close the case. The opinion does not state that the dismissal was with or without prejudice.