The New York Times reports that the plaintiff has appealed Judge Batts's no-fair-use decision. You can read the appellate brief here. At the Wall Street Journal Law Blog, Ashby Jones says "it’s pretty clear that [the plaintiff's] lawyers understand that the case will likely turn on [the] 'transformative' issue": the brief "focuses to a large degree on this 'transformation' idea, largely by highlighting the degree to which [the book] allegedly comments on Salinger’s relationship to the novel and the Holden Caulfield character itself."
The core of the argument seems to be that, in his book, "Colting takes ... the seemingly authentic and fiercely independent Holden, and 'adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message' to create a new work of fiction -- a new story that is entirely 'transformative'" (p. 41, quoting the Supreme Court's decision in Campbell v. Acuff-Rose Music).
Jones predicts "a lively Second Circuit hearing, likely to take place later this summer or fall."