Justia Business Law Opinion Summaries

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Bosch, an engineering company, asked J.S.T. to design and manufacture a connector that Bosch could incorporate into a part that it builds for GM. For a time, Bosch retained J.S.T. as its sole supplier of those connectors. Then, according to J.S.T., Bosch wrongfully acquired J.S.T.’s proprietary designs and provided them to J.S.T.’s competitors, who used the stolen designs to build knockoff connectors and eventually to displace J.S.T. from its role as Bosch’s supplier. After filing various lawsuits against Bosch, J.S.T. filed suit in Illinois against the competitors, alleging misappropriation of trade secrets and unjust enrichment. The Seventh Circuit affirmed the dismissal of the case for lack of personal jurisdiction. The competitors’ only link to Illinois is that they sell their connectors to Bosch, knowing that the connectors will end up in GM cars and parts that are sold in Illinois. For personal jurisdiction to exist, though, there must be a causal relationship between the competitors’ dealings in Illinois and the claims that J.S.T. has asserted against them. No such causal relationship exists. View "J.S.T. Corp. v. Foxconn Interconnect Technology, Ltd." on Justia Law

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Two limited partners demanded the books and records of certain limited partnerships. Most of the documents demanded were produced, but one category of documents remains in dispute: the Schedule K-1s (“K-1s”) attached to the partnerships’ tax returns. Although the limited partners were provided with their own K-1s, the limited partners sought the K-1s of the other limited partners for the purpose of valuing their ownership stake in the partnerships and in order to investigate mismanagement and wrongdoing. The partnerships countered that the K-1s were not necessary and essential to the valuation purpose and there was no credible basis to suspect wrongdoing. The Court of Chancery, based upon its history of interpreting 6 Del. C. section 17- 305 in the same manner as 8 Del. C. section 220, held that the K-1s were subject to the requirement that documents sought be “necessary and essential” to the stated purpose, and found they failed the "necessary and essential" test. The Delaware Supreme Court disagreed, finding that the limited partners were entitled to the K-1s under the terms of the partnership agreements. The Court thus reversed the Court of Chancery and remanded for further proceedings. View "Murfey v. WHC Ventures, LLC" on Justia Law

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Martin Franklin, the Chief Executive Officer and co-founder of Jarden Corporation, negotiated the corporation’s sale to Newell Brands for $59.21 per share in cash and stock. Several large Jarden stockholders refused to accept the sale price and petitioned for appraisal in the Court of Chancery. The Court of Chancery found that, of all the valuation methods presented by the parties’ experts, only the $48.31 unaffected market price of Jarden stock could be used reliably to determine the fair value. The court placed little or no weight on other valuation metrics because the CEO dominated the sales process, there were no comparable companies to assess, and the parties’ experts presented such wildly divergent discounted cash flow models that, in the end, the models were unhelpful to the court. On appeal, the petitioners argued the Court of Chancery erred as a matter of law when it adopted Jarden’s unaffected market price as fair value because it ignored what petitioners claim is a “long-recognized principle of Delaware law” that a corporation’s stock price does not equal its fair value. They also claimed the court abused its discretion by refusing to give greater weight to a discounted cash flow analysis populated with data selected by petitioners, ignoring market-based evidence of a higher value, and refusing to use the deal price as a “floor” for fair value. Finding no abuse of discretion or other reversible error, the Delaware Supreme Court affirmed the Court of Chancery. View "Fir Tree Value Master Fund v. Jarden Corp" on Justia Law

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The underlying lawsuit whose appeal was before the Delaware Supreme Court was filed in 2015 by Plaintiffs Eagle Force Holdings, LLC and EF Investments, LLC (collectively, “Plaintiffs”) against Stanley Campbell. In 2013, Richard Kay and Campbell formed a business venture to market medical diagnosis and prescription technology that Campbell had developed. The parties outlined the principal terms of the investment through two letter agreements in November 2013 and April 2014: Kay and Campbell would form a new limited liability company and each would be a fifty-percent member. Kay would contribute cash. Campbell would contribute stock of Eagle Force Associates, Inc. and the membership interest of Eagle Force Health, LLC, along with intellectual property. After April 2014, the parties negotiated several key terms of the transaction documents. Kay contributed cash to Eagle Force Associates. Campbell executed a promissory note for these contributions with the agreement that Kay would cancel the note when they closed the deal on the new venture. After months of negotiations, Kay and Campbell signed versions of two transaction agreements: a Contribution and Assignment Agreement and an Amended and Restated Limited Liability Company Agreement. A question arose as to whether the parties intended to be bound by these signed documents. Plaintiffs asserted that the parties formed binding contracts; Campbell contended that he signed merely to acknowledge receipt of the latest drafts of the agreements but not to manifest his intent to be bound by the agreements. The Court of Chancery determined that neither transaction document was enforceable. Accordingly, it dismissed the case for lack of personal jurisdiction. The Delaware Supreme Court reversed the Court of Chancery, finding that the trial court did not properly apply the test set forth in Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153 (Del. 2010). On remand, the Court of Chancery issued an opinion holding that Campbell's conduct and communications with Kay before and during the signing of the transaction documents, did not constitute an overt manifestation of assent to be bound by the documents. Because it concluded that Campbell was not bound by the agreements’ forum selection clauses, and because Plaintiffs failed to identify any other applicable basis for personal jurisdiction, the court dismissed the remainder of the claims for lack of personal jurisdiction. Plaintiffs appealed. Finding no reversible error, the Supreme Court affirmed as to plaintiffs' issues raised on appeal. The Court reversed, however, the matter on cross-appeal: if Campbell was not bound by the 2015 trial court order, he could not be held in contempt for violating its terms during the interim appeal period. View "Eagle Force Holdings v. Campbell" on Justia Law

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The Supreme Court held that Plaintiffs, eight members of the Kentucky Retirement System's (KRS) defined-benefit retirement plan, did not have standing to bring claims for alleged funding losses sustained by the KRS plan against former KRS trustees and officers and private-investment advisors and hedge funds and their principals. Plaintiffs alleged that KRS trustees and officers attempted to gamble their way out of an actuarial shortfall by investing $1.5 billion of KRS plan assets in high-risk products offered by the defendant hedge-fund sellers, resulting in a multimillion dollar loss that contributed to what was a $25 billion funding shortfall in the KRS general pool of assets. Defendants moved to dismiss the claims for lack of constitutional standing. The circuit court denied the motion. The Supreme Court reversed, holding that Plaintiffs did not have an injury in fact that was concrete or particularized and therefore did not have standing to bring their claims. View "Overstreet v. Mayberry" on Justia Law

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The issue before the New Jersey Supreme Court in this appeal was whether a high-end restaurant operated by a for-profit entity, but housed in a building on the Kean University campus, qualified for a local property tax exemption. Gourmet Dining, LLC, owned and operated a fine dining restaurant named Ursino in a Kean University building. In October 2011, the Kean University Foundation, Inc., and Gourmet Dining entered into a Management Subcontract Agreement (MSA), which conferred on Gourmet Dining the exclusive right to operate, manage, and control Ursino. Gourmet Dining agreed to pay the Foundation an annual “management fee” and a percentage of Ursino’s gross revenue. The Tax Court granted summary judgment in favor of Union Township. Concluding that Gourmet Dining had not established that the subject property is used for a public purpose pursuant to N.J.S.A. 54:4-3.3, or that its actual use of the property was for “colleges, schools, academies or seminaries” as required by N.J.S.A 54:4-3.6, the court held that Gourmet Dining was not entitled to tax exemption under either provision. The Appellate Division reversed, relying on a holistic view: the restaurant is located on-campus; University students and their parents regularly dined there; Gourmet Dining’s annual management fees were used for scholarships; many of the restaurant’s employees are students; and the restaurant used produce grown on theUniversity grounds and provides the University with compostable waste. The Supreme Court reversed, holding the arrangement by which Gourmet Dining operates Ursino was taxable as a lease or lease-like interest. The public-benefit-oriented exemption provisions in issue were not intended to exempt the for-profit operator of a high-end, regionally renowned restaurant situated on a college campus, when the overriding purpose of the endeavor was focused on profitmaking. "Gourmet Dining, as the exclusive operator and manager of this restaurant establishment, must bear its fair share of the local real property tax burden." View "Gourmet Dining, LLC v. Union Township" on Justia Law

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In this breach of contract action, the First Circuit affirmed the district court's grant of summary judgment for Defendants on all of Plaintiff's claims and all of Defendants' counterclaims, holding that, based on Plaintiff's waivers, summary judgment was appropriate. Plaintiff was the president of a company that Defendant Riverside Partners, LLC directed one of its portfolio companies to acquire. Defendant Steven Kaplan was a General Partner at Riverside. Plaintiff brought suit alleging that he had an oral side agreement under which Kaplan and Riverside would pay Defendant $1 million if the portfolio company acquired the company and that Defendants did not pay him. Defendant denied that any such side deal existed and counterclaimed for indemnification for breach of certain representations and warranties that Plaintiff had made. The district court granted summary judgment for Defendants and awarded Defendants attorneys' fees. The Supreme Court affirmed, holding (1) Plaintiff waived enforcement of the APA's forum selection clause; (2) Defendants' indemnification claim was ripe; and (3) based on Plaintiff's waivers, the indemnification claim provided a complete defense to Plaintiff's claims and indemnification of attorneys' fees. View "Kelly v. Riverside Partners, LLC" on Justia Law

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The Council handles contracts for over 200 New Jersey municipalities, police departments, and school districts. Mid-American sells bulk road salt. The Council's members estimated their salt needs for the 2016-17 winter. The Council issued a comprehensive bid package, anticipating the need for 115,000 tons of rock salt. MidAmerican won the contract, which stated: There is no obligation to purchase [the estimated] quantity. As required by the contract, Mid-American obtained a performance bond costing $93,016; imported $4,800,000 worth of salt from Morocco; and paid $31,250 per month to store the salt and another $58,962.26 to cover it. Mid-American incurred at least another $220,000 in finance costs and additional transportation costs. Council members purchased less than five percent of the estimated tonnage. Mid-American claims “several” Council members purchased salt from MidAmerican’s competitors, who lowered their prices after MidAmerican won the contract. Mid-American sued the Council and 49 of its members, alleging breach of contract, breach of the covenant of good faith and fair dealing, and bad faith under UCC Article 2. The Third Circuit affirmed the denial of relief. No valid requirements contract existed here because the contract was illusory. These sophisticated parties were capable of entering into precisely the contract they desired. Neither the Council nor its members ever promised to purchase from Mid-American all the salt they required View "Mid-American Salt LLC v. Morris County Cooperative Pricing Council" on Justia Law

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Ben-E-Lect, a third-party insurance claim administrator, developed a medical expense reimbursement plan; employers could buy a group policy of medical insurance with a high deductible and self-fund to pay for the healthcare expenses employees incurred within the annual deductible or any copay requirement. The practice of employers’ using such plans in conjunction with a high-deductible health plan is called “wrapping.” Ben-E-Lect was the state’s largest third-party administrator for small group employers who wrapped their employee medical policies. Anthem provides fully insured health plans to the California small group employer market. Beginning in 2006, Anthem announced a series of policies that limited wrapping. In 2014, Anthem prohibited wrapping all Anthem plans. Employer groups who used Anthem plans certified they would not wrap Anthem policies, and agents certified they would not advise employers to enter into any employer-sponsored wrapping plan. Ben-E-Lect sued Anthem. The court of appeal affirmed that Anthem’s policy to prohibit wrapping its health insurance products violated the Cartwright Act (Bus. & Prof. Code, 16700); interfered with Ben-E-Lect’s prospective business relationships; and was an illegal, coercive, vertical group boycott under the antitrust rule of reason (Bus. & Prof. Code, 17200), because Anthem told its insurance agents that if they wrapped any Anthem policies they would be subject to termination loss of sales commissions. The court affirmed an award of $7.38 million and an injunction. The trial court considered sufficient evidence of market power and market injury. View "Ben-E-Lect v. Anthem Blue Cross Life and Health Insurance Co." on Justia Law

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This case arose out of a stabbing that took place outside of an Idaho Falls bar. Steven and Audra Fell were patrons of the First Street Saloon, owned and operated by Fat Smitty’s L.L.C. (Fat Smitty’s). Towards the end of the evening, an altercation took place that resulted in Steven Fell being stabbed by another patron, LaDonna Hall. The Fells filed a complaint against Fat Smitty’s, alleging Fat Smitty’s breached its duty to: (1) warn the Fells, as invitees, of any hidden or concealed dangers in the bar; (2) keep the bar in a reasonably safe condition; and (3) protect the Fells from reasonably foreseeable injury at the hands of other patrons at the bar. The district court granted summary judgment in favor of Fat Smitty’s, ruling that the Fells’ claims were barred by Idaho’s Dram Shop Act because the Fells failed to give Fat Smitty’s timely notice of their claims. The Fells appealed the district court’s grant of summary judgment. Finding no reversible error, the Idaho Supreme Court affirmed. View "Fell v. Fat Smitty's" on Justia Law