Justia Business Law Opinion Summaries

In this case involving a dispute related to Texas liquor laws, the court previously certified the following two questions to the Supreme Court of Texas:1.) Does Texas Alcoholic Beverage Code Section 22.16(f) “continue[] to exempt a public corporation if that corporation sells some or all its shares to a non-exempt corporation, and, if so,2.) Whether the exempt corporation can acquire additional package store permits.The Supreme Court of Texas affirmatively answered both questions, resolving the appeal. Thus, the court reversed the district court's judgment and remanded for further proceedings. View "Gabriel Invst v. Texas Alcoholic" on Justia Law

Plaintiff’s libel per se claim was based on a Google review, written by the manager of plaintiff’s business competitor, that subsequently was removed from the internet without a trace. The Oregon Court of Appeals reversed a grant of summary judgment to defendants. The issues this case presented for the Oregon Supreme Court were: (1) whether plaintiff could reach a jury on his libel claim when the text was no longer available; (2) whether the First Amendment’s public comment defense was available in these circumstances and, relatedly, whether a defendant speaker’s identity or motive was part of the court’s inquiry on the defense’s availability; and (3) whether Oregon should require a plaintiff claiming defamation to prove that the defendant acted with a heightened culpable mental state, “actual malice,” in all cases when the speech was on a “matter of public concern” protected under the First Amendment, abolishing the distinction that requires such proof only when the defendant is a member of the media. The Court of Appeals concluded the trial court had erred because plaintiff’s evidence of the allegedly defamatory statements sufficed to create a question of fact for trial on his claim and the lack of the review’s printed text did not affect the analysis of defendants’ First Amendment defense. The Supreme Court concurred with the appellate court's conclusion that the lack of a copy of the review was not fatal to plaintiff’s libel claim and that two of the three allegedly defamatory statements in the review were actionable. The Court thus affirmed the decision of the Court of Appeals in part and remanded the case to the trial court for further proceedings. View "Lowell v. Wright" on Justia Law

Plaintiff Rick Fowler sought a writ of mandate against defendant Golden Pacific Bancorp, Inc. (Bancorp), to enforce his statutory rights as a director and majority shareholder to inspect corporate books and records. Bancorp opposed the petition, arguing that the trial court should limit Fowler’s inspection rights because he was involved in ongoing litigation with Bancorp and could use the information to undermine Bancorp’s position in the lawsuit. The trial court granted Fowler’s writ petition. Bancorp appealed. After the Court of Appeal issued an oral argument waiver notice, Bancorp moved to dismiss the appeal as moot, citing that because Bancorp had been acquired by Social Finance, Inc., Fowler was no longer a Bancorp board member, and therefore it was impossible for the Court to grant effective relief. Ultimately, the Court of Appeal found Fowler was indeed no longer a member of Bancorp’s board of directors and therefore had no director’s inspection rights. Nevertheless, exercising discretion, the Court reached the merits of the case because it presented an issue of substantial and continuing public interest: whether a director’s “absolute” right of inspection under California Corporations Code section 1602 could be curtailed because the director and corporation were involved in litigation and there was a possibility the documents could be used to harm the corporation. “[T]he mere possibility that information could be used adversely to the corporation is not by itself sufficient to defeat a director’s inspection rights. Rather, any exception to the general rule favoring unfettered access must be limited to extreme cases, where enforcing an ‘absolute’ right of inspection would produce an absurd result, such as when the evidence establishes the director’s clear intent to use the information to breach fiduciary duties or otherwise commit a tort against the corporation.” The Court declined to reach the other question referenced in the parties’ briefs concerning Fowler’s inspection rights as a shareholder, because that issue was not resolved by the trial court and the record was insufficiently developed for a determination of whether it was moot. The case was remanded for the trial court to consider whether that issue was moot and, if not, to resolve any remaining disputes in the first instance. View "Fowler v. Golden Pacific Bancorp." on Justia Law

In 2013, the New Jersey Supreme Court affirmed the Appellate Division’s holding that Koger Distributed Solutions, Inc. (KDS) and Koger Professional Services, Inc. (KPS) had value as independent entities rather than being solely dependent on their parent company, Koger Inc. (Koger). The Court also held that Robert Sipko’s relinquishment of his 50 percent interests in KDS and KPS in 2006 was void for lack of consideration. The matter was remanded the trial court to determine what, if any, remedy was appropriate to compensate Robert for his interests in KDS and KPS -- companies that were rendered valueless by the time the matter reached the Supreme Court. In 2016, the trial court held that the appropriate remedy was a buyout of Robert’s interests in the companies given the court’s finding that George and Rastislav Sipko deliberately stripped the companies of value for the specific purpose of putting the money beyond Robert’s reach. The trial court accepted Robert’s expert’s valuation of the companies and found that KDS and KPS, at the time Robert filed the complaint in 2007, were worth approximately $1.5 million and $34.9 million, respectively. Accordingly, Robert’s 50 percent ownership in both companies totaled over $18 million, plus interest. On appeal, the Appellate Division agreed that a buyout was the appropriate remedy given the record. The court, however, remanded the matter for the trial court to determine whether a marketability discount should be applied. In light of all the defendants’ conduct regarding KDS and KPS to strip Robert of his rightful interests, “equity cannot abide imposing a marketability discount to the benefit of defendants.” The trial court’s acceptance of Robert’s expert’s valuation of the company fell within its broad discretion and was fully supported by the record. Defendants were given the opportunity to present an expert valuation of the companies on remand but made the strategic decision not to do so. Therefore, the Supreme Court declined to provide defendants with “another bite of this thoroughly chewed apple,” and reinstated the judgment of the trial court. View "Sipko v. Koger, Inc." on Justia Law

The Court of Chancery granted Plaintiff's motion for summary judgment seeking an order confirming the arbitration panel's award in this case and denied Defendants' motion for summary judgment seeking to vacate the award, holding that there was no basis to vacate the arbitration panel's award.Defendants initiated arbitration proceedings against Plaintiff to challenge the validity of unsuitability determination that Plaintiff issued to Defendants under the parties' agreement. The arbitration panel determined that the unsuitability determination was valid. This litigation followed. The Court of Chancery confirmed the arbitration award, holding that Defendants were not entitled to relief on their allegations of error. View "MHP Management, LLC v. DTR MHP Management, LLC" on Justia Law

The Supreme Judicial Court affirmed the judgment of the jury finding that Defendant violated his fiduciary duties to a corporation and converted the corporation's assets for his own benefit, holding that the judge did not err in denying Plaintiff's request for a surcharge and that there were no other prejudicial errors.In this disputed between family members in a closely-held corporation over asserted conversions of corporate funds the corporation and one of its shareholders (collectively, Plaintiffs), brought this action against an officer (Defendant), alleging that the officer diverted money from the corporation for the benefit of himself and his individually-owned corporation. The jury found in favor of Plaintiffs and awarded $1 million in damages to the corporation. The Supreme Judicial Court affirmed, holding (1) a surcharge may be used to award a plaintiff fiduciary the costs of attorney's fees under certain circumstances; (2) the judge did not err in denying Plaintiff's request for a surcharge; and (3) Defendant was not entitled to relief on his remaining claims of error. View "Tocci v. Tocci" on Justia Law

The Texas Legislature limited beer-to-go sales to brewers and manufacturers that produced no more than 225,000 barrels annually “at all premises [they] wholly or partly owned.” Tex. Alco. Bev. Code Ann. Sections 62.122(a) and 12.052(a).   The Texas Alcoholic Beverage Commission (TABC) ordered CANarchy to cease and desist after it determined that CANarchy’s facilities collectively exceeded the 225,000-barrel limit. CANarchy complied with the order but then filed suit, seeking a declaratory judgment that the 225,000- barrel threshold did not apply to barrels produced at leased premises. The district court agreed with CANarchy that “premises wholly or partly owned” do not include leased premises and granted it summary judgment.   The Fifth Circuit affirmed the district court’s order granting Plaintiff’s motion for a declaratory judgment. The court held that “premises wholly or partly owned” do not include leased premises and granted it summary judgment.   The court wrote, “it is the Legislature’s prerogative to enact statutes; it is the judiciary’s responsibility to interpret those statutes according to the language the Legislature used, absent a context indicating a different meaning or the result of the plain meaning of the language yielding absurd or nonsensical results.” Here, the ordinary definition of “owned,” when applied to sections 12.052(a) and 62.122(a) of the Texas Alcoholic Beverage Code, establishes that the 225,000-barrel production threshold set in those statutes encompasses only barrels produced at premises owned by the brewer, either in whole or in part, and not at premises leased by the brewer. View "CANarchy Craft Brewery v. Texas Alcoholic" on Justia Law

Warren Averett Companies, LLC, sought a writ of mandamus to direct a circuit court to vacate its order denying Warren Averett's motion to strike the jury demand asserted by Gerriann Fagan and to enter an order granting the motion to strike the jury demand. The underlying dispute involved a business proposition Warren Averett made to Fagan to to build a human-resources consulting practice. Fagan would wind down the operations of her company, The Prism Group; Fagan would then become a member of Warren Averett, and Warren Averett would purchase The Prism Group's equipment and furniture, assume responsibility for The Prism Group's leases; and that Warren Averett would assume The Prism Group's membership in Career Partners International, LLC. The "Standard Personal Service Agreement" ("the PSA") entered into by Fagan and Warren Averett drafted by Warren Averett included, in pertinent part, a dispute-resolution clause. Fagan resigned from Warren Averett after a salary dispute, and, on February 28, 2019, Fagan filed a demand for arbitration with the American Arbitration Association ("AAA"). The AAA determined that, under its rules, Fagan owed $300 and Warren Averett owed $1,900. The AAA also stated that any dispute regarding the filing fees should be raised before the arbitrator for a determination once all the filing requirements, including payment of the fees, had been satisfied. Warren Averett refused to pay its share of the filing fees as requested by the AAA, and the AAA closed the file in the matter. Thereafter, Fagan sued Warren Averett alleging multiple causes of action. Fagan demanded a jury trial. Warren Averett moved to dismiss the claims, and concurrently moved to compel arbitration. The Alabama Supreme Court determined Fagan did not show prejudice by the almost two-year delay between the filing of Fagan's amended complaint and the filing of Warren Averett's motion to strike the jury demand: "The trial court granted Warren Averett's motion to compel arbitration, and Fagan sought review of that decision. We reversed that decision; on remand, the trial court set a scheduling conference, and Warren Averett filed its motion to strike Fagan's jury demand. Although there was a delay between the time that Fagan demanded a jury and the time that Warren Averett sought to strike that demand, Fagan has not shown that she was prejudiced by that passage of time." Warren Averett's petition was granted and the writ issued. View "Ex parte Warren Averett Companies, LLC." on Justia Law

The Supreme Court answered certified questions asking whether Tex. Alco. Bev. Code 22.16(f) continues to exempt a public corporation if that corporation sells some or all of its shares to a non-exempt corporation and, if so, whether the exempt corporation can acquire additional package store permits, holding that the answer to those questions is yes.In 1995, the legislature prohibited public corporations from owning or holding an interest in package store permit and, at the same time, exempted from this prohibition any public corporation that, as of April of that year, already had permits or had permit applications pending. The Court of Appeals of the Fifth Circuit certified questions about the scope of the exemption. The Supreme Court answered both questions in the affirmative, holding that an exempt corporation in which a non-exempt corporation has an interest cannot hold a package store permit. View "Gabriel Investment Group, Inc. Texas Alcoholic Beverage Commission" on Justia Law

In this challenge to a share issuance the Supreme Court held that the probate court improperly submitted an invalid theory of liability to the jury and that the trial court's charge error probably caused the rendition of an improper judgment.In the weeks before he died, Dick Poe, the sole director of Poe Management, Inc. (PMI), authorized the corporation to issue new shares and then bought the new shares for $3.2 million, making him the majority owner of PMI. Dick's death vested control of the family-owned car-dealership enterprise in the two co-executors of Dick's estate. Richard, Dick's son and PMI's only other shareholder, brought this action challenging the share issuance as a breach of Dick's fiduciary duty. The trial court rendered judgment in favor Richard. The Supreme Court reversed and remanded the case for a new trial, holding that the probate court erred in charging the jury in two respects and that the errors were harmful. View "In re Estate of Poe" on Justia Law