Justia Business Law Opinion Summaries

A former employee, after suspecting his previous employer of facilitating a foreign bribery scheme, provided his suspicions and supporting documents to a journalist. The journalist informed the Department of Justice (DOJ) and published articles exposing the alleged misconduct. Following a tip from a DOJ attorney, the employee was advised to submit his information to the Securities and Exchange Commission (SEC) to potentially qualify for a whistleblower award. However, the employee waited over a year before submitting his information directly to the SEC, by which time the SEC had already begun its investigation and independently developed its case using information from the DOJ and public sources.The SEC’s Claims Review Staff (CRS) issued a preliminary determination denying the whistleblower award, reasoning that the employee’s submission neither led the SEC to open its investigation nor significantly contributed to the enforcement action, as the information was already known. The CRS also found that the employee did not meet the regulatory timing requirements for information submitted to other agencies. The employee contested this, relying on a prior SEC order that had granted an award in a similar situation, but the Commission had since disavowed that reasoning and clarified that both original source status and causation are required for an award.The United States Court of Appeals for the District of Columbia Circuit reviewed the SEC’s final order. The court held that, under the plain language of the Dodd-Frank Act and implementing regulations, a whistleblower must submit original information directly to the SEC, and that information must lead to a successful enforcement action. Because the employee’s belated submission did not assist the SEC’s investigation or enforcement efforts, he was not entitled to an award. The court denied the petition for review. View "Doe v. SEC" on Justia Law

Two college football players began their collegiate athletic careers at junior colleges in 2019 before transferring to NCAA Division I institutions. Both completed the maximum five years of collegiate eligibility allowed by the NCAA’s “Five-Year Rule,” which includes time spent at any full-time collegiate institution, including junior colleges. In 2025, each player sought a preliminary injunction in the United States District Court for the District of Nevada, arguing that the NCAA’s five-year limitation on eligibility was anticompetitive under Section 1 of the Sherman Act and seeking to play an additional, sixth year of college football. The players also challenged the NCAA’s “Rule of Restitution,” which allows the NCAA to penalize member schools that permit ineligible athletes to compete pursuant to court orders later vacated or reversed.Both district courts granted the plaintiffs’ requests for preliminary injunctions, permitting them to play in the 2025 college football season. After the season concluded, the NCAA appealed the injunctions to the United States Court of Appeals for the Ninth Circuit. The plaintiffs moved to dismiss the appeals as moot because the 2025 season was over and their collegiate eligibility had ended.The United States Court of Appeals for the Ninth Circuit held that the appeals were moot, as the injunctions had expired and the players’ collegiate careers were over, making it impossible to provide any effective relief to the NCAA. The court further determined that the NCAA did not meet its burden to show that the case fit the “capable of repetition yet evading review” exception to mootness, because there was no reasonable expectation that these plaintiffs would again be subject to the same NCAA actions. Accordingly, the Ninth Circuit dismissed the NCAA’s appeals as moot and vacated the district courts’ orders. View "BRAHAM V. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION" on Justia Law

A college baseball player challenged the National Collegiate Athletic Association’s rule that limits athletes to four seasons of eligibility within five years of their initial college enrollment. After exhausting his five years of eligibility through a series of transfers between NCAA and non-NCAA institutions, including one school that closed during his attendance, the athlete sought a waiver to compete in an additional season at a Division I university. The request for a waiver was denied by both the conference and the NCAA.The athlete filed suit in the United States District Court for the District of Nevada, alleging that the Five-Year Rule violated Section 1 of the Sherman Act and sought a preliminary injunction to allow him to play during the pending litigation. The district court granted the injunction, concluding that the NCAA’s rule was a commercial restraint subject to antitrust scrutiny and that the athlete was likely to succeed on the merits of his claim.On appeal, the United States Court of Appeals for the Ninth Circuit held that, consistent with recent decisions from other circuits and in light of NCAA v. Alston, the Five-Year Rule is indeed a commercial restraint subject to review under the Sherman Act. However, the Ninth Circuit determined that the district court abused its discretion by finding a likelihood of success on the merits. The appellate court found the evidentiary support for the athlete’s antitrust claim to be insufficient, particularly regarding the definition of the relevant market and the demonstration of substantial anticompetitive effects. As a result, the Ninth Circuit vacated the preliminary injunction, holding that the athlete failed to meet his burden to show a likelihood of success on the merits of his antitrust claim. View "BLYTHE V. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION" on Justia Law

Lucid USA, Inc., which manufactures and sells electric vehicles, sought to sell its vehicles directly to consumers in Texas through its own retail studio. However, Texas law prohibits motor vehicle manufacturers and their affiliates from directly selling vehicles to consumers, instead requiring sales to occur through independent franchised dealers. In 2021, after the Texas Department of Motor Vehicles notified Lucid that it could not sell vehicles at its Plano studio due to this prohibition, Lucid filed suit against officials of the Department, alleging that the law violates the Equal Protection and Due Process Clauses of the Fourteenth Amendment. The Texas Automobile Dealers Association intervened as a defendant.The United States District Court for the Western District of Texas reviewed cross-motions for summary judgment and ruled against Lucid. The district court concluded that the Texas prohibition was rationally related to a legitimate governmental interest and, therefore, did not violate either the Equal Protection or Due Process Clauses. Lucid appealed this decision.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment ruling de novo. Relying on its previous decisions in Ford Motor Co. v. Texas Department of Transportation, International Truck & Engine Corp. v. Bray, and Tesla, Inc. v. Louisiana Automobile Dealers Association, the Fifth Circuit found those precedents controlling. The court held that the Texas law survives rational basis review because the legislature has a legitimate interest in curtailing vertical integration and preventing monopolistic practices in the automobile market. The court rejected Lucid’s arguments that its as-applied challenge was distinct from the facial challenges previously considered. The court also found that Lucid's substantive due process claim fails for the same reasons. Accordingly, the Fifth Circuit affirmed the district court’s judgment. View "Lucid Group USA v. Johnston" on Justia Law

This case concerns a dispute between two sophisticated energy companies over a merger agreement. In December 2017, Trireme entered into an agreement with Innogy Renewables US, LLC, a subsidiary of a German energy company, to transfer valuable development companies related to wind and solar projects in exchange for an upfront payment and the possibility of future milestone payments. The agreement included provisions restricting Innogy from transferring these assets without Trireme’s consent. After a complex asset swap and corporate restructuring involving Innogy’s parent company and other entities, Trireme alleged that the assets were transferred within the corporate family in violation of the agreement.Previously, Trireme filed a lawsuit—referred to as Trireme I—in the United States District Court for the Southern District of New York, alleging breaches of other sections of the merger agreement but not the section concerning asset transfers. Later, Trireme sought to amend its complaint to add this new breach-of-contract claim. The district court denied the motion to amend, finding that Trireme had not acted diligently to discover the claim and was on notice of the potential breach before filing the initial action. Trireme did not pursue an appeal of this denial but instead filed a new lawsuit asserting the same claim. The district court dismissed the new case on grounds of res judicata.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court’s dismissal. The court held that when a party seeks to assert a claim in a new action after unsuccessfully moving to amend its complaint in a prior action, courts should consider several factors, including whether the denial was on the merits, whether the plaintiff failed to appeal, the timing of the claim, the plaintiff’s diligence, and whether the plaintiff was represented by counsel. Applying these factors, the Second Circuit concluded that res judicata barred Trireme’s new claim and affirmed the judgment. View "Trireme Energy Development v. RWE Renewables" on Justia Law

Plaintiffs, who had donated funds to the Church of Jesus Christ of Latter-day Saints, alleged that the Church and its investment subsidiary, Ensign Peak Advisors, Inc., fraudulently induced donations by concealing the true use and accumulation of donated funds. They claimed that the Church misrepresented that tithing would be used for charitable and religious purposes, when instead large portions were invested and used for commercial ventures, such as the development of the City Creek Mall. A key event in the case was the publication of a whistleblower report in December 2019, which was widely reported in national and local media and described how the Church managed and concealed a large investment portfolio. The Church publicly responded, and three other lawsuits were filed by different donors based on similar allegations.After actions were filed in several federal district courts, the cases were consolidated in the United States District Court for the District of Utah. Plaintiffs brought claims for breach of fiduciary duty, fraud, fraudulent concealment, fraudulent misrepresentation, and unjust enrichment, seeking to represent a nationwide class of post-1997 donors. The district court dismissed the consolidated complaint with prejudice, ruling that the claims were untimely under Utah’s three-year statute of limitations for fraud. The court found that the widespread news coverage of the whistleblower report meant that plaintiffs, exercising reasonable diligence, should have discovered the alleged fraud more than three years before filing suit.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s dismissal. The Tenth Circuit held that the plaintiffs’ claims were time-barred because the whistleblower report and related media coverage provided sufficient public notice to trigger the statute of limitations, and that reasonable diligence would have led to earlier discovery. The court also found no error in the district court’s procedural rulings and denied the request for leave to amend. View "In re: Church of Jesus Christ of Latter-Day Saints" on Justia Law

After purchasing a trucking company through an asset purchase agreement, Jim Daws Trucking, LLC (JDT) alleged that the sellers—James and Lana Daws, Daws, Inc., and other affiliated entities—violated the APA’s noncompete provision by engaging in competing trucking operations. The APA included a $12 million purchase price, with $4.5 million allocated to goodwill, and a five-year noncompete clause barring the sellers from participating in trucking nationwide. After the relationship between Jim Daws and JDT deteriorated, Jim Daws left JDT and communicated with former employees about starting new trucking ventures, allegedly causing JDT to lose significant personnel and drivers.The United States District Court for the District of Nebraska granted a temporary restraining order, then a preliminary injunction, prohibiting Jim Daws and associates from engaging in trucking or advising new trucking companies nationwide, except for operating certain pre-existing businesses. The district court determined that the noncompete provision was valid and enforceable under Nebraska law, that JDT was likely to prevail on its breach of contract claim, and that irreparable harm existed due to loss of goodwill. The district court also ordered Jim Daws to release $500,000 in funds from an account used for JDT’s operations and set a $480,000 bond based on potential lost revenue.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s grant of the preliminary injunction, the order to release funds, and the bond amount. The appellate court affirmed the district court’s decisions, holding that the noncompete provision was reasonable in scope and duration given the sale of goodwill and the nature of the trucking business. The court found no clear error in the district court’s factual findings, no abuse of discretion in ordering the release of funds as injunctive relief, and no abuse of discretion in setting the amount of the bond. View "Jim Daws Trucking, LLC v. Daws, Inc." on Justia Law

Several individuals, including Richard and Jocelyn Markowitz, John and Elizabeth van Merkensteijn, and pension funds they controlled, were found by a jury to have defrauded the Danish tax authority (Skat) by submitting false claims for tax refunds. The defendants conceded before trial that they were never entitled to the refunds under the U.S.-Denmark tax treaty, admitting that they had not owned Danish shares or received dividends subject to Danish withholding tax. However, they argued that they had been misled by a London-based trading partner into believing otherwise and were unaware that the refund claims submitted on their behalf were fraudulent.The United States District Court for the Southern District of New York presided over the case after it was consolidated as part of multidistrict litigation. The defendants unsuccessfully moved to dismiss Skat’s claims, contending that the common law revenue rule barred the suit. The district court held that because the defendants never owned the relevant Danish stocks or paid taxes, Skat’s claims were for commercial fraud rather than enforcement of Danish tax law. After trial, the jury found each defendant liable, and the district court entered judgments totaling over $476 million based on Skat’s gross payments and prejudgment interest.On appeal, the United States Court of Appeals for the Second Circuit reviewed the case. The court held that Skat’s lawsuit was not barred by the revenue rule because it did not seek to enforce foreign tax laws, but rather sought recovery for fraud. The court also found no abuse of discretion in the district court’s exclusion of certain evidence and upheld the sufficiency of evidence supporting judgments against Jocelyn Markowitz and Elizabeth van Merkensteijn under an agency theory. The Second Circuit affirmed the district court’s judgment. View "Skatteforvaltningen v. Markowitz" on Justia Law

Metroplex Communications, Inc., which operates several local news outlets in Illinois, earns revenue by selling advertising space. Meta Platforms, Inc., the owner of Facebook, also sells ads and competes for the same local advertisers. Metroplex, representing a putative class of small businesses that compete with Meta for advertisers, alleged that Meta engaged in unlawful, anticompetitive practices by misrepresenting the reach and effectiveness of its Facebook advertisements, thereby drawing advertisers away from other platforms. The suit is based on claims under the Lanham Act and the Illinois Uniform Deceptive Trade Practices Act, seeking disgorgement of profits Meta allegedly earned through misleading conduct. Although Metroplex had purchased Facebook ads in the past, its lawsuit was brought in its capacity as a competitor, not as an ad purchaser.Meta moved to compel arbitration in the United States District Court for the Southern District of Illinois, arguing that Metroplex’s prior ad purchases subjected it to an arbitration clause in Meta’s Commercial Terms. The district court denied the motion, reasoning that Metroplex’s claims arose from its status as a competitor and not from its own ad purchases or contractual relationship as an ad buyer. The court found the claims to be outside the scope of the arbitration clause.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the scope of the arbitration clause de novo, applying Illinois law. The court held that Metroplex’s unfair competition claims were not sufficiently connected to Metroplex’s ad purchases or Meta’s Commercial Terms to fall within the arbitration agreement. The claims centered on alleged anticompetitive conduct and public misrepresentations, unrelated to Metroplex’s own limited use of Meta’s ad services. The court affirmed the district court’s denial of Meta’s motion to compel arbitration, holding that the arbitration clause did not apply to Metroplex’s claims as a competitor. View "Metroplex Communications, Inc. v Meta Platforms, Inc." on Justia Law

A shareholder of a Delaware corporation with its principal place of business in San Francisco sought to inspect the company’s records under California Corporations Code sections 1600 and 1601. The shareholder, a California resident holding over 11% of the voting shares, requested access to various documents to evaluate his ownership interest and potential value, communicate with other shareholders, and investigate alleged mismanagement. The company denied the request, citing its status as a Delaware corporation and referencing a forum selection clause in its bylaws, which designated the Delaware Court of Chancery as the exclusive forum for internal affairs claims.Following the denial, the shareholder filed a petition for a writ of mandate in the San Francisco County Superior Court to compel inspection. Shortly thereafter, the company initiated a declaratory action in the Delaware Court of Chancery, seeking confirmation that Delaware law governed the shareholder’s inspection rights. The company then moved to stay the California proceedings, arguing the forum selection clause applied and was enforceable. The Superior Court granted the stay, finding that Delaware law governed interpretation of the clause, and that shareholder inspection rights constituted internal affairs under both Delaware and California law. The court further held that enforcing the clause did not violate California public policy, as Delaware law provided meaningful inspection rights.The California Court of Appeal, First Appellate District, Division Two, reviewed the case. It agreed that the forum selection clause covered the inspection claim but held that enforcing the clause would violate California public policy. The court determined that California’s statutory inspection rights are unwaivable and more extensive than those provided under Delaware law. Because the company failed to show that Delaware law offered the same or greater rights, enforcement of the clause would impermissibly limit the shareholder’s statutory protections. The appellate court reversed the stay and remanded with instructions to deny the motion. View "Salamon v. Orchid Global" on Justia Law