Justia Business Law Opinion Summaries

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Plaintiffs' second amended complaint alleged derivative causes of action on behalf of ALI against AIG for conspiracy to commit fraud, fraud by concealment, breach of fiduciary duty, declaratory relief, conversion, and accounting.The Court of Appeal affirmed the trial court's order of dismissal entered as to the AIG defendants after the trial court sustained without leave to amend the AIG defendants' demurrer to plaintiffs' second amended complaint. The court held that, although plaintiffs' appeal is timely, their derivative claims are barred by the compulsory cross-complaint rule under Code of Civil Procedure section 426.30, subdivision (a). In this case, ALI may not assert against AIG the related causes of action not pleaded in the AIG v. Mahdavi action. Because ALI is barred from asserting the related causes of action against AIG, so are plaintiffs. The court explained that, because plaintiffs stand in the shoes of ALI in seeking redress for ALI's injuries, they are generally subject to the procedural rules that would apply to ALI as plaintiff in a direct action. The court stated that it would be inequitable to AIG to allow plaintiffs to assert claims ALI failed to assert by compulsory cross-complaint in the earlier-filed action, subjecting AIG to the precise piecemeal litigation section 426.30 was designed to prevent. View "Heshejin v. Rostami" on Justia Law

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Plaintiff Mentis Sciences, Inc. appealed a superior court order dismissing its claims for damages representing the cost of recreating lost data and lost business and negligence against defendant Pittsburgh Networks, LLC. Plaintiff was an engineering firm that, among other things, designed, developed, and tested advanced composite materials for United States Department of Defense customers. Since entering this sector in 1996, plaintiff acquired “a vast amount of valuable data that was utilized in its operations.” In 2010, the defendant began providing the plaintiff with technological support or “IT” services. In August 2014, defendant notified plaintiff that a drive in one of its servers had failed and would need to be replaced; a controller malfunctioned, causing the corruption of some of plaintiff’s data. Defendant attempted to recover the corrupted data; however, the data was permanently lost because defendant had failed to properly back it up. Plaintiff filed suit against defendant, alleging breach of contract and negligence. In its complaint, plaintiff alleged that the lost data “represents valuable intellectual property compiled over many years and is of daily critical use in [the plaintiff’s] business.” Further, plaintiff alleged that, as a result of the data loss, it was required to conduct “massively expensive” testing in order to recreate the data and that, without the lost data, it was “unable to bid or participate in various projects worth potentially millions of dollars.” Plaintiff argued on appeal of the dismissal of its suit that the trial court erred by: (1) concluding that the damages representing the cost of recreating lost data and lost business were consequential; (2) concluding that the limitation of liability clause in the parties’ contract is enforceable; and (3) dismissing its claim for negligence. The New Hampshire Supreme Court affirmed because the damages sought by plaintiff were consequential and the limitation of liability clause in the parties' contract precluded plaintiff from recovering consequential damages. The Court also concluded the economic loss doctrine barred plaintiff’s negligence claim. View "Mentis Sciences, Inc. v. Pittsburgh Networks, LLC" on Justia Law

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Two business owners executed a series of transactions to sell a regional airline business. Within two years of the sale, one of the buyer-controlled business entities declared bankruptcy, and the seller commenced litigation to resolve disputes over their agreements. The parties settled before trial. But another buyer-controlled entity later defaulted and declared bankruptcy, and the seller reinitiated litigation. The issue presented to the Alaska Supreme Court was the extent to which the buyers personally guaranteed the obligations of the second bankrupt entity. The superior court granted summary judgment in favor of the seller and held the buyers personally liable for those obligations. The Supreme Court held that whether the parties intended the buyers to personally guarantee the bankrupt entity’s obligations was a disputed material fact, making the issue inappropriate for summary judgment. Judgment was reversed and the matter remanded for further proceedings. View "Beardsley v. Jacobsen" on Justia Law

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Porter Scott, P.C. (hereafter, “Porter Scott”) defended The Johnson Group Staffing Company, Inc. (hereafter, “TJG” or “Johnson Group”) through two rounds of litigation with its chief competitor, Aerotek, Inc. (hereafter, “Aerotek”). Aerotek first sued TJG after TJG’s founder, Chris Johnson, left Aerotek to form TJG. In the lawsuit, Aerotek alleged that TJG and Johnson, among other things, misappropriated trade secrets by soliciting Aerotek’s customers. TJG and Johnson settled with Aerotek a little over a year later. The issue presented for the Court of Appeal's review concerned the ownership of fees awarded under Civil Code 3426.4, and whether the prevailing litigant (here, The Johnson Group Staffing Company, Inc.) or the prevailing litigant’s attorney (here, Porter Scott, P.C.) were entitled to the fees awarded to the “prevailing party.” The Court concluded that, absent an enforceable agreement to the contrary, these fees belonged to the attorney to the extent they exceeded the fees the litigant already paid. Furthermore, the Court concluded that, although the parties here entered into a fee agreement, that agreement did not alter the default disposition of fees in favor of the attorney. Because the trial court reached the same conclusion, the Court of Appeal affirmed its judgment. View "Aerotek v. Johnson Group Staffing Co." on Justia Law

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California’s automatic renewal law, Bus. & Prof. Code 17600, requires a consumer’s affirmative consent to any subscription agreement automatically renewed for a new term when the initial term ends and requires “clear and conspicuous” disclosure of the offer terms, and an “easy-to-use mechanism for cancellation.” Mayron sued Google on behalf of a putative class, alleging that Google’s subscription data storage plan violates the automatic renewal law: “Google Drive” allows users (those registered for a Google account) to remotely store electronic data that can be accessed from any computer, smartphone, or similar device. There is no charge for 15 gigabytes of storage capacity. For a $1.99 monthly fee, users can upgrade to 100 gigabytes of storage. Plaintiff alleged Google did not provide the required clear and conspicuous disclosures nor obtain his affirmative consent to commence a recurring monthly subscription agreement and did not adequately explain how to cancel, and alleged unfair competition, Bus. & Prof. Code 17200.The court of appeal affirmed the dismissal of the complaint. There is no private right of action for violation of the automatic renewal law and, because Mayron has not alleged an injury caused by Google’s conduct, he has no standing to sue under the unfair competition statute. View "Mayron v. Google LLC" on Justia Law

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Windsor I, LLC appealed a superior court's decision to grant defendants' CWCapital Asset Management LLC (“CWCAM”) and U.S. Bank National Association (“U.S. Bank”) motion to dismiss. Windsor owned a 48,000 square foot commercial property and building encumbered by debt eventually held by U.S. Bank. In 2015, after learning that the Property’s sole tenant intended to vacate, Windsor sought special servicing to refinance the debt. After nearly two years of negotiation and litigation, CWCAM, the special servicer, offered to sell the loan to Windsor in a proposed transaction for $5,288,000, subject to credit committee approval. The credit committee, however, rejected the transaction, and Defendants filed a foreclosure action against Windsor in 2017. Defendants thereafter held an online auction to sell the loan. A Windsor representative participated in the auction. After the auction, Defendants sold the loan to a third party, WM Capital Partners 66 LLC (“WM Capital”), and Windsor ultimately paid $7.4 million to WM Capital in full satisfaction of the loan. In its action seeking relief based upon quasi-contractual theories of promissory estoppel and unjust enrichment, Windsor alleged that but for the credit committee’s arbitrary rejection of the proposed transaction, Windsor would have purchased the note and loan nearly a year earlier for over $2,112,000 less than it paid to WM Capital. The Superior Court ultimately held that Windsor failed to state claims for promissory estoppel and unjust enrichment, and that the claims were barred because Windsor’s representative had agreed to a general release as part of an auction bidding process. Finding no reversible error, the Delaware Supreme Court affirmed dismissal. View "Windsor I, LLC v. CWCapital Asset Mgmt, LLC" on Justia Law

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Mohamed Aljabban appeals from an adverse judgment after a bench trial in the lawsuit that he and his wife, Jacqueline Carrasco, filed against defendants Fontana Indoor Swap Meet, Inc. (FISM), Jonathan Shapiro and Victor Ramirez. Aljabban and Carrasco operated a beauty salon on the premises of an indoor swap meet managed by FISM and its president, Shapiro. Aljabban contended: (1) the trial court erred in concluding that he and Carrasco were not permitted to remove a sink/cabinet unit, a water heater and some decorative molding when vacating the premises of the beauty salon; (2) FISM and Shapiro improperly withheld $680.00 of the security deposit to cover expenses it incurred to repair damage to the premises; (3) the trial court should have found that FISM and Shapiro breached the parties’ agreement under which Aljabban and Carrasco occupied the premises because they wrongfully failed to renew it; and (4) he did not receive a fair trial because of alleged misbehavior during trial by Shapiro. After review, the Court of Appeal determined only one of Aljabban’s contentions had merit: FISM was not entitled to withhold $680.00 of the security deposit to cover the expense of repairing damage to the premises, as the parties did not specifically agree that the security deposit could be used to cover repairs. Accordingly, the Court reversed in part the trial court's judgment with respect to this contention, but affirmed in all other respects. The matter was remanded for further proceedings on the issue of attorney fees and costs. View "Aljabban v. Fontana Indoor Swap Meet, Inc." on Justia Law

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The issue this case presented for the Mississippi Supreme Court was whether Jackson Ramelli Waste LLC was entitled to additional compensation “over and above [the] amounts agreed upon by the parties, invoiced by [Jackson Ramelli], and accepted as payment by [Jackson Ramelli], in the absence of a contract, but under a quantum meruit theory[.]” From October 2009 to September 2015, Waste Management contracted with the City of Jackson to collect solid waste from all residential units and light commercial entities in the city. The contract required Waste Management to subcontract 35.802 percent of the work to minority-owned or women-owned businesses and to adhere to the requirements of the City’s equal business opportunity (EBO) plan. Waste Management entered a subcontract with Jackson Ramelli and Metro Waste Disposal to perform certain portions of the waste-collection services and to fulfill this obligation. Jackson Ramelli’s payment rate would be adjusted annually in accordance with any increase or decrease in the Consumer Price Index (CPI). Both parties were prohibited from the assignment of the subcontract without the other party’s consent. Unbeknownst to Waste Management, after entering into the subcontract with Waste Management, Jackson Ramelli subcontracted all of its work to RKC LLC, a Louisiana company that was neither a minority- nor women-owned company. It is undisputed that RKC performed all of the residential waste-collection services that Waste Management hired Jackson Ramelli to perform. The subcontract between Waste Management and Jackson Ramelli expired at the end of September 2010; the parties continued services on a month-to-month basis. In January 2012, Jackson Ramelli purchased the right to assume Metro Waste’s routes related to the contract. As a result, Jackson Ramelli increased the amount it invoiced Waste Management to reflect the additional houses it acquired through its acquisition of Metro Waste’s routes. While Jackson Ramelli submitted monthly invoices to Waste Management for services rendered, it did not invoice Waste Management for any CPI adjustments or for any further houses serviced. But during this time, Jackson Ramelli raised the possibility of additional compensation to reflect (1) the changes in the CPI and (2) the increase in the number of houses Jackson Ramelli claimed to be servicing. Jackson Ramelli filed a complaint against Waste Management in July 2015 claiming Waste Management’s: (1) nonpayment of CPI increases between 2012 and 2015; (2) nonpayment of waste-collection services for additional houses between 2012 and 2015; and (3) nonpayment of work performed in March 2015. Because the record established that the additional work claimed by Jackson Ramelli was contemplated by its contract and because Jackson Ramelli did not have a reasonable expectation of additional compensation, the Supreme Court reversed its quantum meruit claim, and final judgment was entered in favor of Waste Management. View "Waste Management of Mississippi Inc. v. Jackson Ramelli Waste LLC" on Justia Law

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Dzierzawski was vice-president of Forsyth's vineyard company. When Forsythe declined an opportunity to produce a custom wine for the Meijer grocery chain, Dzierzawski formed Vinifera and began doing business with Meijer, while continuing to work for Forsythe. Forsythe eventually became aware of the scope of Dzierzawski’s operation and filed suit.The district court granted summary judgment in favor of Dzierzawski on the corporate opportunity theory. A jury found Dzierzawski liable on the unfair competition contention but rejected unjust enrichment, fiduciary duty, and breach of the duty of good faith theories. The jury left the damages section on the verdict form blank. The court polled the jurors, who unanimously responded that it was their intention to award no damages. Forsyth did not object to the verdict at that time but later moved for a new trial. The court denied that motion but granted Forsyth’s request for disgorgement as alternative relief, and ordered Dzierzawski to pay $285,731, reasoning that “the jury’s verdict is merely advisory on the issue of equitable disgorgement, as it is an equitable remedy to be imposed by the Court.” The Seventh Circuit affirmed. The evidence does not support that Dzierzawski stole a corporate opportunity from his company and there was no reversible error in the disgorgement order. View "Continental Vineyard LLC v. Dzierzawski" on Justia Law

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Two doctors and a former pharmaceutical sales representative formed a partnership, JKJ, to sue several pharmaceutical companies as a qui tam relator under the False Claims Act with respect to the marketing of the anti-clotting drug, Plavix. When one of them left the partnership and was replaced, that change amounted to forming a new partnership. The defendant’s moved to dismiss because the Act’s first-to-file bar stops a new “person” from “interven[ing] or bring[ing] a related action based on the [same] facts,” 31 U.S.C. 3730(b)(5).The Third Circuit vacated the dismissal, after noting responses by the Delaware Supreme Court to certified questions indicating that the two partnerships were distinct. The verb “intervene” means to inject oneself between two existing parties, as under Federal Rule of Civil Procedure 24. The new partnership did not do that but instead came in as the relator. The district court ruling was based mainly on a dictum from a Supreme Court case on a very different issue and never considered the issue here. The Act’s plain text bars only intervention or bringing a related suit. View "In Re: Plavix Marketing, Sales Practices and Products Liability Litigation" on Justia Law