Justia Business Law Opinion Summaries
WickFire, LLC v. Woodruff
WickFire filed suit against Media, alleging a violation of section 43(a) of the Lanham Act, tortious interference with existing contracts, tortious interference with prospective economic relationships, and civil conspiracy. In this appeal, Media challenged the jury verdict in favor of WickFire.The Fifth Circuit concluded that the district court had jurisdiction over WickFire's Lanham Act claim and thus pendent jurisdiction over each of WickFire's state law tort claims. On the merits, the court concluded that any argument that WickFire offered insufficient evidence regarding the section 43(a) claim is moot where the jury found that there were no damages and thus WickFire cannot be a prevailing party under the Act. The court also concluded that WickFire's tortious interference with contractual relations claim failed as a matter of law. However, because the evidence of damages is insufficient as a matter of law, the court reversed the judgment as to the tortious interference with prospective business relations claim. Because each of WickFire's underlying claims failed, the court reversed the judgment as to the civil conspiracy claim. Finally, the court concluded that TriMax is not entitled to judgment as a matter of law on WickFire's justification defense. Accordingly, the court denied TriMax's motion to dismiss; reversed as to WickFire's tortious interference claims and its civil conspiracy claim; and affirmed in all other respects. The court remanded for further proceedings. View "WickFire, LLC v. Woodruff" on Justia Law
Express Scripts, Inc. v. Bracket Holdings Corp
United BioSource LLC (“UBC”), a subsidiary of Express Scripts, Inc. (“ESI”) agreed to sell three of UBC’s pharmaceutical research and development businesses to Bracket Holding Corp. (“Bracket”), a holding company formed by Parthenon Capital Partners, LP (“Parthenon”). In August 2013, Bracket and UBC signed a $187 million securities purchase agreement (“SPA”). Except for claims involving deliberate fraud and certain fundamental representations, Bracket agreed to limit its remedy for breach of the SPA’s representations and warranties to an insurance policy (the “R&W Policy”) purchased to cover these claims. After closing, Bracket claimed that ESI and UBC engaged in fraud by inflating the revenue and working capital of one of the divisions of the acquired companies. In an arbitration proceeding Bracket recovered $13 million under the R&W Policy for breach of the SPA’s representations and warranties. Bracket then sued ESI and UBC for fraud in Delaware superior court. A jury awarded Bracket over $82 million. The parties appealed the jury verdict and judgment. After review, the Delaware Supreme Court found one issue dispositive: the SPA provided unambiguously that, except in the case of deliberate fraud and certain fundamental representations, Bracket could only recover up to the R&W Policy’s limits for breaches of the representations and warranties. Over ESI’s objection, however, the superior court instructed the jury that it could find for Bracket not only for deliberate fraud, but also for recklessness. "A deliberate state of mind is a different kettle of fish than a reckless one." The Supreme Court determined the superior court’s erroneous jury instruction was not harmless: it violated a key provision of the SPA and how the parties allocated risk in the transaction. The Supreme Court therefore reversed the superior court’s judgment and remanded for a new trial. View "Express Scripts, Inc. v. Bracket Holdings Corp" on Justia Law
The Ohio State University v. Redbubble, Inc.
Redbubble operates a global online marketplace. Around 600,000 independent artists, not employed by Redbubble, upload images onto Redbubble’s interface. Consumers scroll through those images and order customized items. Once a consumer places an order, Redbubble notifies the artist and arranges the manufacturing and shipping of the product with independent third parties. Redbubble never takes title to any product shown on its website and does not design, manufacture, or handle these products. The shipped packages bear Redbubble's logo. Redbubble handles customer service, including returns. Redbubble markets goods listed on its website as Redbubble products; for instance, it provides instructions on how to care for “Redbubble garments.” Customers often receive goods from Redbubble’s marketplace in Redbubble packaging.Some of Redbubble’s artists uploaded trademark-infringing images that appeared on Redbubble’s website; consumers paid Redbubble to receive products bearing images trademarked by OSU. Redbubble’s user agreement states that trademark holders, and not Redbubble, bear the burden of monitoring and redressing trademark violations. Redbubble did not remove the offending products from its website. OSU sued, alleging trademark infringement, counterfeiting, and unfair competition under the Lanham Act, and Ohio’s right-of-publicity law. The district court granted Redbubble summary judgment. The Sixth Circuit reversed. Redbubble’s marketplace involves creating Redbubble products and garments that would not have existed but for Redbubble’s enterprise. The district court erred by entering summary judgment under an overly narrow reading of the Lanham Act. View "The Ohio State University v. Redbubble, Inc." on Justia Law
Smith v. General Motors LLC
In 2005-2006, GM changed the dashboard used for GMT900 model cars from a multi-piece design to a single-piece design, which made the dashboard prone to cracking in two places. Plaintiffs, from 25 states, alleged that GMT900 vehicles produced in 2007-2014 contained a faulty, dangerous dashboard and that GM knew of the defective dashboards before GTM900 vehicles hit the market. The complaint contained no allegation that any of the plaintiffs have been hurt by the allegedly defective dashboards. The complaint, filed on behalf of a nationwide class, alleged fraudulent concealment, unjust enrichment, and violations of state consumer protection statutes and the Magnusson-Moss Warranty Act.The Sixth Circuit affirmed the dismissal of the case. At worst, Plaintiffs suffered only cosmetic damage and a potential reduced resale value from owning cars with cracked dashboards. Although the plaintiffs claimed that routine testing, customer complaints, and increased warranty claims alerted GM to the defective dashboards and accompanying danger, that is not enough to survive a motion to dismiss without specifics about how and when GM learned about the defect and its hazards, and concealed the allegedly dangerous defect from consumers. Even accepting that GM produced defective vehicles, under the common legal principles of the several states, the plaintiffs must show that GM had sufficient knowledge of the harmful defect to render its sales fraudulent. View "Smith v. General Motors LLC" on Justia Law
Steves and Sons, Inc. v. JELD-WEN, Inc.
JELD-WEN's customers, Steves and Sons, filed suit challenging JELD-WEN's acquisition of a competitor. After a jury found that the merger violated the Clayton Antitrust Act and that Steves and Sons was entitled to treble damages, the district court granted Steves and Sons' request to unwind the merger and plans to hold an auction for the merged assets after this appeal. The district court then held another trial before a different jury on JELD-WEN's countersuit against Steves and Sons for trade secret misappropriation, allowing three individuals to intervene in the case. The jury ruled in favor of Steves and Sons on most of JELD-WEN's claims and entered judgment for the intervenors.The Fourth Circuit concluded that the district court properly declined to grant JELD-WEN judgment as a matter of law on whether Steves and Sons demonstrated antitrust injury; the district court acted within its discretion by excluding certain evidence from the antitrust trial and by ordering JELD-WEN to unwind the merger, rejecting JELD-WEN's laches defense in the process; the district court properly found that equitable relief under the Clayton Act was appropriate because the merger created a significant threat that Steves and Sons will go out of business in 2021; and JELD-WEN has not shown that the district court's jury instructions in the trade-secrets trial were improper.However, the court vacated the jury's award of future lost profits to Steves and Sons in the antitrust trial because the issue is not ripe. The court explained that the injury on which the future lost profits award was premised cannot occur until September 2021, and the Clayton Act requires a plaintiff seeking damages—as opposed to equitable relief—to "show actual injury." The court also vacated the district court's entry of judgment for the intervenors in the trade-secrets case because JELD-WEN brought no claims against them. View "Steves and Sons, Inc. v. JELD-WEN, Inc." on Justia Law
Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH
In 2010, Appellants Meso Scale Diagnostics, LLC and Meso Scale Technologies, LLC (collectively “Meso”) filed suit in Delaware against Appellee entities Roche Diagnostics GmbH, Roche Diagnostics Corp., Roche Holding Ltd., IGEN LS LLC, Lilli Acquisition Corp., IGEN International, Inc., and Bioveris Corp. (collectively “Roche”), all of which were affiliates or subsidiaries of the F. Hoffmann -- La Roche, Ltd. family of pharmaceutical and diagnostics companies. Meso alleged two counts of breach of contract. Roche prevailed at trial, and the Delaware Supreme Court affirmed the judgment in 2014. Then in 2019, Meso brought a new action asking the court to reopen the case, vacate the judgment entered after trial, and order a new trial. Meso alleged that the Vice Chancellor who decided its case four years earlier had an undisclosed disabling conflict, namely, that Roche’s counsel had been simultaneously representing him in an unrelated federal suit challenging the constitutionality of Delaware’s law providing for confidential business arbitration in the Court of Chancery (“Section 349”). In that federal litigation, which ended in 2014, the Chancellor and Vice Chancellors of the Court of Chancery, as the parties responsible for implementing the challenged statute, were nominal defendants. The Court of Chancery denied relief and dismissed the action. Meso appealed. Finding no reversible error, the Delaware Supreme Court affirmed dismissal. View "Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH" on Justia Law
Xereas v. Heiss
Plaintiff, who holds the RIOT ACT trademark, entered into a business agreement with defendants to open the Riot Act Comedy Club in downtown D.C. Plaintiff subsequently filed suit to recover damages from defendants' alleged breaches of fiduciary duty and of the operating agreement of the limited liability company the parties formed to start the club. Defendants counterclaimed.The DC Circuit reversed the district court's dismissal of plaintiff's breach of fiduciary duty claim, holding that plaintiff adequately alleged that he and defendants were members of a member-managed LLC and that under D.C. law that suffices to plead the existence of a fiduciary duty. In this case, the district court improperly found it "clear" that a "special confidential relationship transcending an ordinary business transaction did not take place" between the parties. The court explained that the district court failed to consider relevant District of Columbia and Maryland law, the statute's clear imposition of duties of loyalty and care typical of a fiduciary, or the nature of the parties' relationship—as partners and co-managers in a business venture, not merely arms-length parties to a standard commercial transaction. However, plaintiff failed to show that the court should reverse any of the district court's evidentiary rulings. The court affirmed the district court's decision to deny defendants judgment as a matter of law on plaintiff's breach of contract claim and to deny defendants' fee petition. The court remanded for further proceedings. View "Xereas v. Heiss" on Justia Law
Woo v. Spackman
In this appeal concerning the scope and reach of 28 U.S.C. 1963 - a statute permitting the registration of certain judgment in a federal district court - the First Circuit affirmed the district court's judgment concluding that the New York state court judgment proffered by Plaintiff did not come within the statutory sweep and that no other cognizable basis for federal subject-matter jurisdiction had been shown, holding that the district court did not err.Plaintiff sought recognition of a Korean judgment in New York. A New York court recognized the Korean judgment and entered a judgment in Plaintiff's favor for more than $13 million. When the New York judgment went unpaid, Plaintiff filed the judgment in the United States District Court for the District of Massachusetts. Defendants moved to quash, arguing that the district court lacked subject-matter jurisdiction because 28 U.S.C. 1963 only authorized district courts to register judgments of other federal courts and not state court judgments. The district court agreed and dismissed the matter for want of subject-matter jurisdiction. The First Circuit affirmed, holding (1) section 1963 does not authorize federal courts to register state-court judgments; and (2) there were no independent grounds for federal jurisdiction here. View "Woo v. Spackman" on Justia Law
Primarque Products Co. v. Williams West & Witt’s Products Co.
In this appeal and cross-appeal stemming from litigation that followed the termination of an almost forty-year business relationship between a company that manufactured and supplied soup base products (Manufacturer) and a company that distributed them (Distributor), the First Circuit reversed in part and vacated in part Distributor's appeal and affirmed in Manufacturer's cross appeal, holding that the district court erred in part.Following a trial, the jury awarded Distributor $255,000 in damages for its state law breach of contract and tortious interference with business relationships claims against Manufacturer. The district court granted summary judgment to Manufacturer on Distributor's claim against it under Mass. Gen. Laws ch. 93A and to Manufacturer on its counterclaim for breach of contract, for which the court awarded Manufacturer $97,843 in damages. The First Circuit held that the district court (1) erred in granting summary judgment on the Chapter 93A claim; (2) erred in striking as duplicative the jury's damages award on Distributor's breach of contract claim; (3) erred in denying Distributor prejudgment interest on the damages award it received on the tortious interference with business relations claim; and (4) erred in denying Distributor's offset request. View "Primarque Products Co. v. Williams West & Witt's Products Co." on Justia Law
Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC
Through several corporations, members of the Boersen family have farmed in Michigan for several generations. After 2016's poor crop, their corporate entities could not cover their debts. One creditor, Helena, obtained a nearly 15-million-dollar judgment against the Boersen entities and family members who ran them. Much of the farm equipment was repossessed and, unable to obtain financing, the Boersens discontinued farming until 1999, when family members Stacy and Nick formed new entities, secured financing to lease the land and remaining equipment, and resumed farming. Because the original defendants could not pay their debt, Helena sued Stacy and Nick and their new companies.The Sixth Circuit affirmed summary judgment in favor of the defendants. The leases do not transfer the debtors’ assets; none of the involved entities owes any money to Helena. Stacy and Nick’s use of the family farm’s production history to obtain crop insurance does not constitute a “transfer of assets.” Neither Stacy nor Nick was an owner, manager, or shareholder of any of the Boersen entities covered by the judgment; no Boersen legacy owner or guarantor serves as an officer of or is otherwise employed by, either new company. No original Boersen defendant received anything of value from the new companies other than fair market value payments on leases. Nor was either new company used to commit a wrong against Helena. View "Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC" on Justia Law