Justia Business Law Opinion Summaries

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Six Dimensions filed suit against a former employee and a competitor, Perficient, alleging claims for breach of contracts, unfair competition, and misappropriation of trade secrets.The Fifth Circuit reversed the part of the judgment holding that the employee breached an employment contract and owed damages to Six Dimensions. The court held that the district court abused its discretion in denying the employee an opportunity to extend the arguments she had already made about the 2014 Agreement and have them apply to the 2015 Agreement. However, the court held that the district court did not reversibly err in interpreting California law and concluding that California's strict antipathy towards restraint of trade of any kind in California Business and Professions Code section 16600 voids the nonsolicitation provision here. The court also found no error in the district court's refusal to apply California's Unfair Competition Law, and held that the district court did not abuse its discretion in refusing to find the jury's verdict contrary to the weight of the great evidence as to the misappropriation claim. Therefore, the court otherwise affirmed the district court's judgment. View "Six Dimensions, Inc. v. Perficient, Inc." on Justia Law

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After ATOM filed for bankruptcy, plaintiff and ATOM initiated an adversarial proceeding against Petroleum Analyzer, alleging claims of misappropriation of trade secrets, unfair competition, and civil theft. On the bankruptcy court's recommendation, the district court withdrew the reference to the bankruptcy court and asserted jurisdiction under 28 U.S.C. 1334, and entered partial summary judgment for plaintiff and ATOM. Four years later, the district court held a bench trial and entered judgment in favor of Petroleum Analyzer and later awarded attorneys' fees to Petroleum Analyzer.The Fifth Circuit held that the district court did not clearly err by finding that Petroleum Analyzer did not use plaintiff's trade secrets in Petroleum Analyzer's sulfur-detecting excimer lamp called a MultiTek. Furthermore, the district court did not ignore the "law of the case" doctrine. The court also held that the district court did not err by awarding Petroleum Analyzer attorneys' fees under the Texas Theft Liability Act. The court remanded to allow the district court to make the initial determination and award of appellate attorneys' fees to Petroleum Analyzer. View "ATOM Instrument Corp. v. Petroleum Analyzer Co., LP" on Justia Law

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In May 2018, appellants Green Mountain Fireworks, LLC and its owner Matthew Lavigne, began selling fireworks from a retail store in Colchester, Vermont. As described in their complaint, the “intended purpose” for the store was “to sell retail fireworks to consumers.” In relation to the retail store, appellants obtained a license from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) as a “Type 53 - Dealer of Explosives.” They also got a building permit and a certificate of occupancy from the Town Zoning Administrator. These zoning permits were the only two permit applications appellants submitted to the Town. The issue this appeal presented for the Vermont Supreme Court's review centered on whether 20 V.S.A. 3132(a)(1) authorized municipalities to grant permits for the general retail sale of fireworks to consumers who do not hold valid permits to display those fireworks. Appellants appealed the superior court's dismissal of two actions: (1) their appeal of the Town of Colchester selectboard’s denial of their application for a permit to sell fireworks pursuant to 20 V.S.A. 3132(a)(1); and (2) their request for a declaratory judgment that, even without that distinct permit, they had “all possible and applicable permits” and were permitted under section 3132 to sell fireworks in the manner described in their complaint. The Supreme Court concluded that section 3132(a)(1) required a distinct permit for the sale of fireworks, but did not authorize a permit for the general retail sale of fireworks along the lines proposed by appellants. The only fireworks sales authorized by statute were sales to the holder of a display permit for the purpose of the permitted display. Therefore, the Supreme Court affirmed the trial court's judgments. View "Green Mountain Fireworks, LLC, et al. v. Town of Colchester et al." on Justia Law

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Granny Purps grows and provides medical marijuana to its 20,000 members, in compliance with state laws governing the production and distribution of marijuana for medical purposes. Santa Cruz County’s ordinance prohibits any medical cannabis operation from cultivating more than 99 plants; Granny’s dispensary was growing thousands of marijuana plants. The sheriff’s office went to the dispensary in June 2015, seized about 1,800 plants, and issued a notice of ordinance violation. Several months later, officers again went to the dispensary and took about 400 more marijuana plants. Granny sued, alleging conversion, trespass, and inverse condemnation and sought an order requiring the county to return the seized cannabis plants, The trial court dismissed.The court of appeal reversed. A government entity does not have to return seized property if the property itself is illegal but the Santa Cruz ordinance ultimately regulates land use within the county; it does not (nor could it) render illegal a substance that is legal under state law. View "Granny Purps, Inc. v. County of Santa Cruz" on Justia Law

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Defendants-tenants John and Rosa Castro (the tenants) leased a residential property from plaintiff-landlord Fred Graylee. The landlord brought an unlawful detainer action against the tenants, alleging they owed him $27,100 in unpaid rent. The day of trial, the parties entered into a stipulated judgment in which the tenants agreed to vacate the property by a certain date and time. If they failed to do so, the landlord would be entitled to enter a $28,970 judgment against them. The tenants missed their move-out deadline by a few hours and the landlord filed a motion seeking entry of judgment. The trial court granted the motion and entered a $28,970 judgment against the tenants under the terms of the stipulation. The tenants appealed, arguing the judgment constituted an unenforceable penalty because it bore no reasonable relationship to the range of actual damages the parties could have anticipated would flow from a breach of the stipulation. To this, the Court of Appeal agreed, and reversed and remanded this matter for further proceedings. View "Graylee v. Castro" on Justia Law

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The Supreme Judicial Court affirmed the judgment of the superior court in favor of Tucker Cianchette and CBF Associates, LLC (collectively, Tucker) and against Peggy Cianchette, Eric Cianchette, PET, LLC and Cianchette Family, LLC (collectively, Peggy and Eric) on Tucker's claims against Peggy and Eric and on Peggy and Eric's counterclaim against Tucker, holding that the superior court did not err in clarifying that post-judgment interest began to run on March 15, 2018.In this second appeal before the Supreme Court, the parties sought resolution of two legal issues regarding post-judgment interest: (1) whether the trial court had jurisdiction to issue an order on post-judgment interest, and (2) on what date prejudgment interest ceased and post-judgment interest began to accrue. The Supreme Judicial Court held (1) the trial court had authority to act and did not abuse its discretion in clarifying its judgments to resolve the parties' uncertainty surrounding post-judgment interest; and (2) post-judgment interest did not begin to run until the court entered the final judgment on March 15, 2018. View "Cianchette v. Cianchette" on Justia Law

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The Supreme Court held that tortious interference with at-will contracts requires independent wrongfulness and that a rule of reason applies to determine the validity of a settlement provision requiring Forward Pharma to terminate its agreement with Ixchel Pharma, LLC under Cal. Bus. & Prof. Code 16600.Ixchel, a biotechnology company, entered into an agreement with Forward jointly to develop a drug for the treatment of Friedreich's ataxia. Forward later withdrew from the agreement, which was allowed by the agreement's terms. Pursuant to a settlement with Biogen, Inc., another biotechnology company, Forward agreed to terminate its contract with Ixchel. Ixchel sued Biogen in federal court for tortiously interfering with Ixchel's contractual and prospective economic relationship with Forward in violation of section 16600. On appeal, the federal appeals court certified two questions to the Supreme Court. The Supreme Court held (1) tortious interference with at-will contracts requires independent wrongfulness, and therefore, Ixchel must allege that Biogen interfered with its at-will contract through wrongful means; and (2) the validity of the settlement provision at issue must be evaluated based on a rule of reason. View "Ixchel Pharma, LLC v. Biogen, Inc." on Justia Law

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The Court of Chancery granted in part and denied in part the motion for partial summary judgment filed by Applied Energetics, Inc. (the Company) on its claims against George Farley, the Company's former director and principal executive officer, and AnneMarieCo, LLC, holding that Farley lacked authority to issue himself twenty-five million shares and grant himself an annual salary of $150,000 per year but that the Company was not entitled to summary judgment on Farley's counterclaims.The Company asserted several claims based on Farley's actions. Farley filed counterclaims against the Company for breach of contract, for unjust enrichment, and to validate his actions under section 205 of the Delaware General Corporation Law. The Company moved for partial summary judgment. The Court of Chancery granted the motion in part and denied it in part, holding (1) because Farley was the Company's sole remaining director when he issued himself stock and granted himself compensation, Farley's actions were invalid; (2) because the Company had the corporate power to issue shares and compensate its officers and directors Farley's acts could be validated under section 205; (3) the Court had the power to validate Farley's decision to grant himself a salary; and (4) evidence could support Farley's claim for compensation under a theory of quantum merit. View "Applied Energetics, Inc. v. Farley" on Justia Law

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Two counties sued Sherwin-Williams in state court, seeking abatement of the public nuisance caused by lead-based paint. Anticipating suits by other counties, Sherwin-Williams sued in federal court under 42 U.S.C. 1983. Sherwin-Williams claimed that “[i]t is likely that the fee agreement between [Delaware County] and the outside trial lawyers [is] or will be substantively similar to an agreement struck by the same attorneys and Lehigh County to pursue what appears to be identical litigation” and that “the Count[y] ha[s] effectively and impermissibly delegated [its] exercise of police power to the private trial attorneys” by vesting the prosecutorial function in someone who has a financial interest in using the government’s police power to hold a defendant liable. The complaint pleaded a First Amendment violation, citing the company’s membership in trade associations, Sherwin-Williams’ purported petitioning of federal, state, and local governments, and its commercial speech. The complaint also argued that the public nuisance theory would seek to impose liability “that is grossly disproportionate,” arbitrary, retroactive, vague, and “after an unexplainable, prejudicial, and extraordinarily long delay, in violation of the Due Process Clause.”The Third Circuit affirmed the dismissal of the suit. Sherwin-Williams failed to plead an injury in fact or a ripe case or controversy because the alleged harms hinged on the County actually filing suit. View "Sherwin Williams Co. v. County of Delaware" on Justia Law

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Dr. Dominick Lembo employed Arlene Marchese in his dental practice as his office manager, and Karen Wright, a dental hygienist. Sometime before December 2011, Marchese and Wright unlawfully took possession of numerous checks totaling several hundred thousand dollars, forged Lembo’s indorsement on the checks, and deposited the proceeds from the forged checks into their personal accounts at TD Bank. In February 2015, Lembo filed a complaint against TD Bank, alleging that “TD Bank knew or should have known that Marchese and/or Wright were not permitted to negotiate checks made payable to [Lembo].” The complaint also alleged that by permitting them to negotiate checks with forged indorsements, TD Bank “aided and abetted Marchese and Wright in their fraudulent scheme and conduct.” The complaint did not assert that Lembo had a banking relationship with TD Bank. And Lembo did not file an action for conversion under the Uniform Commercial Code (UCC) within the three-year limitations period. Had Lembo done so, TD Bank would have been strictly liable for depositing or cashing those checks, subject to the defenses in N.J.S.A. 12A:3-405 or N.J.S.A. 12A:3-406. The trial court granted the Bank's motion to dismiss, finding that the UCC governed Lembo's remedies against the Bank, and “common law negligence is not such a remedy” in the absence of a “special relationship” between Lembo and the bank. The court also rejected Lembo’s argument that the Uniform Fiduciaries Law (UFL) provided an affirmative cause of action against the bank. The Appellate Division reversed, reading into the complaint the basis for an affirmative UFL claim, and remanded to allow Lembo to amend the complaint to assert such a claim. The New Jersey Supreme Court concluded the Appellate Division misconstrued the purpose of the UFL, finding the Legislature enacted the UFL not to create an affirmative cause of action against a bank but to provide a defense when the bank is sued for failing to take notice of and action on the breach of a fiduciary’s obligation. "The UFL confers a limited immunity on a bank, unless the bank acts in bad faith or has actual knowledge of a fiduciary breach." The Supreme Court found no affirmative cause of action arose under the statute; whether a UFL claim was adequately pled was therefore moot. Recognizing the predominant role the UCC plays in assigning liability for the handling of checks, the Supreme Court also found Lembo had no “special relationship” with the bank to sustain the common law causes of action. View "Lembo v. Marchese" on Justia Law