Justia Business Law Opinion Summaries
Glaxo Group Limited, et al. v. DRIT LP
Glaxo Group Limited and Human Genome Sciences, Inc. (collectively, “GSK”) owned patents covering Benlysta, a lupus treatment drug. GSK filed a patent application with the United States Patent and Trademark Office (“PTO”) claiming a method for treating lupus. Biogen Idec MA Inc. (“Biogen”) held an issued patent covering a similar method for treating lupus. When parties dispute who was first to discover an invention, the PTO declares an interference. Rather than suffer the delay and uncertainty of an interference proceeding, the parties agreed to settle their differences through a patent license and settlement agreement (“Agreement”). GSK ended up with its issued patent. The PTO cancelled Biogen’s patent, and Biogen received upfront and milestone payments and ongoing royalties for Benlysta sales. Under the Agreement GSK agreed to make royalty payments to Biogen until the expiration of the last “Valid Claim” of certain patents, including the lupus treatment patent. The Agreement defined a Valid Claim as an unexpired patent claim that has not, among other things, been “disclaimed” by GSK. GSK paid Biogen royalties on Benlysta sales. After Biogen assigned the Agreement to DRIT LP - an entity that purchased intellectual property royalty streams - GSK filed a statutory disclaimer that disclaimed the patent and all its claims. GSK notified DRIT that there were no longer any Valid Claims under the Agreement and stopped paying royalties on Benlysta sales. DRIT sued GSK in the Superior Court for breach of contract and breach of the implied covenant of good faith and fair dealing for failing to pay royalties under the Agreement. The court dismissed DRIT’s breach of contract claim but allowed the implied covenant claim to go to a jury trial. The jury found for DRIT, and the court awarded damages. On appeal, GSK argued the superior court should have granted it judgment as a matter of law on the implied covenant claim. On cross-appeal, DRIT claimed that, if the Court reversed the jury verdict on the implied covenant claim, it should reverse the superior court’s ruling dismissing the breach of contract claim. The Delaware Supreme Court found the superior court properly dismissed DRIT’s breach of contract claim, but should have granted GSK judgment as a matter of law on the implied covenant claim. Thus, the superior court's judgment was reversed. View "Glaxo Group Limited, et al. v. DRIT LP" on Justia Law
Lund v. Swanson, et al.
James Lund appealed the grant of summary judgment entered in favor of Leland Swanson and Open Road Trucking, LLC. Lund had been an adverse party to Swanson and Open Road in a series of lawsuits, dating back to 2018. Trial in one of the lawsuits was scheduled to begin December 3, 2019. On the day before trial, Lund, Swanson, Open Road, and their respective counsel met to discuss settling the lawsuits between them. Swanson and Open Road were represented by the same attorneys. After the meeting, Lund’s attorney, Sean Foss, contacted the district court to inform it that the parties had resolved the matter scheduled for trial the following day, and asked the court to “take the trial off the calendar.” Attorney Foss then sent an email to counsel for Swanson and Open Road, with the subject line “settlement,” containing his notes regarding the settlement terms. On December 10, 2019, Swanson and Open Road’s attorney, Randolph Stefanson, emailed Foss a proposed settlement agreement, which included the same terms as Foss’s email. Two days later, Foss emailed Swanson and Open Road’s attorneys a revised version of the proposed settlement agreement. That same day, the North Dakota Supreme Court issued an opinion on one of the parties' pending cases which was on appeal at the time. In that case, the Supreme Court concluded a “judgment was not satisfied as between Swanson and Lund, and Open Road was entitled to take an assignment of the judgment from Swanson to enforce Swanson’s right of contribution from Lund for one-half of the judgment amount.” The Court reversed the district court’s order directing entry of satisfaction of the judgment, and remanded for entry of a charging order against Lund's transferrable interests in specified limited liability companies. Ultimately, no written settlement agreement was signed by the parties. In January 2020, Lund initiated this action against Swanson and Open Road to enforce the alleged settlement agreement. The parties filed cross-motions for summary judgment. After a hearing, the district court denied Lund’s motion and granted summary judgment in favor of Swanson and Open Road, concluding the statute of frauds barred enforcement of the settlement agreement. Lund appealed. Finding no reversible error, the North Dakota Supreme Court affirmed the district court's judgment. View "Lund v. Swanson, et al." on Justia Law
Southern Furniture Leasing v. YRC
Southern Furniture Leasing, Inc. filed a putative class action against a group of less-than-truckload (“LTL”) freight carriers, all predecessors to or current subsidiaries of YRC, Inc. Southern Furniture alleged YRC “carried out a widespread and systematic practice of overcharging its customers by intentionally using inflated shipment weights when determining shipment prices.” YRC asked the Tenth Circuit to affirm on the alternate ground that Southern Furniture failed to allege Article III standing. The district court rejected YRC’s standing argument, and the Tenth Circuit agreed with its analysis. The district court granted YRC’s motion to dismiss on the grounds that Southern Furniture had only 180 days to contest the alleged overcharges under 49 U.S.C. 13710(a)(3)(B). To this, the Tenth Circuit concurred and affirmed. View "Southern Furniture Leasing v. YRC" on Justia Law
Chen v. Paypal, Inc.
California residents who sell goods on eBay, an online marketplace, as part of their online businesses and use PayPal to receive payments for many of their sales filed a putative class action. The suit challenged provisions of the user agreements, including PayPal’s policy of placing a temporary hold on funds in a user’s account when PayPal believes there is a high level of risk associated with a transaction or a user’s account; PayPal’s retention of interest on users’ funds that are placed in pooled accounts when users maintain a balance in their PayPal accounts; PayPal’s buyer’s protection policy, which allows buyers, under certain circumstances, to dispute transactions up to 180 days after the date of purchase; and a claim that PayPal aids and abets buyers in defrauding sellers by the manner in which it resolves disputes. The court of appeal affirmed the dismissal of the claims against PayPal, without leave to amend. The challenged practices are not unconscionable. The degree of procedural unconscionability that arises from the fact that a contract is one of adhesion is ‘minimal.” View "Chen v. Paypal, Inc." on Justia Law
Holistic Supplements, LLC v. Stark
Plaintiff alleged that defendant transferred his ownership in the LLC, a medical marijuana dispensary, to her in April 2015. Unbeknownst to plaintiff and despite that alleged transfer, defendant later converted the LLC from a limited liability company to a corporation and then a mutual benefit corporation in his name called Holistic Supplements Inc. (the corporation) and changed the business address. Defendant also claimed rights to a Business Tax Registration Certificate, a city-issued tax document that enabled the dispensary to operate. Plaintiff and the LLC filed suit against defendant and the corporation for conversion, unfair competition, and declaratory relief, among other claims.The Court of Appeal concluded that nonsuit was erroneous on plaintiff's individual claims because she has standing to sue for conversion of her personal property membership interest in the LLC; nonsuit was erroneous on claims against defendant in his individual capacity, since he can be held liable for personally participating in the tortious conduct of the corporation; nonsuit was erroneous on the unfair competition law claims because the court rejected the only two grounds for nonsuit defendants raise on appeal; and the Business Tax Registration Certificate is property subject to conversion, so the trial court prejudicially erred when it instructed the jury it was not. The court also rejected defendant's contention that plaintiff lacked standing because she failed to file a petition for reinstatement of the LLC pursuant to Government Code section 12261. The court explained that plaintiff and the LLC permissibly sought reinstatement as part of this lawsuit, so they did not need to file a separate petition in the superior court. Accordingly, the court reversed and remanded. View "Holistic Supplements, LLC v. Stark" on Justia Law
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