Justia Business Law Opinion Summaries

Kendell Seafood Imports, Inc. and Mark Foods, LLC are both fish importers. Kendell alleged that Mark Foods tortiously interfered with its agreement with Chilean Sea Bass, Inc. (CSB), a fish distributor. According to Kendell, it had arranged with CSB to purchase the distributor’s entire catch for several years, including 2021, and that CSB agreed to roll over an outstanding 2020 balance into the 2021 price. Kendell further claimed that Mark Foods was aware of this agreement and attempted to solicit business from CSB during the same period, thereby interfering with Kendell’s relationship and causing it harm.After Kendell initially sued Mark Foods for tortious interference in the United States District Court for the District of Rhode Island, Mark Foods moved to dismiss the complaint. In response, Kendell filed an amended complaint with similar facts but with additional details about the agreement with CSB. The district court treated the amended complaint as operative and, after considering substantive arguments from both parties, granted Mark Foods’ motion to dismiss with prejudice. The district court found that Kendell’s allegations did not plausibly support three essential elements of tortious interference: the defendant’s knowledge of the contract, intentional interference, and resulting damages.The United States Court of Appeals for the First Circuit reviewed the case on appeal. It held that the district court properly applied the pending motion to dismiss to the amended complaint, as the amendments did not affect the relevant arguments. Applying Rhode Island law, the First Circuit concluded that Kendell had not sufficiently pleaded that Mark Foods knew about the specific agreement with CSB. Because this element was not plausibly alleged, the court affirmed the district court’s order dismissing the case with prejudice. View "Kendell Seafood Imports, Inc. v. Mark Foods, LLC" on Justia Law

Eric Smith was the majority owner, chairman, and CEO of Consulting Services Support Corporation (CSSC), which wholly owned CSSC Brokerage Services, Inc. (CSSC-BD), a registered FINRA broker-dealer. Although CSSC-BD was registered, Smith did not personally register with FINRA, claiming an exemption so long as he was not involved in managing the securities business. However, between 2010 and 2015, Smith actively managed CSSC-BD, including overseeing debt offerings, preparing offering documents with false statements, and soliciting investments totaling $130,000 from four investors. A FINRA examination and investor complaints uncovered these activities.Following an investigation, FINRA’s Department of Enforcement filed a complaint against Smith for violations of federal securities laws and FINRA rules. After a disciplinary proceeding, FINRA found against Smith and imposed sanctions, including $130,000 in restitution and a bar from associating with any FINRA member. Smith appealed to the United States Securities and Exchange Commission (SEC), which affirmed FINRA’s findings and sanctions. Smith then sought review in the United States Court of Appeals for the Sixth Circuit, arguing that FINRA lacked jurisdiction over him and that the proceedings violated his rights under Article III and the Seventh Amendment.The United States Court of Appeals for the Sixth Circuit held that FINRA had statutory authority to discipline Smith because, despite not registering, he controlled a FINRA member firm and was therefore a “person associated with a member” under the relevant statute. The court found Smith’s constitutional claims barred because he failed to raise them before the SEC as required by statute, and none of the exceptions to the exhaustion requirement applied. The petition for review was denied. View "Smith v. Securities and Exchange Commission" on Justia Law

Minority shareholders of an Argentine oil and gas company, previously privatized in 1993, became involved in litigation after the Argentine government expropriated a majority stake in the company in 2012. The government’s acquisition of shares was conducted without making a public tender offer to minority shareholders, a process that was explicitly required by the company’s bylaws to protect such shareholders in the event of a takeover. The plaintiffs, consisting of Spanish entities and a New York hedge fund, had acquired significant stakes in the company, and after the expropriation, they claimed that they suffered substantial financial losses due to the government’s failure to comply with the tender offer requirement.The plaintiffs sued in the United States District Court for the Southern District of New York, asserting breach of contract and promissory estoppel claims under Argentine law against both the Argentine Republic and the company. After extensive litigation, the district court found in favor of the plaintiffs on their breach of contract claims against the Argentine Republic, awarding over $16 billion in damages, but granted summary judgment to the company, finding it had no obligation to enforce the tender offer provision. The court also dismissed the promissory estoppel claims.On appeal, the United States Court of Appeals for the Second Circuit held that the plaintiffs' breach of contract damages claims against the Argentine Republic and the company were not cognizable under Argentine law, reasoning that the bylaws did not create enforceable bilateral obligations between shareholders and that Argentine public law governing expropriation precluded such claims. The court affirmed the dismissal of the promissory estoppel claims and judgment in favor of the company, but reversed the judgment against the Argentine Republic, remanding for further proceedings consistent with its opinion. View "Petersen Energía v. Argentine Republic" on Justia Law

Two development companies owned land in Johnson County, Texas, within the extraterritorial jurisdiction of the City of Mansfield but outside the city’s corporate boundaries. To develop this land, the companies needed access to retail water services, which, under state law, could be provided only by the Johnson County Special Utility District (“JCSUD”) because it held the exclusive certificate of convenience and necessity (CCN) for the area. However, a contract between JCSUD and the City of Mansfield required JCSUD to secure Mansfield’s written consent, which could be withheld at the City’s discretion, before providing water services within the city’s extraterritorial jurisdiction. The developers’ efforts to obtain water service were unsuccessful, as Mansfield demanded annexation and additional fees, ultimately refusing to formalize an agreement.After unsuccessful negotiations and attempts to compel service through the Texas Public Utility Commission, the developers sued the City of Mansfield in the United States District Court for the Northern District of Texas. They alleged violations of the Sherman Act and brought state-law claims. The district court, adopting a magistrate judge’s recommendation, dismissed the antitrust claims with prejudice, holding that Mansfield was entitled to state-action antitrust immunity under Texas law, and declined to exercise supplemental jurisdiction over the state-law claims.The United States Court of Appeals for the Fifth Circuit reviewed whether Mansfield was entitled to state-action immunity. The Fifth Circuit held that, although Texas law authorizes monopolies for water utilities through CCNs, it does not clearly articulate or authorize the City of Mansfield to act anticompetitively concerning the area in question, since the CCN belonged to JCSUD. Therefore, the court reversed the district court’s grant of state-action immunity and remanded the case for further proceedings. View "Megatel v. Mansfield" on Justia Law

The Securities and Exchange Commission initiated an enforcement action against Timothy Barton and related entities, alleging violations of federal securities laws. The district court subsequently appointed a receiver to manage properties allegedly acquired with funds from Barton’s fraudulent activities. Certain properties and entities, including TC Hall, LLC (owner of the Hall Street property), Goldmark Hospitality LLC (owner of Amerigold Suites), BM318, LLC, and JMJ Development, LLC, were placed within the receivership because they had received or benefitted from assets traceable to the alleged misconduct.The United States District Court for the Northern District of Texas oversaw the receivership and issued several orders approving property sales and settlements. Barton previously appealed the appointment of the receivership and its scope. The United States Court of Appeals for the Fifth Circuit, in an earlier decision (SEC v. Barton, 79 F.4th 573 (5th Cir. 2023)), vacated and remanded for reconsideration; on remand, the district court narrowed and reappointed the receivership. The Fifth Circuit later affirmed the new receivership order in SEC v. Barton, 135 F.4th 206 (5th Cir. 2025). While appeals were pending, the district court issued orders related to the sale of Amerigold Suites, settlements involving JMJ and BM318, and the sale of the Hall Street property.In the current appeal, the United States Court of Appeals for the Fifth Circuit concluded it lacked appellate jurisdiction to review the cancelled Amerigold Suites sale and the two settlement agreements, dismissing those portions of the appeal. The court found jurisdiction to review the approval of the Hall Street property sale and affirmed the district court’s order, holding that the district court did not abuse its discretion in approving the sale, which complied with statutory requirements and was in the best interest of the receivership estate. View "Securities and Exchange Commission v. Barton" on Justia Law

Shari Redstone exercised control over National Amusements Incorporated, which in turn held a majority of the voting shares of Paramount Global, giving her control over Paramount. In 2023 and 2024, media outlets reported on efforts to sell National Amusements and possible bids for Paramount itself. Some reports suggested that Redstone, acting as Paramount’s controller, blocked a sale of the entire company in favor of selling only National Amusements’ controlling stake. The Employees’ Retirement System of Rhode Island, a Paramount shareholder, made a demand under Section 220 of the Delaware General Corporation Law to inspect Paramount’s books and records for evidence of potential corporate wrongdoing, specifically the possible usurpation of a corporate opportunity and breaches of fiduciary duty by Redstone and National Amusements. Paramount rejected the demand, leading Rhode Island to file a complaint to compel inspection.A trial was held before a Magistrate in Chancery, who declined to consider evidence arising after the demand and found that Rhode Island lacked a credible basis to infer wrongdoing, recommending judgment for Paramount. Rhode Island took exceptions to this report. The Vice Chancellor, conducting a de novo review, considered both pre- and post-demand evidence, including confidentially sourced news reports, and found Rhode Island had established a credible basis to infer possible wrongdoing. The court ordered the matter remanded for a hearing on the scope of production and later certified two questions for interlocutory appeal.The Supreme Court of the State of Delaware affirmed the Vice Chancellor’s decision. It held that, while generally stockholders are limited to pre-demand evidence in Section 220 actions, courts may, in exceptional circumstances and at their discretion, consider post-demand evidence that is material and not prejudicial. The court also determined that reliable hearsay from reputable news outlets can be considered in the credible basis inquiry. The judgment was affirmed and remanded for further proceedings. View "Paramount Global v. State of Rhode Island Office of the General Treasurer" on Justia Law

The plaintiffs, who were long-time friends of the defendants, invested significant sums in a biopharmaceutical company controlled by the defendants. The defendants did not disclose that the company was in serious financial distress, under a substantial obligation to a lender, and prohibited from incurring additional debt. The investment was structured through promissory notes, which included false warranties regarding the company’s financial status and claimed the formation of a new entity that never materialized. Instead of funding a new venture, the defendants used the investment to pay off existing company debt. Less than two years later, the company declared bankruptcy, making the notes essentially worthless.The plaintiffs brought claims under federal and Massachusetts securities laws, the Massachusetts consumer protection statute, and for common law fraud and negligent misrepresentation in the United States District Court for the District of Massachusetts. The defendants moved to dismiss the action, relying on a forum selection clause in the promissory notes requiring litigation in Delaware courts. The district court granted the motion and dismissed the case without prejudice, concluding that the clause applied to the plaintiffs’ claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the dismissal de novo. The plaintiffs argued that their claims did not “arise out of” the notes and that the forum selection clause was unenforceable as contrary to Massachusetts public policy. The First Circuit rejected both arguments, holding that the claims arose from the notes and that the plaintiffs did not meet the heavy burden required to invalidate the clause on public policy grounds. The First Circuit affirmed the district court’s dismissal without prejudice, leaving the plaintiffs free to pursue their claims in the contractually designated Delaware courts. View "Manzo v. Wohlstadter" on Justia Law

Gregory Parzych served as president of ZipBy USA, LLC, a parking technology company, after previously founding and selling a similar company, TCS. While employed by ZipBy, Parzych entered into several agreements restricting conflicts of interest and disclosure of confidential information. In 2020, Parzych learned that TCS might be for sale. He advised ZipBy’s owner against pursuing the acquisition, then secretly attempted to purchase TCS for himself via a shell company, using financial information he had obtained as a ZipBy executive. ZipBy discovered his actions, terminated his employment, and, along with affiliates, sued Parzych for breach of fiduciary duty, breach of contract, misappropriation of trade secrets, trademark infringement, and false designation.After a jury trial in the United States District Court for the District of Massachusetts, the jury found for ZipBy on all claims, awarding compensatory and exemplary damages. The district court later granted judgment as a matter of law for Parzych on the trade secret claims, striking the exemplary damages but upholding the other verdicts and damages. The court also entered a permanent injunction barring Parzych from acquiring TCS and awarded ZipBy a portion of its attorneys’ fees. Parzych appealed, contesting evidentiary rulings, denial of a trial continuance, and the fee award, while ZipBy cross-appealed the judgment on the trade secret claims.The United States Court of Appeals for the First Circuit affirmed the district court’s judgment. It held that the district court did not abuse its discretion in admitting ZipBy’s expert lost-profits testimony, excluding late-disclosed evidence, or denying a trial continuance due to counsel’s COVID-19 infection. The appellate court agreed with the district court’s judgment as a matter of law against ZipBy’s trade secret claims, finding insufficient evidence that Parzych’s actions constituted trade secret misappropriation. Finally, the fee award was affirmed as a reasonable enforcement of the IP Agreement’s fee-shifting provision. View "ZipBy USA LLC v. Parzych" on Justia Law

Three nonprofit organizations filed a nationwide class action against the United States, alleging that the federal judiciary overcharged the public for access to court records through the PACER system. They claimed the government used PACER fees not only to fund the system itself but also for unrelated expenses, contrary to the statutory limits set by the E-Government Act. The plaintiffs sought refunds for allegedly excessive fees collected between 2010 and 2018.The United States District Court for the District of Columbia oversaw extensive litigation, including class certification and an interlocutory appeal. The United States Court of Appeals for the Federal Circuit previously affirmed that the district court had subject matter jurisdiction under the Little Tucker Act and that the government had used PACER fees for unauthorized expenses. After remand, the parties reached a settlement totaling $125 million. The district court approved the settlement, finding it fair, reasonable, and adequate under Rule 23 of the Federal Rules of Civil Procedure. The court also approved attorneys’ fees, administrative costs, and incentive awards to the class representatives. An objector, Eric Isaacson, challenged the district court’s jurisdiction, the fairness of the settlement, the attorneys’ fees, and the incentive awards.On appeal, the United States Court of Appeals for the Federal Circuit affirmed the district court’s judgment. The court held that the district court properly exercised jurisdiction under the Little Tucker Act because each PACER transaction constituted a separate claim, none exceeding the $10,000 jurisdictional limit. The appellate court found no abuse of discretion in approving the class settlement, the attorneys’ fees, or the incentive awards. The court also held that incentive awards are not categorically prohibited and are permissible if reasonable, joining the majority of federal circuits on this issue. The district court’s judgment was affirmed. View "NVLSP v. US " on Justia Law

A former high-level employee left her position at a company after receiving incentive equity agreements that included non-compete, non-solicitation, and confidentiality provisions. She subsequently joined a competitor. The company alleged that she breached those provisions by working for the competitor and that, in the short time since her move, at least five important clients had also moved to the competitor, an unusual loss rate for the business. The employee’s role at her former employer was not confined to a single region, and she was involved in high-level strategic decisions affecting company operations nationwide. The restrictive covenants at issue included an 18-month, nationwide non-compete and were supported by incentive units that would vest over time or upon sale of the company.After the company filed suit, the Court of Chancery of the State of Delaware denied a temporary restraining order but expedited proceedings. The defendants moved to dismiss. The company amended its complaint with more detailed allegations. The Court of Chancery granted the motion to dismiss, holding that the non-compete was unenforceable due to its breadth and the minimal value of the consideration provided, and that the allegations of breach of the non-solicitation and confidentiality provisions were conclusory. It also dismissed related tortious interference claims.On appeal, the Supreme Court of the State of Delaware reviewed the dismissal de novo. The Supreme Court held that the Court of Chancery improperly drew inferences against the employer at the pleading stage and failed to credit factual allegations supporting the claims. The Supreme Court found it was reasonably conceivable that the non-compete, non-solicitation, and confidentiality provisions could be enforceable, and that the complaint sufficiently alleged breaches. The Supreme Court reversed and remanded for further proceedings, limiting its holding to the adequacy of the pleadings and expressing no view on ultimate enforceability. View "Payscale Inc. v. Norman" on Justia Law