Justia Business Law Opinion Summaries

Plaintiffs, who had donated funds to the Church of Jesus Christ of Latter-day Saints, alleged that the Church and its investment subsidiary, Ensign Peak Advisors, Inc., fraudulently induced donations by concealing the true use and accumulation of donated funds. They claimed that the Church misrepresented that tithing would be used for charitable and religious purposes, when instead large portions were invested and used for commercial ventures, such as the development of the City Creek Mall. A key event in the case was the publication of a whistleblower report in December 2019, which was widely reported in national and local media and described how the Church managed and concealed a large investment portfolio. The Church publicly responded, and three other lawsuits were filed by different donors based on similar allegations.After actions were filed in several federal district courts, the cases were consolidated in the United States District Court for the District of Utah. Plaintiffs brought claims for breach of fiduciary duty, fraud, fraudulent concealment, fraudulent misrepresentation, and unjust enrichment, seeking to represent a nationwide class of post-1997 donors. The district court dismissed the consolidated complaint with prejudice, ruling that the claims were untimely under Utah’s three-year statute of limitations for fraud. The court found that the widespread news coverage of the whistleblower report meant that plaintiffs, exercising reasonable diligence, should have discovered the alleged fraud more than three years before filing suit.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s dismissal. The Tenth Circuit held that the plaintiffs’ claims were time-barred because the whistleblower report and related media coverage provided sufficient public notice to trigger the statute of limitations, and that reasonable diligence would have led to earlier discovery. The court also found no error in the district court’s procedural rulings and denied the request for leave to amend. View "In re: Church of Jesus Christ of Latter-Day Saints" on Justia Law

After purchasing a trucking company through an asset purchase agreement, Jim Daws Trucking, LLC (JDT) alleged that the sellers—James and Lana Daws, Daws, Inc., and other affiliated entities—violated the APA’s noncompete provision by engaging in competing trucking operations. The APA included a $12 million purchase price, with $4.5 million allocated to goodwill, and a five-year noncompete clause barring the sellers from participating in trucking nationwide. After the relationship between Jim Daws and JDT deteriorated, Jim Daws left JDT and communicated with former employees about starting new trucking ventures, allegedly causing JDT to lose significant personnel and drivers.The United States District Court for the District of Nebraska granted a temporary restraining order, then a preliminary injunction, prohibiting Jim Daws and associates from engaging in trucking or advising new trucking companies nationwide, except for operating certain pre-existing businesses. The district court determined that the noncompete provision was valid and enforceable under Nebraska law, that JDT was likely to prevail on its breach of contract claim, and that irreparable harm existed due to loss of goodwill. The district court also ordered Jim Daws to release $500,000 in funds from an account used for JDT’s operations and set a $480,000 bond based on potential lost revenue.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s grant of the preliminary injunction, the order to release funds, and the bond amount. The appellate court affirmed the district court’s decisions, holding that the noncompete provision was reasonable in scope and duration given the sale of goodwill and the nature of the trucking business. The court found no clear error in the district court’s factual findings, no abuse of discretion in ordering the release of funds as injunctive relief, and no abuse of discretion in setting the amount of the bond. View "Jim Daws Trucking, LLC v. Daws, Inc." on Justia Law

Several individuals, including Richard and Jocelyn Markowitz, John and Elizabeth van Merkensteijn, and pension funds they controlled, were found by a jury to have defrauded the Danish tax authority (Skat) by submitting false claims for tax refunds. The defendants conceded before trial that they were never entitled to the refunds under the U.S.-Denmark tax treaty, admitting that they had not owned Danish shares or received dividends subject to Danish withholding tax. However, they argued that they had been misled by a London-based trading partner into believing otherwise and were unaware that the refund claims submitted on their behalf were fraudulent.The United States District Court for the Southern District of New York presided over the case after it was consolidated as part of multidistrict litigation. The defendants unsuccessfully moved to dismiss Skat’s claims, contending that the common law revenue rule barred the suit. The district court held that because the defendants never owned the relevant Danish stocks or paid taxes, Skat’s claims were for commercial fraud rather than enforcement of Danish tax law. After trial, the jury found each defendant liable, and the district court entered judgments totaling over $476 million based on Skat’s gross payments and prejudgment interest.On appeal, the United States Court of Appeals for the Second Circuit reviewed the case. The court held that Skat’s lawsuit was not barred by the revenue rule because it did not seek to enforce foreign tax laws, but rather sought recovery for fraud. The court also found no abuse of discretion in the district court’s exclusion of certain evidence and upheld the sufficiency of evidence supporting judgments against Jocelyn Markowitz and Elizabeth van Merkensteijn under an agency theory. The Second Circuit affirmed the district court’s judgment. View "Skatteforvaltningen v. Markowitz" on Justia Law

Metroplex Communications, Inc., which operates several local news outlets in Illinois, earns revenue by selling advertising space. Meta Platforms, Inc., the owner of Facebook, also sells ads and competes for the same local advertisers. Metroplex, representing a putative class of small businesses that compete with Meta for advertisers, alleged that Meta engaged in unlawful, anticompetitive practices by misrepresenting the reach and effectiveness of its Facebook advertisements, thereby drawing advertisers away from other platforms. The suit is based on claims under the Lanham Act and the Illinois Uniform Deceptive Trade Practices Act, seeking disgorgement of profits Meta allegedly earned through misleading conduct. Although Metroplex had purchased Facebook ads in the past, its lawsuit was brought in its capacity as a competitor, not as an ad purchaser.Meta moved to compel arbitration in the United States District Court for the Southern District of Illinois, arguing that Metroplex’s prior ad purchases subjected it to an arbitration clause in Meta’s Commercial Terms. The district court denied the motion, reasoning that Metroplex’s claims arose from its status as a competitor and not from its own ad purchases or contractual relationship as an ad buyer. The court found the claims to be outside the scope of the arbitration clause.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the scope of the arbitration clause de novo, applying Illinois law. The court held that Metroplex’s unfair competition claims were not sufficiently connected to Metroplex’s ad purchases or Meta’s Commercial Terms to fall within the arbitration agreement. The claims centered on alleged anticompetitive conduct and public misrepresentations, unrelated to Metroplex’s own limited use of Meta’s ad services. The court affirmed the district court’s denial of Meta’s motion to compel arbitration, holding that the arbitration clause did not apply to Metroplex’s claims as a competitor. View "Metroplex Communications, Inc. v Meta Platforms, Inc." on Justia Law

A shareholder of a Delaware corporation with its principal place of business in San Francisco sought to inspect the company’s records under California Corporations Code sections 1600 and 1601. The shareholder, a California resident holding over 11% of the voting shares, requested access to various documents to evaluate his ownership interest and potential value, communicate with other shareholders, and investigate alleged mismanagement. The company denied the request, citing its status as a Delaware corporation and referencing a forum selection clause in its bylaws, which designated the Delaware Court of Chancery as the exclusive forum for internal affairs claims.Following the denial, the shareholder filed a petition for a writ of mandate in the San Francisco County Superior Court to compel inspection. Shortly thereafter, the company initiated a declaratory action in the Delaware Court of Chancery, seeking confirmation that Delaware law governed the shareholder’s inspection rights. The company then moved to stay the California proceedings, arguing the forum selection clause applied and was enforceable. The Superior Court granted the stay, finding that Delaware law governed interpretation of the clause, and that shareholder inspection rights constituted internal affairs under both Delaware and California law. The court further held that enforcing the clause did not violate California public policy, as Delaware law provided meaningful inspection rights.The California Court of Appeal, First Appellate District, Division Two, reviewed the case. It agreed that the forum selection clause covered the inspection claim but held that enforcing the clause would violate California public policy. The court determined that California’s statutory inspection rights are unwaivable and more extensive than those provided under Delaware law. Because the company failed to show that Delaware law offered the same or greater rights, enforcement of the clause would impermissibly limit the shareholder’s statutory protections. The appellate court reversed the stay and remanded with instructions to deny the motion. View "Salamon v. Orchid Global" on Justia Law

A publicly traded Delaware company specializing in plant-based sweeteners became the subject of a merger transaction led by the controlling stockholder of a major suitor, who was also the father of the company’s CEO. Shortly after becoming interim CEO, the son secretly provided his father’s investment firm with confidential and material nonpublic financial information, including a key valuation report. Over the next several months, the CEO continued to share sensitive company data with his father’s entities. The father’s investment firm then accumulated a significant ownership stake in the company and submitted an offer to acquire it. The board responded by forming a Special Committee and attempting to restrict the CEO’s involvement, but after he refused to sign a confidentiality agreement, he was placed on leave. Despite this, he was later given access to confidential board materials and attended meetings regarding the sale process.The Court of Chancery of the State of Delaware reviewed the case after the plaintiff, a stockholder, brought a class action challenging the merger and related conduct. The plaintiff alleged breaches of fiduciary duty, statutory violations under 8 Del. C. § 203, and conversion. The defendants moved to dismiss the complaint under Rule 12(b)(6). The court found that the plaintiff had adequately alleged that the board’s process was grossly negligent, noting the board’s failure to adequately wall off the conflicted CEO and its misleading proxy statement to stockholders. As a result, the statutory safe harbors under 8 Del. C. § 144(a)(1) and (a)(2) were unavailable at the pleading stage.The court held that claims could proceed against the CEO and the executive chairman, who had negotiated a lucrative consulting agreement in connection with the merger. It dismissed the remaining directors, finding them disinterested and not alleged to have acted in bad faith. The court also dismissed the statutory and conversion claims, holding that the challenged stockholder vote satisfied Section 203’s requirements and that deficiencies in the proxy statement did not render the merger invalid. View "Dodiya v. Franklin" on Justia Law

Roy Hill, founder and CEO of Clean Energy Technology Association, Inc. (CETA), solicited investments by representing that CETA owned patented carbon capture technology and promised investors returns from these assets. CETA, however, operated as a Ponzi scheme, using funds from new investors to pay returns to earlier ones. UniBank, a Washington-based commercial bank, provided secured loans to investors who used the funds to buy interests in CETA’s purported assets. UniBank perfected its security interests in the distributions from CETA. After the SEC initiated an enforcement action alleging fraud and sought appointment of a receiver, Albert Black was appointed to marshal CETA’s assets for the benefit of creditors and investors.In parallel litigation, investors sued UniBank in Washington state court for fraud and negligence, but UniBank obtained summary judgment on the basis that it owed no duty to the investors. Meanwhile, in the United States District Court for the Western District of Texas, the receiver recommended a pro rata distribution of the remaining CETA estate funds to all investors and creditors based on net cash losses, aggregating UniBank’s claims with those of other victims rather than honoring UniBank’s asserted secured creditor priority. UniBank objected, arguing its perfected liens should grant it priority recovery. The district court overruled UniBank’s objection, adopted the receiver’s recommendation, and ordered pro rata distributions.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s order. The Fifth Circuit held that the district court failed to provide UniBank with adequate due process because it adopted the receiver’s recommendation with only a cursory analysis and without giving UniBank a meaningful opportunity to present its evidence and arguments, particularly given the extensive record. The court vacated the district court’s order and remanded for further proceedings consistent with due process requirements, without expressing a view on the merits. View "Black v. Unibank" on Justia Law

Cowboy Racing was formed in Wyoming with two members: EFTI, which held a 51% interest and was managed by William Edwards, and Dillinger’s, with a 49% interest, managed by Ryan Clement. The company’s operating agreement appointed Edwards and Clement as the initial managers and set out procedures for removing a manager, including both a for-cause provision and a mechanism for removal with the consent of a majority interest. In February 2025, EFTI, holding the majority interest, removed Clement as a manager citing his unauthorized expenditures. Despite his removal, Clement continued to act as though he had authority on behalf of Cowboy Racing.EFTI and Cowboy Racing then filed suit in the District Court of Laramie County, seeking a declaration that Clement could not act on behalf of the company, enforcement of a purchase right under the operating agreement, damages for breach of a letter of intent, and, relevant here, a preliminary injunction to prevent Clement from representing himself as a manager. Clement objected, arguing that the removal process was procedurally and substantively improper and conflicted with the operating agreement.The Supreme Court of the State of Wyoming reviewed the district court’s grant of the preliminary injunction, applying an abuse of discretion standard. The Court held that while the district court’s order was inartfully phrased as a final determination, it properly found that Cowboy Racing and EFTI were likely to succeed on their claim that Clement was lawfully removed under the operating agreement. The Court concluded the agreement was unambiguous and that EFTI, as the majority member, had the authority to remove Clement with express written consent. The preliminary injunction was affirmed, but the parties retain the right to present further evidence at trial on the merits. View "Dillinger's LLC v. CR-GTD, LLC" on Justia Law

In 2022, Soohyung Kim and his company, through an affiliate, secured a winning bid to purchase TEGNA, a large broadcast television company. The transaction required regulatory approval from the Federal Communications Commission (FCC) within 450 days, as specified in the merger agreement. The proposal drew objections from several organizations and individuals, including labor unions, public interest groups, and a rival bidder. Amid ongoing objections and extended public comment periods, the FCC’s Media Bureau ultimately failed to approve the license transfer within the required timeframe, resulting in the expiration of the merger agreement and obligating Kim’s group to pay significant break-up fees.After the collapse of the merger, the appellants filed suit in the United States District Court for the District of Columbia against both the FCC and various private parties. They alleged constitutional and statutory violations, including Equal Protection claims, Communications Act violations, federal civil rights and conspiracy claims, and D.C.-law tort claims, asserting that the FCC and private parties conspired to prevent the merger based on race. The District Court dismissed all claims. Regarding the FCC, the court found the appellants lacked standing for prospective relief, as they failed to allege a substantial risk of future injury. The court also dismissed the Communications Act claims for lack of jurisdiction. As to the claims against private parties, the court applied Noerr-Pennington immunity and found no plausible basis for the civil rights or tort claims.On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the District Court’s dismissal. The court held that the appellants lacked standing against the FCC due to insufficient allegations of likely future injury. The court further held that the claims against private appellees failed because the complaint did not plausibly allege intentional race discrimination or actionable tortious interference, and thus did not state a claim upon which relief could be granted. View "SGCI Holdings III LLC v. FCC" on Justia Law

A nonprofit organization based in Washington, D.C. published articles critical of a technology company and its CEO, which led to corporations pulling their advertisements from the company’s platform, resulting in significant losses for the company. The technology company filed a lawsuit in the United States District Court for the Northern District of Texas, alleging interference with contract, business disparagement, and interference with prospective economic advantage under Texas law. The nonprofit and its employees sought dismissal for lack of personal jurisdiction, improper venue, and failure to state a claim. After this was denied, and following further discovery showing that affected advertisers were not based in Texas, the nonprofit moved to transfer the case to the Northern District of California, citing venue statutes and a forum-selection clause.The district court denied both the motion to dismiss and the motion to transfer venue, finding that the transfer request was untimely and that the evidence was insufficient to show the Texas venue was improper. It also expressed concerns about the nonprofit’s litigation conduct and considered possible sanctions. The nonprofit then petitioned for a writ of mandamus from the United States Court of Appeals for the Fifth Circuit, seeking to compel a venue transfer.The United States Court of Appeals for the Fifth Circuit granted the petition in part. It held that the district court erred by failing to consider the required eight public- and private-interest factors when analyzing the transfer motion under 28 U.S.C. §§ 1404(a) and 1406(a), instead focusing solely on the timeliness of the motion. The Court ordered the district court to vacate its denial of the transfer motion and conduct a new venue analysis consistent with appellate precedent. The nonprofit’s related interlocutory appeal was held in abeyance pending the outcome of the remand. View "In Re: Media Matters for America" on Justia Law