Justia Business Law Opinion Summaries

Three principals of an investment firm received approximately $141.5 million in distributive shares from the firm for the 2016 and 2017 tax years. The firm, organized as a Delaware limited partnership, did not include these distributive shares as self-employment income, asserting that the principals were "limited partners" within the meaning of the Internal Revenue Code, which exempts limited partners’ distributive shares from self-employment tax. The Internal Revenue Service audited the firm and determined that, because the principals worked full-time and exercised managerial control over the partnership, they were not limited partners. The IRS issued adjustments to increase the firm’s taxable income for both years, including the distributive shares as self-employment income.The firm challenged the IRS adjustments in the United States Tax Court, arguing both that the principals qualified for the limited partner exemption and that the Tax Court lacked jurisdiction to decide the adjustments under the TEFRA partnership-level procedures. The Tax Court found that the principals, despite their formal status as limited partners, functionally exercised managerial control and therefore did not qualify for the exemption. The Tax Court also held it had jurisdiction to review the adjustments as partnership-level items under TEFRA and upheld the IRS’s adjustments.On appeal, the United States Court of Appeals for the Second Circuit affirmed the Tax Court’s decisions. The court held that the Tax Court properly exercised jurisdiction and that the principals were not “limited partners” within the meaning of § 1402(a)(13) because they actively managed the partnership’s business. The distributive shares received by the principals were therefore subject to self-employment tax. The Tax Court’s orders and decisions were affirmed. View "Soroban Capital Partners LP v. Commissioner of Internal Revenue" on Justia Law

A Delaware corporation specializing in data analytics software was acquired in December 2023 through a merger valued at $48.25 per share, totaling approximately $4.4 billion. The merger was orchestrated by funds affiliated with Insight Venture Management, LLC and Clearlake Capital Group, L.P. Prior to the merger, the company’s controlling stockholder held significant voting power through legacy Class B shares. The board formed a special committee to oversee the sales process, which involved multiple bidders and was influenced by disappointing financial results and market conditions. Ultimately, the merger was approved by a significant majority of stockholders, with the controlling stockholder not receiving any special consideration.The plaintiffs, representing a putative class, initiated litigation in the Delaware Court of Chancery, alleging breaches of fiduciary duty against the board, the controlling stockholder, the chief legal officer, and a claim for aiding and abetting against Insight Venture Management, LLC. The defendants moved to dismiss under Rule 12(b)(6), arguing that the merger was approved by a fully informed, uncoerced stockholder vote, invoking the protections of Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015).The Court of Chancery granted the motion to dismiss. It held that none of the alleged disclosure deficiencies raised by the plaintiffs were material, and the stockholder vote was both fully informed and uncoerced. Under Corwin, this vote cleansed the transaction, and the business judgment rule insulated the merger from attacks other than waste, which was not claimed. As a result, all counts—including breach of fiduciary duty and aiding and abetting—were dismissed. View "Wisconsin Laborers' Pension Fund v. Joshi" on Justia Law

Snap, a Delaware corporation, sued Vertical Raise, an Idaho LLC, and an individual, alleging tortious interference, misappropriation of trade secrets, and unfair competition. Liability was resolved in Snap’s favor on summary judgment. At trial, the jury awarded Snap $750,000 in unjust enrichment damages and $250,000 in punitive damages. However, the district court mistakenly entered judgment for $800,000, not $1,000,000. Snap sought an additur or new trial and discretionary costs. The district court granted both: costs were awarded, and the damages were increased via additur, but without giving Vertical Raise the option to accept or reject it.Vertical Raise appealed to the Supreme Court of Idaho, which in the prior case, Snap! Mobile, Inc. v. Vertical Raise, LLC, 173 Idaho 499, 544 P.3d 714 (2024), affirmed the costs award, reversed the grant of additur or new trial, and remanded with instructions to reinstate the jury verdict and enter an amended judgment accordingly. After remand, Vertical Raise’s surety bond paid the judgment and costs, but not post-judgment interest. Disputes arose over whether interest accrued from the dates of the original and amended judgments, or only from the post-remand judgment.In the present appeal, the Supreme Court of Idaho reviewed whether the district court erred by awarding post-judgment interest starting from the entry dates of the original and amended judgments. The Court held that post-judgment interest accrues from the dates when the original and amended judgments were entered, not from the date of the post-remand judgment, even if later judgments modify the amount owed. The Third Amended Judgment was affirmed. The Court also awarded Snap its attorney fees under Idaho Code section 12-121, finding Vertical Raise’s appeal unreasonable and without foundation. Costs on appeal were awarded as a matter of course. View "SNAP! MOBILE v. VERTICAL RAISE" on Justia Law

Two condominium owners installed glass artwork on the terrace wall of their unit in a residential complex governed by a nonprofit association. The association, citing its declaration of restrictive covenants, fined one of the owners for this installation and required removal of the artwork, asserting that prior written consent was required for such exterior modifications. The owners paid the fine under protest and removed the artwork, but then brought suit seeking injunctive and declaratory relief, arguing that the association had waived enforcement through long-term inaction and that they had relied on this acquiescence to their detriment.The County Court of Harrison County granted summary judgment to the association, ruling that the declaration was unambiguous, the association was entitled to enforce it, and that waiver did not apply. The court adopted the association’s proposed findings and did not address pending discovery requests or motions to compel. The owners appealed to the Harrison County Chancery Court, arguing that summary judgment was improper prior to completion of discovery, especially given their equitable claims of waiver, estoppel, and laches.The Supreme Court of Mississippi reviewed the case on interlocutory appeal. The court held that the doctrines of waiver, estoppel, and laches are fact-intensive and generally require full discovery before summary judgment can be considered. The court affirmed the chancery court’s reversal of summary judgment, finding that the county court abused its discretion by granting summary judgment prematurely and foreclosing discovery necessary to resolve factual issues related to the owners’ equitable claims. The case was remanded for further proceedings in the county court. View "Sea Breeze Condominiums & Resort Owners' Association, Inc. v. Lyons" on Justia Law

A former employee, after suspecting his previous employer of facilitating a foreign bribery scheme, provided his suspicions and supporting documents to a journalist. The journalist informed the Department of Justice (DOJ) and published articles exposing the alleged misconduct. Following a tip from a DOJ attorney, the employee was advised to submit his information to the Securities and Exchange Commission (SEC) to potentially qualify for a whistleblower award. However, the employee waited over a year before submitting his information directly to the SEC, by which time the SEC had already begun its investigation and independently developed its case using information from the DOJ and public sources.The SEC’s Claims Review Staff (CRS) issued a preliminary determination denying the whistleblower award, reasoning that the employee’s submission neither led the SEC to open its investigation nor significantly contributed to the enforcement action, as the information was already known. The CRS also found that the employee did not meet the regulatory timing requirements for information submitted to other agencies. The employee contested this, relying on a prior SEC order that had granted an award in a similar situation, but the Commission had since disavowed that reasoning and clarified that both original source status and causation are required for an award.The United States Court of Appeals for the District of Columbia Circuit reviewed the SEC’s final order. The court held that, under the plain language of the Dodd-Frank Act and implementing regulations, a whistleblower must submit original information directly to the SEC, and that information must lead to a successful enforcement action. Because the employee’s belated submission did not assist the SEC’s investigation or enforcement efforts, he was not entitled to an award. The court denied the petition for review. View "Doe v. SEC" on Justia Law

Two college football players began their collegiate athletic careers at junior colleges in 2019 before transferring to NCAA Division I institutions. Both completed the maximum five years of collegiate eligibility allowed by the NCAA’s “Five-Year Rule,” which includes time spent at any full-time collegiate institution, including junior colleges. In 2025, each player sought a preliminary injunction in the United States District Court for the District of Nevada, arguing that the NCAA’s five-year limitation on eligibility was anticompetitive under Section 1 of the Sherman Act and seeking to play an additional, sixth year of college football. The players also challenged the NCAA’s “Rule of Restitution,” which allows the NCAA to penalize member schools that permit ineligible athletes to compete pursuant to court orders later vacated or reversed.Both district courts granted the plaintiffs’ requests for preliminary injunctions, permitting them to play in the 2025 college football season. After the season concluded, the NCAA appealed the injunctions to the United States Court of Appeals for the Ninth Circuit. The plaintiffs moved to dismiss the appeals as moot because the 2025 season was over and their collegiate eligibility had ended.The United States Court of Appeals for the Ninth Circuit held that the appeals were moot, as the injunctions had expired and the players’ collegiate careers were over, making it impossible to provide any effective relief to the NCAA. The court further determined that the NCAA did not meet its burden to show that the case fit the “capable of repetition yet evading review” exception to mootness, because there was no reasonable expectation that these plaintiffs would again be subject to the same NCAA actions. Accordingly, the Ninth Circuit dismissed the NCAA’s appeals as moot and vacated the district courts’ orders. View "BRAHAM V. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION" on Justia Law

A college baseball player challenged the National Collegiate Athletic Association’s rule that limits athletes to four seasons of eligibility within five years of their initial college enrollment. After exhausting his five years of eligibility through a series of transfers between NCAA and non-NCAA institutions, including one school that closed during his attendance, the athlete sought a waiver to compete in an additional season at a Division I university. The request for a waiver was denied by both the conference and the NCAA.The athlete filed suit in the United States District Court for the District of Nevada, alleging that the Five-Year Rule violated Section 1 of the Sherman Act and sought a preliminary injunction to allow him to play during the pending litigation. The district court granted the injunction, concluding that the NCAA’s rule was a commercial restraint subject to antitrust scrutiny and that the athlete was likely to succeed on the merits of his claim.On appeal, the United States Court of Appeals for the Ninth Circuit held that, consistent with recent decisions from other circuits and in light of NCAA v. Alston, the Five-Year Rule is indeed a commercial restraint subject to review under the Sherman Act. However, the Ninth Circuit determined that the district court abused its discretion by finding a likelihood of success on the merits. The appellate court found the evidentiary support for the athlete’s antitrust claim to be insufficient, particularly regarding the definition of the relevant market and the demonstration of substantial anticompetitive effects. As a result, the Ninth Circuit vacated the preliminary injunction, holding that the athlete failed to meet his burden to show a likelihood of success on the merits of his antitrust claim. View "BLYTHE V. NATIONAL COLLEGIATE ATHLETIC ASSOCIATION" on Justia Law

Lucid USA, Inc., which manufactures and sells electric vehicles, sought to sell its vehicles directly to consumers in Texas through its own retail studio. However, Texas law prohibits motor vehicle manufacturers and their affiliates from directly selling vehicles to consumers, instead requiring sales to occur through independent franchised dealers. In 2021, after the Texas Department of Motor Vehicles notified Lucid that it could not sell vehicles at its Plano studio due to this prohibition, Lucid filed suit against officials of the Department, alleging that the law violates the Equal Protection and Due Process Clauses of the Fourteenth Amendment. The Texas Automobile Dealers Association intervened as a defendant.The United States District Court for the Western District of Texas reviewed cross-motions for summary judgment and ruled against Lucid. The district court concluded that the Texas prohibition was rationally related to a legitimate governmental interest and, therefore, did not violate either the Equal Protection or Due Process Clauses. Lucid appealed this decision.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s summary judgment ruling de novo. Relying on its previous decisions in Ford Motor Co. v. Texas Department of Transportation, International Truck & Engine Corp. v. Bray, and Tesla, Inc. v. Louisiana Automobile Dealers Association, the Fifth Circuit found those precedents controlling. The court held that the Texas law survives rational basis review because the legislature has a legitimate interest in curtailing vertical integration and preventing monopolistic practices in the automobile market. The court rejected Lucid’s arguments that its as-applied challenge was distinct from the facial challenges previously considered. The court also found that Lucid's substantive due process claim fails for the same reasons. Accordingly, the Fifth Circuit affirmed the district court’s judgment. View "Lucid Group USA v. Johnston" on Justia Law

This case concerns a dispute between two sophisticated energy companies over a merger agreement. In December 2017, Trireme entered into an agreement with Innogy Renewables US, LLC, a subsidiary of a German energy company, to transfer valuable development companies related to wind and solar projects in exchange for an upfront payment and the possibility of future milestone payments. The agreement included provisions restricting Innogy from transferring these assets without Trireme’s consent. After a complex asset swap and corporate restructuring involving Innogy’s parent company and other entities, Trireme alleged that the assets were transferred within the corporate family in violation of the agreement.Previously, Trireme filed a lawsuit—referred to as Trireme I—in the United States District Court for the Southern District of New York, alleging breaches of other sections of the merger agreement but not the section concerning asset transfers. Later, Trireme sought to amend its complaint to add this new breach-of-contract claim. The district court denied the motion to amend, finding that Trireme had not acted diligently to discover the claim and was on notice of the potential breach before filing the initial action. Trireme did not pursue an appeal of this denial but instead filed a new lawsuit asserting the same claim. The district court dismissed the new case on grounds of res judicata.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court’s dismissal. The court held that when a party seeks to assert a claim in a new action after unsuccessfully moving to amend its complaint in a prior action, courts should consider several factors, including whether the denial was on the merits, whether the plaintiff failed to appeal, the timing of the claim, the plaintiff’s diligence, and whether the plaintiff was represented by counsel. Applying these factors, the Second Circuit concluded that res judicata barred Trireme’s new claim and affirmed the judgment. View "Trireme Energy Development v. RWE Renewables" on Justia Law

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