Justia Business Law Opinion Summaries

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For the 100th Indianapolis 500 race in 2016, organizers engaged Karma, an event-planning company, to host a ticketed party. The party was a disappointment. Poor ticket sales prevented Karma from covering its expenses. Karma sued the racetrack for breach of contract, accusing it of failing to adequately promote the party. Karma sought $817,500 in damages, a figure apparently gleaned from conversations with Speedway officials who speculated that the party would generate $1 million in gross revenue “from ticket and table sales only.” The Speedway filed a counterclaim alleging that Karma failed to place the promised banner advertisement on Maxim’s website or provide marketing support on Maxim’s social-media channels. Karma is a licensee of Maxim’s, a men’s magazine. The district judge rejected Karma’s claim at summary judgment, ruling that the damages theory rested on speculation. A jury found Karma liable on the counterclaim, awarding $75,000 in damages. The Seventh Circuit affirmed. Karma’s evidence of damages was speculative, so its claim failed under Indiana law. The jury could award objectively foreseeable damages; it didn’t need to hear testimony on the subjective expectations of Speedway officials before awarding damages. View "Karma International, LLC v. Indianapolis Motor Speedway, LLC" on Justia Law

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LS, a trucking company, also operates as a broker of construction trucking services. Under a 2009 oral agreement between LS and Cheema, Cheema purchased a Super Dump Truck, with the understanding that LS would purchase the truck’s detachable box from Cheema. As the box owner, LS would give priority to Cheema in dispatching assignments to Cheema as a subhauler. The parties entered a written “Subhauler and Trailer Rental Agreement” under which Cheema would submit to LS completed freight bills for all hauling that he performed for LS; LS would prepare statements showing the amount billed payable to Cheema, less a 7.5 percent brokerage fee and, if the work was performed with a box owned by LS, a 17.5 percent rental fee. Cheema began providing hauling services. Cheema claimed that because LS failed to pay him the $32,835.09 purchase price of the box, it remained his, and LS was not entitled to deduct rental fees from the payments due him. In June 2010, LS began paying Cheema $1,000 a month for nine months, noting on the checks that the payments were repayment of a “loan.” Cheema recovered damages from L.S. for having been underpaid and untimely payments. The court of appeal affirmed but remanded for calculation of prejudgment interest and penalty interest (Civil Code 3287, 3322.1), rejecting LS’s argument that the parties’ oral agreement for Cheema to sell it the box, justifying its deductions for rental, was enforceable. View "Cheema v. L.S. Trucking, Inc." on Justia Law

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Sapa manufactures aluminum extruded profiles, pre-treats the metal and coats it with primer and topcoat. For decades, Sapa supplied “organically coated extruded aluminum profiles” to Marvin, which incorporated these extrusions with other materials to manufacture aluminum-clad windows and doors. This process was permanent, so if an extrusion was defective, it could not be swapped out; the whole window or door had to be replaced. In 2000-2010, Marvin bought about 28 million Sapa extrusions and incorporated them in about 8.5 million windows and doors. Marvin sometimes received complaints that the aluminum parts of its windows and doors would oxidize or corrode. The companies initially worked together to resolve the issues. In the mid-2000s, there was an increase in complaints, mostly from people who lived close to the ocean. In 2010, Marvin sued Sapa, alleging that Sapa had sold it extrusions that failed to meet Marvin’s specifications. In 2013, the companies settled their dispute for a large sum. Throughout the relevant period, Sapa maintained 28 commercial general liability insurance policies through eight carriers. Zurich accepted the defense under a reservation of rights, but the Insurers disclaimed coverage. Sapa sued them, asserting breach of contract. The district court held that Marvin’s claims were not an “occurrence” that triggered coverage. The Third Circuit vacated in part, citing Pennsylvania insurance law: whether a manufacturer may recover from its liability insurers the cost of settling a lawsuit alleging that the manufacturer’s product was defective turns on the language of the specific policies. Nineteen policies, containing an Accident Definition of “occurrence,” do not cover Marvin’s allegations, which are solely for faulty workmanship. Seven policies contain an Expected/Intended Definition that triggers a subjective-intent standard that must be considered on remand. Two policies with an Injurious Exposure Definition also include the Insured’s Intent Clause and require further consideration. View "Sapa Extrusions, Inc. v. Liberty Mutual Insurance Co." on Justia Law

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Parke Bancorp (“Parke”) made a loan to 659 Chestnut LLC (“659 Chestnut”) in 2016 to finance the construction of an office building in Newark, Delaware. 659 Chestnut pleaded a claim in the Superior Court for money damages in the amount of a 1% prepayment penalty it had paid under protest when it paid off the loan. The basis of 659 Chestnut’s claim was that the parties were mutually mistaken as to the prepayment penalty provisions of the relevant loan documents. Parke counterclaimed for money damages in the amount of a 5% prepayment penalty, which it claimed was provided for in the agreement. After a bench trial, the Superior Court agreed with 659 Chestnut and entered judgment in its favor. After review, the Delaware Supreme Court reversed and directed entry of judgment in Parke’s favor on 659 Chestnut’s claim. Although Parke loan officer Timothy Cole negotiated on behalf of Parke and represented to 659 Chestnut during negotiations that there was a no-penalty window, the parties stipulated that: (1) everyone knew that Cole did not have authority to bind Parke to loan terms; and (2) everyone also knew that any terms proposed by Cole required both final documentation and approval by Parke’s loan committee. It was evident to the Supreme Court that 659 Chestnut did not offer clear and convincing evidence that Parke’s loan committee agreed to something other than the terms in the final loan documents. Accordingly, it Directed entry of judgment for Parke. View "Parke Bancorp Inc., et al. v. 659 Chestnut LLC" on Justia Law

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The UAW negotiates collective-bargaining agreements (CBAs) with automotive manufacturers including Fiat Chrysler (FCA). Plaintiffs claim that FCA officials bribed UAW officials to get a more company-friendly CBA. The scandal resulted in federal convictions and indictments. Plaintiffs filed a purported class action, alleging violations of Labor-Management Relations Act (LMRA) section 301, 29 U.S.C. 185. The Second Amended Complaint named individuals formerly employed by both FCA and UAW, alleges that “FCA executives and FCA employees agree[d] ... and willfully paid and delivered, money and things of value to officers and employees of the UAW,” and that plaintiffs have been unable to discover the complete extent of defendants’ collusive conduct because of the secrecy of the ongoing federal criminal investigations. The complaint refers to a “hybrid 301 claim” and raises two counts: violation of the LMRA and breach of the LMRA duty of fair representation, both of which must be properly alleged in a hybrid claim. The Sixth Circuit affirmed the dismissal of the complaint. A section 301 “hybrid claim” requires evidence of the violation of a contract or CBA and the complaint explicitly does not allege that defendants violated any CBA provision. Plaintiffs failed to allege that they exhausted internal union remedies and CBA grievance procedures and did not establish proximate cause between defendants’ alleged malfeasance and plaintiffs’ injuries. View "Swanigan v. Fiat Chrysler Automobiles U.S., LLC" on Justia Law

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The debtor obtained a commercial loan from Bank. The agreement dated March 9, 2015, granted Bank a security interest in substantially all of the debtor’s assets, described in 26 categories of collateral, such as accounts, cash, equipment, instruments, goods, inventory, and all proceeds of any assets. Bank filed a financing statement with the Illinois Secretary of State, to cover “[a]ll Collateral described in First Amended and Restated Security Agreement dated March 9, 2015.” Two years later, the debtor defaulted and filed a voluntary Chapter 7 bankruptcy petition. Bank sought to recover $7.6 million on the loan and filed a declaration that its security interest was properly perfected and senior to the interests of all other claimants. The trustee countered that the security interest was not properly perfected because its financing statement did not independently describe the underlying collateral, but instead incorporated the list of assets by reference, and cited 11 U.S.C. 544(a), which empowers a trustee to avoid interests in the debtor’s property that are unperfected as of the petition date. The bankruptcy court ruled that ”[a] financing statement that fails to contain any description of collateral fails to give the particularized kind of notice” required by UCC Article 9. The trustee sold the assets for $1.9 million and holds the proceeds pending resolution of this dispute. The Seventh Circuit reversed, citing the plain and ordinary meaning of the Illinois UCC statute, and how courts typically treat financing statements. View "First Midwest Bank v. Reinbold" on Justia Law

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Tennessee’s Billboard Act, enacted to comply with the Federal Highway Beautification Act, 23 U.S.C. 131, provides that anyone intending to post a sign along a roadway must apply to the Tennessee Department of Transportation (TDOT) for a permit unless the sign falls within one of the Act’s exceptions. One exception applies to signage “advertising activities conducted on the property on which [the sign is] located.” Thomas owned a billboard on an otherwise vacant lot and posted a sign on it supporting the 2012 U.S. Summer Olympics Team. Tennessee ordered him to remove it because TDOT had denied him a permit and the sign did not qualify for the “on-premises” exception, given that there were no activities on the lot to which the sign could possibly refer. Thomas argued that the Act violated the First Amendment. The Sixth Circuit affirmed that the Act is unconstitutional. The on-premises exception was content-based and subject to strict scrutiny. Whether the Act limits on-premises signs to only certain messages or limits certain messages from on-premises locations, the limitation depends on the content of the message. It does not limit signs from or to locations regardless of the messages. The provision was not severable from the rest of the Act. View "Thomas v. Bright" on Justia Law

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The Supreme Court reversed the decision of the court of appeals affirming the judgment of the district court concluding that a receiver should bring a piercing-the-corporate-veil claim against the shareholders of the corporate entity that the receiver controls, holding that the receiver in this case did not have the power to bring the veil-piercing claims. Aaron Carlson Corporation, one of the creditors of the now-defunct LSI Corporation of America, Inc. (LSI), sought to pierce the LSI corporate veil and recover from Respondents. The district court concluded that the corporation's claims should have been brought by a receiver that had been appointed in a lawsuit that Respondents had filed against LSI. In that suit, the receiver had sold LSI's assets and repaid some of LSI's creditors. The court of appeals affirmed. The Supreme Court reversed, holding (1) the receiver did not have the power to bring veil-piercing claims; and (2) therefore, the corporation's claims against the shareholders did not represent an impermissible collateral attack on the receivership and were not barred by res judicata. View "Aaron Carlson Corp. v. Cohen" on Justia Law

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The Ninth Circuit affirmed the district court's grant of a preliminary injunction in favor of hiQ, a data analytics company, prohibiting LinkedIn, a professional networking website, from denying hiQ access to publicly available LinkedIn member profiles. The panel held that the district court did not abuse its discretion in concluding that hiQ currently has no viable way to remain in business other than using LinkedIn public profile data for its Keeper and Skill Mapper services, and that HiQ therefore has demonstrated a likelihood of irreparable harm absent a preliminary injunction. The panel also held that the district court's determination that the balance of hardships tips sharply in hiQ's favor was not illogical, implausible, or without support in the record; hiQ raised serious questions regarding the merits of its tortious interference with contract claim and LinkedIn's legitimate business purpose defense; hiQ also raised a serious question regarding whether state law causes of action were preempted by the Computer Fraud and Abuse Act; and the district court's conclusion that the public interest favors granting the preliminary injunction was appropriate. View "hiQ Labs, Inc. v. LinkedIn Corp." on Justia Law

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This appeal involved a business dispute between two physicians. William Yost, M.D., owned and operated a pain-management clinic, Doctors Medical Center, LLC (DMC-Slidell). Within six months of opening DMC-Sidell, the Louisiana State Board of Medical Examiners (LSBME) began an investigation of Dr. Yost for illegally operating a pain-management clinic. Yost surrendered his Louisiana license, and closed DMC-Slidell. Yost then opened a new clinic, Doctors Medical Center of Picayune, LLC (DMC-Picayune), and began seeing patients, including his former patients from DMC-Slidell. The Mississippi State Board of Medical Licensure (MSBML) required that all pain-management clinics be registered and issued a certificate; Yost submitted an application for registration to the MSBML, but the certificate was not immediately issued. Mayor Okoloise, M.D. met with Yost to discuss affiliating. As a result of these discussions, Okoloise began practicing medicine with Yost at DMC-Picayune. They formalized their relationship and signed a “Personal Services Contract” in August 2012. At trial, Okoloise testified that, at the time he signed the agreement, he was unaware of the LSBME’s investigation of Yost,and he was unaware that Yost was not properly credentialed in Mississippi. The MSBML was not aware of the Louisiana investigation either and approved Yost’s application practice in pain management, issuing the required certificate. Dr. Okoloise resigned from DMC-Picayune; when he learned of the investigations, Okoloise testified the clinic was being operated illegally, and, thus he believed his contract to have been void at its inception. After Okoloise resigned, several other DMC-Picayune employees unexpectedly resigned. Testimony was presented that Okoloise made plans to open another clinic before he submitted his resignation, Hope Medical Services, LLC. Okoloise offered several members of the DMC-Picayune staff jobs at Hope Medical. The Drug Enforcement Agency (DEA) investigated Yost and DMC-Picayune, the result of which did not end in charges filed. But, on February 13, 2013, the DEA closed DMC-Picayune. That same day, Yost voluntarily surrendered his Mississippi medical license. Notwithstanding these investigations and the closure of his clinics, Yost sued Okoloise and Hope Medical and the DMC-Picayune employees that worked for Hope Medical. The chancellor determined there was sufficient evidence to sustain several claims against Okoloise and Hope Medical: trover/conversion, defamation, breach of contract, breach of duty of good faith, and misappropriation of trade secrets. The chancellor found “[Dr. Yost and DMC-Picayune] should be equitably compensated for the damages they incurred for these claims and losses.” He awarded a judgment against Okoloise and Hope Medical in the amount of $188,622. The Mississippi Supreme Court determined the chancellor’s findings were based on equitable measures, with no legal basis, and were therefore manifestly wrong. "The record evidence was insufficient to show losses attributable to Dr. Okoloise or Hope Medical. The judgment is manifestly wrong, clearly erroneous, and not supported by credible evidence. We reverse and render." View "Okoloise v. Yost" on Justia Law