Justia Business Law Opinion Summaries

Plaintiffs, ParaFi Digital Opportunities LP, Framework Ventures, L.P., and 1kx LP, invested in Curve, a decentralized cryptocurrency trading platform developed by Mikhail Egorov. They allege that Egorov fraudulently induced them to invest by making false promises about their stake in Curve and then canceled their investment, leading to claims of fraud, conversion, and statutory violations. Egorov, who developed Curve while living in Washington and later moved to Switzerland, formed Swiss Stake GmbH to manage Curve. The investment agreements included Swiss law and forum selection clauses.The San Francisco County Superior Court granted Egorov’s motion to quash for lack of personal jurisdiction, finding that Egorov did not purposefully avail himself of California’s benefits. The court noted that the plaintiffs initiated contact and negotiations, and the agreements specified Swiss jurisdiction. The court also denied plaintiffs’ request for jurisdictional discovery, concluding that plaintiffs did not demonstrate that discovery would likely produce evidence establishing jurisdiction.The California Court of Appeal, First Appellate District, Division Two, affirmed the lower court’s decision. The appellate court agreed that Egorov’s contacts with California were insufficient to establish specific jurisdiction, as the plaintiffs had solicited the investment and Egorov had not directed any activities toward California. The court emphasized that the plaintiffs’ unilateral actions could not establish jurisdiction and that the agreements’ Swiss law and forum selection clauses further supported the lack of jurisdiction. The court also upheld the denial of jurisdictional discovery, finding no abuse of discretion by the trial court. View "ParaFi Digital Opportunities v. Egorov" on Justia Law

The case involves a dispute between longtime friends over a failed business venture, resulting in a $20 million judgment against Stanley N. Cohen for negligent misrepresentation. Cohen, a professor at Stanford University, and his colleague discovered a genetic mutation linked to Huntington’s disease and formed a company, Nuredis, with Moshe and Chris Alafi, who invested $20 million. The FDA rejected Nuredis’s request for human clinical trials for the drug HD106 due to its toxicity, leading to the abandonment of the drug. The Alafis sued Cohen and his colleague for failing to disclose the drug’s history of toxicity.The Santa Clara County Superior Court held a bench trial and found in favor of the plaintiffs on the negligent misrepresentation claim against Cohen, awarding $20 million in damages. The court did not address the other causes of action. Cohen appealed, arguing that the claim required an affirmative misrepresentation, that the plaintiffs did not rely on the alleged omission, and that they were aware of the drug’s history. He also contended that the trial court erred by not issuing a statement of decision upon his request.The California Court of Appeal, Sixth Appellate District, found that the trial court’s failure to issue the requested statement of decision was prejudicial error, as it prevented effective appellate review of the trial court’s factual and legal findings. Consequently, the appellate court did not address Cohen’s arguments on the merits and reversed and remanded the case for the trial court to issue the statement of decision. View "Alafi v. Cohen" on Justia Law

The plaintiff, an entrepreneur, helped form a medical business with a surgeon. The business, structured as a limited liability company (LLC), operated surgery centers and distributed profits to its members, including the plaintiff. Over time, the plaintiff became inactive but continued to receive substantial profits. Tensions arose when the plaintiff refused buyout offers from other members. The plaintiff then directed his attorney to send a threatening letter to various stakeholders, alleging illegal activities within the company. This letter caused significant concern among the recipients, leading the company to warn the plaintiff that he would be ejected without compensation if he did not retract his statements within 30 days. The plaintiff refused, and the company subsequently ousted him, valuing his shares at zero.The Superior Court of Los Angeles County rejected all of the plaintiff's claims. The court found that the plaintiff's letter constituted a "terminating event" under the company's operating agreement, justifying his ejection without compensation. The court also ruled that the business judgment rule protected the company's decision to remove the plaintiff, as it was made in the best interests of the company. The plaintiff's claims for breach of fiduciary duty, unfair competition, and breach of the covenant of good faith and fair dealing were all dismissed.The California Court of Appeal, Second Appellate District, Division Eight, affirmed the lower court's judgment. The appellate court held that the business judgment rule applied, as the company's decision to eject the plaintiff was rational and made in good faith. The court also found that the plaintiff's loss of his shares was not an illegal forfeiture, as it was reasonably related to the harm his actions could have caused the company. The court rejected the plaintiff's arguments regarding procedural irregularities and the valuation of his shares, concluding that the company's actions were justified and lawful. View "Tuli v. Specialty Surgical Center of Thousand Oaks, LLC" on Justia Law

The case involves a dispute between Robert and Stephen Samuelian (the Samuelians) and Life Generations Healthcare, LLC (the Company), which they co-founded along with Thomas Olds, Jr. The Samuelians sold a portion of their interest in the Company, and the new operating agreement included a noncompetition provision. The Samuelians later challenged this provision in arbitration, arguing it was unenforceable under California law.The arbitrator found the noncompetition provision invalid per se under California Business and Professions Code section 16600, as it arose from the sale of a business interest. The arbitrator also ruled that the Samuelians did not owe fiduciary duties to the Company because they were members of a manager-managed limited liability company. The Company argued that the arbitrator had legally erred by applying the per se standard instead of the reasonableness standard. The trial court reviewed the arbitrator’s ruling de novo, found no error, and confirmed the award.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The court held that the arbitrator had applied the wrong standard under section 16600. The court concluded that noncompetition agreements arising from the partial sale of a business interest should be evaluated under the reasonableness standard, not the per se standard. The court reasoned that a partial sale leaves the seller with some ongoing connection to the business, which could have procompetitive benefits. Therefore, such restraints require further scrutiny to determine their reasonableness.The court reversed the trial court’s judgment confirming the arbitration award and directed the trial court to enter an order denying the Samuelians’ petition to confirm the award and granting the Company’s motion to vacate the entire award, including the portion awarding attorney fees and costs. View "Samuelian v. Life Generations Healthcare, LLC" on Justia Law

The case involves a dispute over the enforceability of a noncompetition provision in an operating agreement following the partial sale of a business interest. Robert and Stephen Samuelian co-founded Life Generations Healthcare, LLC, and later sold a portion of their interest in the company. The new operating agreement included a noncompetition clause that the Samuelians later challenged in arbitration. The arbitrator found the provision invalid per se under California Business and Professions Code section 16600, which generally voids contracts restraining lawful professions, trades, or businesses.The Superior Court of Orange County reviewed the arbitrator's decision de novo and confirmed the award, agreeing that the noncompetition provision was invalid per se. The court also found that the Samuelians did not owe fiduciary duties to the company as minority members in a manager-managed LLC. The company and individual defendants appealed, arguing that the arbitrator applied the wrong legal standard and that the reasonableness standard should apply instead.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case and concluded that the arbitrator had indeed applied the wrong standard. The court held that noncompetition agreements arising from the partial sale of a business interest should be evaluated under the reasonableness standard, not the per se standard. The court reasoned that partial sales differ significantly from the sale of an entire business interest, as the seller remains an owner and may still have some control over the company. Therefore, such noncompetition provisions must be scrutinized for their procompetitive benefits.The Court of Appeal reversed the trial court's judgment confirming the arbitration award and directed the trial court to enter an order denying the Samuelians' petition to confirm the award and granting the company's motion to vacate the entire award, including the portion awarding attorney fees and costs. View "Samuelian v. Life Generations Healthcare, LLC" on Justia Law

Camden Systems, LLC appealed a judgment favoring 409 North Camden, LLC and its members after the trial court granted summary judgment for the defendants. Camden Systems sought declarations that certain actions taken by 409 North Camden's members, including distributions to members, were invalid due to defective notice of a 2021 meeting and sought the return of distributed funds. 409 North Camden argued that a 2022 meeting ratified the prior actions, curing any defects. The trial court agreed and granted summary judgment for 409 North Camden.The Superior Court of Los Angeles County initially reviewed the case. Camden Systems filed a complaint alleging breach of fiduciary duty, breach of contract, and declaratory relief. The court sustained multiple demurrers to the complaint, leading Camden Systems to file a third amended complaint. The member defendants moved for summary judgment, arguing that the 2022 ratification cured any defects in the 2021 meeting notice and that Camden Systems lacked standing to challenge actions taken before it became a member in 2020. The trial court granted the motion, finding the ratification valid and Camden Systems without standing for earlier actions.The California Court of Appeal, Second Appellate District, Division Seven, reviewed the case. The court held that the 2022 ratification of the 2021 actions was valid under the California Revised Uniform Limited Liability Company Act, which allows limited liability companies to ratify actions similarly to natural persons. The court also found that Camden Systems lacked standing to challenge distributions made before it became a member and that the indemnification resolution was valid under the operating agreement. The court affirmed the trial court's judgment, concluding that Camden Systems was not entitled to the declarations it sought. View "Camden Systems v. 409 North Camden" on Justia Law

WasteXperts, Inc. (WasteXperts) filed a complaint against Arakelian Enterprises, Inc. dba Athens Services (Athens) and the City of Los Angeles (City) in June 2022. WasteXperts alleged that Athens, which holds a waste collection franchise from the City, sent a cease and desist letter to WasteXperts, arguing that WasteXperts was not legally permitted to handle Athens’s bins. WasteXperts sought judicial declarations regarding the City’s authority and Athens’s franchise rights, and also asserted tort claims against Athens for interference with contract, interference with prospective economic advantage, unfair competition, and trade libel.The Superior Court of Los Angeles County granted Athens’s anti-SLAPP motion to strike the entire complaint, finding that the claims were based on Athens’s communications, which anticipated litigation and were therefore protected activity. The court also held that the commercial speech exemption did not apply and that WasteXperts had no probability of prevailing on the merits of its claims. WasteXperts’s request for limited discovery was denied.The California Court of Appeal, Second Appellate District, Division Four, reversed the trial court’s order. The appellate court concluded that the declaratory relief claim did not arise from protected activity, as it was based on an existing dispute over the right to move waste collection bins, not on the prelitigation communications. The court also found that the commercial speech exemption applied to Athens’s communications with WasteXperts’s clients, removing those communications from the protection of the anti-SLAPP statute. Consequently, the tort claims did not arise from protected activity. The appellate court did not address the probability of WasteXperts prevailing on the merits or the request for limited discovery. View "Wastexperts, Inc. v. Arakelian Enterprises, Inc." on Justia Law

The case involves a worker, Jake Johnson, who was injured while working as an electrician on a construction project managed by CBRE and owned by Property Reserve, Inc. (PRI). Johnson was employed by PCF Electric, a subcontractor hired by Crew Builders, the general contractor for the project. Johnson filed a complaint against CBRE, PRI, Crew, and PCF for damages. CBRE and PRI moved for summary judgment based on the Privette doctrine, which generally protects entities that hire independent contractors from liability for injuries sustained by the employees of the independent contractor. The trial court denied the motion, finding a triable issue of fact as to when CBRE and PRI hired Crew for the project.The Court of Appeal, Fourth Appellate District, Division One, State of California, disagreed with the trial court's decision. The appellate court found that a written contract was not required to invoke the Privette doctrine, and the undisputed facts established that CBRE and PRI delegated control over the tenant improvements to Crew prior to Johnson’s injury. The court also found that no exception to the Privette doctrine applied. The court concluded that because no triable issues of material fact precluded summary judgment, CBRE and PRI were entitled to relief. The court ordered the trial court to vacate its previous order and enter a new one granting summary judgment to CBRE and PRI. View "CBRE v. Superior Court of San Diego County" on Justia Law

In 2020 and 2021, two plaintiffs, identified as Jane Doe WHBE 3 and Jane Doe LSA 35, filed separate lawsuits against Uber Technologies, Inc. and its subsidiary, Raiser, LLC, alleging they were sexually assaulted by their Uber drivers in Hawaii and Texas, respectively. These cases, along with hundreds of others, were coordinated before a single judge of the San Francisco Superior Court. Uber moved to stay the cases on the ground of forum non conveniens, arguing that the cases should be heard in the jurisdictions where the alleged incidents occurred. The trial court granted Uber's motions, staying the cases and providing for tolling of the statute of limitations.The trial court's decision was based on a comprehensive 21-page order that considered whether the alternate forums (Hawaii and Texas) were suitable for trial, the private interests of the litigants, and the public interest in retaining the action for trial in California. The court concluded that the alternate forums were suitable, and that the public interest factors weighed heavily in favor of transfer. The court also found that the cases should be viewed as individual sexual assault/misconduct cases in which the plaintiffs claimed Uber was vicariously liable due to its deficient safety practices, rather than as corporate misconduct cases.The plaintiffs appealed both the trial court’s forum non conveniens order and the agreed-upon order applying it to the non-California cases. They argued that the trial court erred in failing to ensure that a suitable alternative forum existed for all the affected cases, failing to require Uber to demonstrate that California was a “seriously inconvenient” forum, and failing to “accord the coordination order proper deference.” The Court of Appeal rejected all of these arguments and affirmed the trial court's decision. View "Doe v. Uber Technologies, Inc." on Justia Law

This case involves TRC Operating Co., Inc. and TRC Cypress Group, LLC (collectively TRC) and Chevron U.S.A., Inc. (Chevron), oil producers operating adjacent well fields in Kern County, California. Both companies pump from a shared underground oil reservoir and engage in a process known as “cyclic steaming” to make oil extraction more efficient. In 1999, a “surface expression” formed near a Chevron well, which occurs when the steaming process causes a lateral fracture from the wellbore, allowing oil and other effluent to escape to the surface. Despite Chevron’s attempts at remediation, in 2011, an eruption occurred in the area of the well, causing a sinkhole to form, which killed a Chevron employee. The state oil and gas regulator issued various orders preventing steaming in the area, which lasted four years. TRC sued Chevron, claiming Chevron’s negligent maintenance and operation of its property led to dangerous conditions which made it unsafe to perform cyclic steaming operations. These conditions led to the regulator's shut-down orders, and to TRC’s harm and damages. Chevron countersued, claiming TRC’s failure to adequately maintain its own wells was the cause of the surface expression, the eruptions, and damages suffered by Chevron. The jury found in favor of TRC, awarding approximately $120 million in damages against Chevron. Nothing was awarded to Chevron. Chevron filed motions for a new trial and for judgment notwithstanding the verdict (JNOV). The trial court denied the JNOV, but granted a new trial based on misconduct by a juror. TRC appealed the granting of this motion. The Court of Appeal reversed the grant of a new trial, finding that the juror was not ineligible and no prejudice resulted from the juror’s failure to disclose his prior criminal conviction or the previous civil lawsuit. Chevron also filed a protective cross-appeal, in the event the Court of Appeal found against it on TRC’s appeal. Chevron appealed the denial of its JNOV, arguing that the regulator's orders to stop steaming were the superseding cause of any harm suffered by TRC and precludes it from bearing any liability. The Court of Appeal concluded sufficient evidence was introduced to sustain the verdict, demonstrating TRC did not stop any of its steaming operations solely because of the regulator's orders, which were therefore not a superseding cause. The Court of Appeal reversed the trial court’s order granting a new trial, and remanded with instructions to reinstate the judgment against Chevron. View "TRC Operating Co. v. Chevron USA, Inc." on Justia Law