Justia Business Law Opinion Summaries

Articles Posted in California Courts of Appeal
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Plaintiffs challenged the Board of Optometry's denial of an application for a statement of licensure submitted by Rudick, a licensed optometrist (Business and Professions Code section 3041.2), Rudick is a 49% owner of Ridge, a medical corporation, and works at one of Ridge’s four locations. Ridge employs both ophthalmologists and optometrists at each location. The Board denied Rudick’s application, stating: “you list yourself as the principal employer at the location ... you state that you are 49% shareholder in the business. Per BPC 3077 you need to submit a Branch Office License application if you have a financial interest in that location.” The trial court denied the petition, finding that the Board properly determined Rudick must comply with the branch office licensing requirements for his practice at Ridge’s Magalia office since his principal place of practice was in Paradise. The court of appeal affirmed, upholding the Board’s decision that Rudick must obtain a branch office license for each Ridge location aside from his principal place of practice; for purposes of section 3077, “office” means any place where optometry is practiced notwithstanding the fact that ophthalmology is also practiced at the location, or that the practicing optometrist is merely a minority owner of the medical corporation where he is practicing. View "Rudick v. State Board of Optometry" 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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Quidel Corporation (Quidel) petitioned for a writ of mandate and/or prohibition to direct the trial court to vacate its order granting summary judgment. Quidel contended the trial court incorrectly concluded a provision in its contract with Beckman Coulter, Inc. (Beckman) was an invalid restraint on trade in violation of Business and Professions Code section 16600. In 1996, Biosite Inc. (Biosite; Quidel is the successor in interest to Biosite) licensed patent rights and know-how related to a B-type natriuretic peptide (BNP), which can be measured in a person's blood. The semi-exclusive licensing agreement allowed Biosite to develop an immunoassay to determine the level of BNP in a person's blood sample, to help diagnose congestive heart failure. After acquiring the intellectual property rights and know-how, Biosite developed and created a BNP assay for use with its point-of-care analyzer device, and it obtained regulatory approval. By 2003, Beckman had developed a laboratory analyzer, but it did not have a license for a BNP assay compatible with its analyzer. Around this same time, other companies were also pursuing BNP assays for use with their larger analyzers, which could run multiple, different immunoassays at higher volumes than the point-of-care analyzer Biosite had. Collaborating would mean Biosite could expand its customer base to those who wanted to use the larger capacity laboratory analyzers and Beckman could include the BNP assay in its menu of immunoassay offerings. Biosite and Beckman negotiated the Agreement over several months, and they exchanged numerous drafts before executing it. The Agreement prohibited Biosite from engaging other manufacturers to provide the BNP assay for their competing lab analyzers. The term of the Agreement was negotiated to coincide with the term of a related licensing agreement Biosite had with another company, Scios. Section 5.2.3 of the Agreement prohibited Beckman from researching or developing an assay that detected the presence or absence of the BNP or NT-proBNP proteins or markers for use in diagnosing cardiac disease until two years before the Agreement's expiration. Beckman sued Quidel for declaratory relief for violation of section 16600 and violation of the Cartwright Act, asking the Court to declare section 5.2.3 of the Agreement was void and unenforceable and to issue a permanent injunction preventing the enforcement of section 5.2.3 of the Agreement. Quidel argued the trial court improperly extended the holding from Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008) beyond the employment context to section 5.2.3 of the Agreement. The Court of Appeal determined the trial court's per se application of section 16600 to section 5.2.3 of the Agreement between Quidel and Beckman was not correct, granted Quidel’s petition and issued a writ instructing the trial court to vacate the December 7, 2018 order granting summary adjudication on the first cause of action. View "Quidel Corporation v. Super. Ct." on Justia Law

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Plaintiff-relator Matthew Omlansky, by virtue of knowledge gleaned as a state employee involved with the Medi-Cal program, brought this qui tam action in the name of the State of California alleging that defendant Save Mart Supermarkets (Save Mart) had violated the False Claims Act in its billings to Medi-Cal for prescription and nonprescription medications, charging a higher price than cash customers paid in violation of 2009 statutory provisions capping Medi-Cal charges at a provider’s usual and customary price (“statutory cap”). Per the trial court, the gist of the alleged fraud upon Medi-Cal, Save Mart generally offered a lower price for medications to cash customers, and would also match a lower price that a competitor was offering (although it appears from an exhibit to the complaint that the latter applied only to prescriptions), but did not apply these discounts from its list prices in the billings it submitted to Medi-Cal. The State declined to intervene. The trial court sustained a demurrer to the original complaint because all of the alleged violations occurred during a period when the 2009 statutory cap was subject to a federal injunction. Plaintiff then filed an essentially identical amended complaint. The only significant change was an allegation in paragraph 45 that Save Mart’s billing practices favoring cash customers continued from December 2016 to March 2017 after the expiration of the injunction, specifying six examples of “illegal pricing.” The court sustained Save Mart’s demurrer to this pleading as to two of the six grounds raised, and denied leave to amend. It entered a judgment of dismissal. Plaintiff timely appealed, but the Court of Appeal concurred with the grounds for the trial court’s ruling, thereby affirming dismissal of Plaintiff’s complaint. View "Omlansky v. Save Mart Supermarkets" on Justia Law

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Plaintiff Alphonso Benton (Benton) and defendant Cynthia Moreno Benton (Moreno-Benton) were married and shared a Chino Hills dental practice through late 2014, when they divorced. Benton continued to work at that practice, plaintiff Compcare Medical, Inc. Moreno-Benton, however, opened a separate practice by forming defendant Moreno Family Medical and Associates, Inc. (Moreno Family) around the time of her departure from Compcare. Defendant Kristi Diehl was a physician’s assistant at Compcare who left with Moreno-Benton for the rival practice. Benton and Compcare alleged that defendants Moreno-Benton, Diehl, and Moreno Family misappropriated trade secrets, intentionally interfered with the plaintiffs’ prospective economic advantage, defamed plaintiffs, and engaged in unfair competition. Plaintiffs also alleged Moreno-Benton violated the fiduciary duties she owed to Compcare, and that Diehl violated the duty of loyalty she owed to that company. Defendants responded to the operative complaint with a motion to strike pursuant to Code of Civil Procedure section 425.16, the anti-SLAPP statute, because it was designed to address so-called strategic lawsuits against public participation. The motion alleged that plaintiffs’ lawsuit arises out of two types of activity protected by the anti-SLAPP statute: (1) notices to patients and others that Moreno-Benton was leaving Compcare to start a new practice, as well as advertising Moreno-Benton’s services; and (2) the filing of the petition for the divorce of Moreno-Benton and Benton. Plaintiffs opposed the motion, arguing that the causes of action did not arise from protected activity, and that they could in any event demonstrate that their lawsuit had a probability of success on the merits. The trial court denied the defendants’ anti-SLAPP motion for two reasons, one of which was that the commercial speech exemption found in Code of Civil Procedure section 425.17 applied to the conduct underlying the operative complaint. Although most trial court orders resolving an anti-SLAPP motion were subject to interlocutory appeal, the Court of Appeal found the California Legislature precluded interlocutory appellate jurisdiction over an appeal from an order denying an anti-SLAPP motion on the ground that the commercial speech exemption applied. The Court therefore dismissed this appeal. View "Benton v. Benton" on Justia Law

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R&W appealed a judgment entered after R&W allegedly defaulted in making payments to Osteroid Parties under a settlement agreement. The Court of Appeal held that the trial court erred in entering the stipulated judgment because the additional $700,000 was an unenforceable penalty under Civil Code section 1671. However, the court held that the trial court's factual determinations regarding R&W's breach of the agreement were supported by substantial evidence. Accordingly, the court reversed in part and remanded with directions to reduce the judgment, with further adjustments, plus interest. The court noted that its decision to publish was to remind practitioners whose clients settle a dispute involving payments over time how to incentivize prompt payment properly, and what may happen if done incorrectly. View "Red & White Distribution v. Osteroid Enterprises" on Justia Law

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In 2004, Hernandez, age 11, was a passenger in a 1992 Oldsmobile Cutlass that was involved in a head-on collision; she was seriously injured. Hernandez alleged that the Cutlass was not designed to be crashworthy and did not provide adequate protection to children riding in the back seat when the vehicle was involved in a frontal collision. Hernandez did not attempt to hold the manufacturer liable but sued Enterprise. Hernandez argued that a rental car company, NCRS, was strictly liable because NCRS placed the Oldsmobile “into the stream of commerce.” NCRS has sold its business in 1995 and, after a series of transactions, Enterprise became a successor in 2003. The case was stayed while Hernandez litigated an unsuccessful identical legal claim against other alleged NCRS affiliates. The trial court granted Enterprise summary judgment. The court of appeal affirmed. Enterprise did not succeed to any liability NCRS would have had for Hernandez’s injuries. After the sale of NCRS’s assets plaintiffs such as Hernandez could have sought recourse against General Motors. In addition, one of the successor owners entered bankruptcy through no fault of the acquiring entities, so the subsequent owners do not come within an exception to the general rule against successor liability in an asset sale. View "Hernandez v. Enterprise Rent-A-Car Co. of S.F." on Justia Law

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The defendants are Fair, an attorney, and limited liability companies Fair formed in 2007, which own Arizona apartment units. Plaintiffs are a California limited partnership and a nonattorney individual investor, who invested $150,000 and $100,000, respectively, in those LLCs. Plaintiffs asserted that defendants made fraudulent representations. The following years involved an attempt to negotiate a settlement; a lawsuit and amended complaints; two motions to stay the action and compel arbitration, pursuant to the arbitration provision contained in each LLC’s operating agreement; two appeals; a special motion to strike (anti-SLAPP motion); an award to plaintiffs of $12,609 in attorney fees and costs; refusal to comply with an alleged settlement; summary adjudications; and an additional award of $4,918.00 in attorney fees for the SLAPP proceedings. The court of appeal affirmed summary adjudication regarding the breach of the settlement agreement, rejecting an argument that there were triable issues of material fact regarding whether the parties entered into a binding settlement agreement. The court also affirmed the award of fees, rejecting an argument that the court should have awarded attorney fees for the entire dispute, consistent with Civil Code section 1717’s mutuality requirement and public policy or, at least, should have awarded fees as prevailing parties on defendants’ failed motions to compel arbitration and a related appeal. The court imposed monetary sanctions on defendants and their attorneys for bringing a frivolous appeal. View "J.B.B. Investment Partners v. Fair" on Justia Law

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The case arose from a landlord’s repeated refusal to consent to the proposed assignment of a ground lease for the anchor space in a shopping center. The plaintiffs were the entities that wished to assign the leasehold interest and the entities that agreed to take the assignment; the defendants were the landlord and its parent company. In their original and first amended complaints, plaintiffs alleged the landlord unreasonably withheld consent to the plaintiffs’ lease assignment request. While the litigation was pending, plaintiffs made an amended lease assignment request, which the landlord similarly rejected. In their second amended complaint, plaintiffs asserted the same five causes of action as before, but added allegations about the landlord’s refusal to consent to their amended assignment request. The landlord filed an anti-SLAPP motion to strike the second amended complaint, contending plaintiffs’ amended assignment request and the landlord’s response to that request were settlement communications and statements made in litigation, and therefore constituted protected activity. The trial court denied the motion, finding the landlord’s rejection of the amended assignment request was not a settlement communication or litigation-related conduct, but rather an ordinary business decision. The Court of Appeal agreed and affirmed the order denying the anti-SLAPP motion. View "ValueRock TN Prop. v. PK II Larwin Square" on Justia Law

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Pneuma sued a former employee, a competitor that employee went to work for, and a Pneuma investor, alleging several business torts including claims under the Comprehensive Computer Data Access and Fraud Act (Pen. Code section 502); for conversion; and for trespass to chattel relating to an internet domain. The investor filed a cross-complaint against Pneuma and its owner alleging they breached their investor agreement. The trial court ruled against Pneuma except on a single cause of action for trespass to chattel and ruled in favor of the investor on his cross-complaint. The court of appeal affirmed. A determination that a party engaged in trespass to chattel in a business context does not, without more, establish that the party engaged in an unlawful business practice under California’s Unfair Competition Law. (Bus. & Prof. Code section 17200). View "Pneuma International, Inc. v. Cho" on Justia Law