Justia Business Law Opinion Summaries

Michael R. Rattagan, an Argentinian lawyer, was retained by Uber Technologies, Inc. through its Dutch subsidiaries to assist with launching Uber's ridesharing platform in Argentina. Rattagan also agreed to act as the Dutch subsidiaries' legal representative in Argentina, a role that exposed him to personal liability under Argentinian law. Despite warnings about potential personal exposure, Uber allegedly concealed its plans to launch the platform in Buenos Aires, which led to significant legal and reputational harm to Rattagan when the launch was deemed illegal by local authorities.The United States District Court for the Northern District of California dismissed Rattagan’s third amended complaint without leave to amend, ruling that his fraudulent concealment claims were barred by the economic loss rule as interpreted in Robinson Helicopter v. Dana Corp. The court concluded that Robinson provided only a narrow exception to the economic loss rule, which did not apply to Rattagan’s claims of fraudulent concealment. The court also found that Rattagan’s negligence and implied covenant claims were time-barred.The Supreme Court of California, upon request from the Ninth Circuit, addressed whether a plaintiff may assert a tort claim for fraudulent concealment arising from or related to the performance of a contract under California law. The court held that a plaintiff may assert such a claim if the elements of the claim can be established independently of the parties’ contractual rights and obligations, and if the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract. The court clarified that the economic loss rule does not bar tort recovery for fraudulent concealment in these circumstances. View "Rattagan v. Uber Technologies, Inc." on Justia Law

The City of Los Angeles contracted with PricewaterhouseCoopers (PwC) to modernize the billing system for the Department of Water and Power (LADWP). The rollout in 2013 resulted in billing errors, leading the City to sue PwC in 2015, alleging fraudulent misrepresentation. Concurrently, a class action was filed against the City by Antwon Jones, represented by attorney Jack Landskroner, for overbilling. Discovery revealed that the City’s special counsel had orchestrated the class action to settle claims favorably for the City while planning to recover costs from PwC.The Los Angeles County Superior Court found the City engaged in extensive discovery abuse to conceal its misconduct, including withholding documents and providing false testimony. The court imposed $2.5 million in monetary sanctions against the City under the Civil Discovery Act, specifically sections 2023.010 and 2023.030, which allow sanctions for discovery misuse.The California Court of Appeal reversed the sanctions, interpreting the Civil Discovery Act as not granting general authority to impose sanctions for discovery misconduct beyond specific discovery methods. The appellate court held that sections 2023.010 and 2023.030 do not independently authorize sanctions but must be read in conjunction with other provisions of the Act.The Supreme Court of California reversed the Court of Appeal’s decision, holding that the trial court did have the authority to impose monetary sanctions under sections 2023.010 and 2023.030 for the City’s pattern of discovery abuse. The Supreme Court clarified that these sections provide general authority to sanction discovery misuse, including systemic abuses not covered by specific discovery method provisions. View "City of Los Angeles v. Pricewaterhousecoopers, LLP" on Justia Law

In the case before the Supreme Court of California, Another Planet Entertainment, LLC, a live entertainment venue operator, sued its insurer, Vigilant Insurance Company, for denying its claim for coverage of pandemic-related business losses. The plaintiff argued that the actual or potential presence of the COVID-19 virus at its venues constituted "direct physical loss or damage to property," triggering coverage under its insurance policy. The district court dismissed the case, and the plaintiff appealed. The Ninth Circuit Court of Appeals then asked the Supreme Court of California to clarify whether the presence of the COVID-19 virus could constitute "direct physical loss or damage to property" under California law.The Supreme Court of California concluded that allegations of the actual or potential presence of COVID-19 on an insured’s premises do not, without more, establish direct physical loss or damage to property within the meaning of a commercial property insurance policy. Under California law, direct physical loss or damage to property requires a distinct, demonstrable, physical alteration to property. The physical alteration need not be visible to the naked eye, nor must it be structural, but it must result in some injury to or impairment of the property as property. The court found that Another Planet’s allegations did not satisfy this standard. While Another Planet alleges that the COVID-19 virus alters property by bonding or interacting with it on a microscopic level, Another Planet does not allege that any such alteration results in injury to or impairment of the property itself. Its relevant physical characteristics are unaffected by the presence of the COVID-19 virus. View "Another Planet Entertainment, LLC v. Vigilant Insurance Co." on Justia Law

The Supreme Court reversed the judgment of the court of appeal finding that Cal. Corp. Code 5142, 5233, and 5223 impose a continuous directorship requirement that would require dismissal of a lawsuit brought under the statutes if the plaintiff, a director of a nonprofit public benefit corporation, fails to retain a director position, holding that the statutes do not require continued service as a director as a condition for pursuing such a lawsuit.Sections 5142 and 5233 allow a director of a nonprofit public benefit corporation to bring an action to remedy a breach of a charitable trust or recover damages for self-dealing transactions by other directors, and section 5223 allows the trial court, "at the suit of a director," to remove any director guilty of malfeasance from office. At issue was whether the director of charitable corporation who loses that position after instituting a lawsuit against other directors under the director enforcement statutes also loses standing to maintain the lawsuit. The Supreme Court reversed the opinion of the court of appeal, holding that the statutes do not require a director-plaintiff at a nonprofit corporation to maintain the director position throughout litigation. View "Turner v. Victoria" on Justia Law

The Supreme Court reversed the judgment of the court of appeal affirming the judgment of the court of appeal granting summary judgment for the defense in this lawsuit brought by the California Medical Association (CMA), holding that the evidence was sufficient to create triable issues of fact precluding summary judgment.CMA, a nonprofit professional association representing California physicians, sued Aetna Health of California Inc. alleging that Aetna violated the unfair competition law (UCL), Cal. Bus. & Prof. Code 17200 et seq., by engaging in unlawful business practices. At issue was whether Aetna satisifed the UCL's standing requirements by diverting its resources to combat allegedly unfair competition. The Supreme Court held (1) the UCL’s standing requirements are satisfied when an organization, in furtherance of a bona fide, preexisting mission, incurs costs to respond to perceived unfair competition that threatens that mission, so long as those expenditures are independent of costs incurred in UCL litigation or preparations for such litigation; and (2) the trial court erred in granting summary judgment for Aetna on the ground that CMA lacked standing. View "Cal. Medical Assn. v. Aetna Health of Cal., Inc." on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the appellate court concerning whether a party in default has standing to file a motion for a new trial asserting legal error relating to calculation of damages and whether a court may award treble damages and attorney's fees under Cal. Penal Code 496 in a case involving fraudulent diversion of a partnership's cash distributions, holding the court erred in part.Plaintiff sued Defendants for underpaying him and improperly diverting a partnership's rental income. The trial court entered a default judgment against Defendants, awarding Plaintiff treble damages and attorney's fees. The court of appeal reversed in part, concluding that Defendants had standing and that the trial court improperly awarded treble damages under section 496(c) under the circumstances of this case. The Supreme Court reversed in part, holding that the court of appeal (1) correctly recognized and confirmed Defendants' standing to move for a new trial on the ground that the trial court erred in awarding and calculating damages; and (2) erred in construing section 496(c) to withhold, rather than afford, treble damages and attorney's fees when property "has been obtained in any manner constituting theft." View "Siry Investment, L.P. v. Farkhondehpour" on Justia Law

The Supreme Court held that tortious interference with at-will contracts requires independent wrongfulness and that a rule of reason applies to determine the validity of a settlement provision requiring Forward Pharma to terminate its agreement with Ixchel Pharma, LLC under Cal. Bus. & Prof. Code 16600.Ixchel, a biotechnology company, entered into an agreement with Forward jointly to develop a drug for the treatment of Friedreich's ataxia. Forward later withdrew from the agreement, which was allowed by the agreement's terms. Pursuant to a settlement with Biogen, Inc., another biotechnology company, Forward agreed to terminate its contract with Ixchel. Ixchel sued Biogen in federal court for tortiously interfering with Ixchel's contractual and prospective economic relationship with Forward in violation of section 16600. On appeal, the federal appeals court certified two questions to the Supreme Court. The Supreme Court held (1) tortious interference with at-will contracts requires independent wrongfulness, and therefore, Ixchel must allege that Biogen interfered with its at-will contract through wrongful means; and (2) the validity of the settlement provision at issue must be evaluated based on a rule of reason. View "Ixchel Pharma, LLC v. Biogen, Inc." on Justia Law

The Supreme Court affirmed the judgment of the Court of Appeal affirming in part and reversing in part the judgment of the trial court granting Defendant's motion for judgment on the pleadings on certain stock and wage conversion claims, holding that Plaintiff's stock conversion claims should be permitted to proceed but that Plaintiff did not plead a cognizable claim for conversion of wages.Plaintiff worked alongside Defendant to launch three start-up ventures in return for a promise of later payment of wages. Later, Plaintiff was fired and never paid. Plaintiff successfully sued the companies invoking both contract-based and statutory remedies for the nonpayment of wages. In this lawsuit, Plaintiff sought to hold Defendant personally responsible for the unpaid wages on a theory of common law conversion. The trial court granted Defendant's motion for summary judgment. The court of appeal reversed in part but concluded that extending the tort of conversion to the wage context was not warranted. The Supreme Court affirmed, holding that a conversion claim was not an appropriate remedy for the wrong alleged in this case. View "Voris v. Lampert" on Justia Law

The Supreme Court answered a question regarding California's Unruh Civil Rights Act, Cal. Civ. Code 51 et seq., by holding that a plaintiff has standing to bring a claim under the Act when the plaintiff visits a business's website with the intent of using its services and encounters terms and conditions that allegedly deny the plaintiff full and equal access to the website's services and then leaves the website without entering into an agreement with the service provider.Plaintiff sued Defendant, alleging that Defendant's seller agreement discriminated against him in violation of the Act. The district court dismissed the complaint on the ground that Plaintiff lacked standing under the Act to sue Defendant because Plaintiff had not attempted to use Defendant's services. On appeal, the United States Court of Appeals for the Ninth Circuit issued the certification order at issue in this case. The Supreme Court held that, under the rule announced today, Plaintiff sufficiently alleged injury for Unruh Civil Rights Act standing because entering into an agreement with the business is not required for standing under the Act. View "White v. Square, Inc." on Justia Law

In this case concerning a massive, four-month-long leak from a natural gas storage facility located outside Los Angeles the Supreme Court held that local businesses, none of which alleged they suffered personal injury or property damage, may not recover in negligence for income lost because of the leak.Plaintiffs were businesses seeking to represent a class of persons and entities conducting businesses within the area of the leak, arguing that by depriving local businesses of customers the environmental disaster cost local businesses considerable earnings. Defendant demurred, arguing that Plaintiffs' negligence claims failed as a matter of law because Plaintiffs were seeking to recover for purely economic losses. The trial court overruled the demurrer. The court of appeal reversed, holding that California law did not permit recovery for the purely economic losses sought by Plaintiffs. The Supreme Court affirmed, holding that Defendant did not have a tort duty to guard against purely economic losses. View "Southern California Gas Leak Co. v. Superior Court of Los Angeles County" on Justia Law