Justia Business Law Opinion Summaries

The Supreme Court reversed the judgment of the court of appeals as to the applicability of the economic loss doctrine in this case, holding that the economic loss doctrine applies only in products liability cases and should not be expanded to apply outside the products liability context.In the underlying suit brought by a drywall subcontractor against a general contractor under theories of breach of contract and tort a jury awarded compensatory and punitive damages to the subcontractor. The court of appeals affirmed in part the award of compensatory damages for breach of contract, dismissed the tort claim, and reversed the award for punitive damages, holding that the economic loss doctrine applied outside the products liability context when the contract was negotiated between sophisticated commercial entities. The Supreme Court reversed, holding (1) the economic loss doctrine only applies in products liability cases and should not be extended to other claims; and (2) the economic loss doctrine did not bar the subcontractor's recovery of compensatory and punitive damages based on its tort claim. View "Commercial Painting Co. v. Weitz Co., LLC" on Justia Law

The Supreme Court answered a question of law certified by the district court in the negative, holding that two video streaming services - Netflix, Inc. and Hulu, LLC - did not provide "video service" within the meaning of Tenn. Code Ann. 7-59-303(19) and thus did not qualify as "video service providers" required to pay franchise fees to localities under section 7-59-303(20).The City of Knoxville brought this action asserting that Netflix and Hulu were required to pay franchise fees because they used public rights-of-way to provide video service. Specifically, Knoxville argued that Netflix and Hulu were "video service providers" as defined in the Competitive Cable and Video Services Act, Tenn. Code Ann. 7-59-301 to -318, and were thus required to apply for a franchise and pay franchise fees to Knoxville. The district court certified a question of law to the Supreme Court. The Supreme Court answered that Netflix and Hulu did not provide a "video service" within the meaning of section -303(19) and thus did not qualify as "video service providers" under section -303(20). View "City of Knoxville, Tenn. v. Netflix, Inc." on Justia Law

The Supreme Court vacated the judgments of the lower courts in this appeal addressing mootness when a law challenged in the trial court is altered or amended after the trial court issued its final judgment and while the appeal is pending, holding that remand was required in this case.Plaintiffs filed a lawsuit against Metropolitan Government of Nashville and Davidson County (Metro) challenging an ordinance prohibiting them from having clients in their home-based businesses. The trial court granted summary judgment in favor of Metro. While Plaintiffs' appeal was pending, Metro repealed the ordinance at issue and enacted a new ordinance allowing limited client visits to home-based businesses. The court of appeals determined that Plaintiffs' case was moot. The Supreme Court vacated the judgments below and remanded the case to give the parties an opportunity to amend their pleadings to address any claims asserted under the new ordinance, holding that, based on the current record, it could not be determined whether Plaintiffs would suffer ongoing harm from the new ordinance, how the change could affect their claims, and whether they retained a residual claim under the new ordinance. View "Shaw v. Metropolitan Government of Nashville" on Justia Law

At issue in this dissenters’ rights case was the methods by which a trial court may determine the “fair value” of shares of a dissenting shareholder under Tennessee’s dissenters’ rights statutes, Tenn. Code Ann. 48-23-101, et seq.The Supreme Court overruled Blasingame v. American Materials, Inc., 654 S.W.2d 659 (Tenn. 1983), to the extent Blasingame implicitly mandates use of the Delaware Block method for determining the fair value of a dissenting shareholder’s stock and adopted the more open approach set forth in Weinberger v. UOP, Inc., 457 A.2d 701, 712-13 (Del. 1983), which departs from the Delaware Block method and permits fair value to be determined by using any technique or method that is generally acceptable in the financial community and admissible in court.Defendant minority shareholders were forced out of a corporation as a result of a merger. The corporation sought a determination as to the fair value of the minority shareholders’ stock. The trial court may have based its decision to discredit the testimony of the dissenting shareholders’ expert on the basis that Blasingame compelled use of the Delaware Block method to determine stock value. The Supreme Court remanded the case to the trial court to reconsider its valuation determination in light of this decision to partially overrule Blasingame. View "Athlon Sports Communications, Inc. v. Duggan" on Justia Law

At issue in this case was the standard for determining whether a shareholder’s claim is a direct claim or a derivative claim. This case arose from a dispute among siblings who were shareholders in a closely-held family corporation. The conflict resulted in dissolution of the original family corporation, the formation of two new corporations, and a lawsuit. In the suit, one group of shareholder siblings asserted claims against the other group of shareholder siblings. The trial court awarded damages to the plaintiff shareholder siblings. The court of appeals reversed, concluding that the plaintiff shareholder siblings did not have standing because their claims were derivative in nature and belonged to their new corporation. The Supreme Court affirmed in part and reversed in part, holding (1) the traditional approach for determining whether a shareholder claim is direct or derivative described in Hadden v. City of Gatlinburg is hereby set aside; (2) the framework set forth by the Delaware Supreme Court in Tooley v. Donaldson, Lufkin & Jenrette, Inc. is hereby adopted; and (3) under the Tooley framework, the plaintiffs lacked standing to assert some claims but had standing as to other claims. View "Keller v. Estate of Edward Stephen McRedmond" on Justia Law

Plaintiff filed suit against Defendants in California state court for business-related torts. Plaintiff then voluntarily dismissed his complaint and re-filed his action in the federal district court, alleging several federal securities law violations. The federal court exercised supplemental jurisdiction over Plaintiff's state-law claims. Thereafter, Plaintiff voluntarily dismissed his complaint and filed the present action in a Tennessee state court, pleading three of the state-law claims that formed the basis for his two previously dismissed lawsuits. The trial court granted summary judgment for Defendants, concluding that Plaintiff's claims were barred by Plaintiff's second voluntary dismissal in federal court. The court of appeals affirmed. The Supreme Court reversed, holding that a plaintiff's second voluntary dismissal of supplemental state-law claims filed in federal court does not preclude the plaintiff from later re-filing an action based on the same claims in Tennessee state court. Remanded. View "Cooper v. Glasser" on Justia Law

In a two-year period, more than eleven million cigarettes manufactured by an Indonesian cigarette manufacturer were sold in Tennessee. After the manufacturer withdrew its cigarettes from the United States market, the State suit the manufacturer, alleging that the manufacturer had failed to pay into the Tobacco Manufacturers' Escrow Fund as required by Tenn. Code Ann. 47-31-101 to -103. The trial court dismissed the suit for lack of personal jurisdiction over the manufacturer. The court of appeals reversed. At issue on appeal was whether Tennessee courts may exercise personal jurisdiction over the Indonesian manufacturer where the manufacturer's cigarettes were sold in the State through the marketing efforts of a Florida entrepreneur who purchased the cigarettes from an independent foreign distributor. The Supreme Court reversed, holding that Tennessee courts lacked personal jurisdiction over the manufacturer because the State failed to establish that the manufacturer purposely availed itself of the privilege of doing business in Tennessee. View "State v. NV Sumatra Tobacco Trading Co." on Justia Law

In 1992, Appellant Wendell Baugh, III acquired Precision Services, Inc. from Ronald and Gayla Miller. The Millers agreed to finance the transaction. Mr. Baugh and his wife personally guaranteed a note executed by the corporation that purchased Precision's assets and the right to use its name. Appellee Herman Novak and his wife were friends and neighbors of the Baughs. In 1995, Messrs. Baugh and Novak bought a company together (Penske Plastics, Inc.), and by contract, were jointly and severally liable for the company's debts and obligations. Both gentlemen agreed to share equally in the company's profits. Mr. Baugh offered to sell one-half of Precision to Mr. Novak. Before he could sell any interest in Precision, Mr. Baugh had to obtain permission from the Millers. Because Mr. Baugh found the Millers difficult to deal with, he asked his attorney to draft an arrangement so that Mr. Novak could purchase an interest in Precision without the Millers' involvement. The document drafted by the attorney included an indemnity agreement by which the Novaks would agree to indemnify the Baughs for fifty percent of any payments they were required to make on the Millers' note and Precision's other debts. Mr. Baugh kept an office at Penske Plastics. Fire destroyed Penske's building in 2003. Of import, a banker-box that contained the original signed copies of the Baugh-Novak 1995 purchase agreement was consumed in the fire. The companies' insurance policies were not enough to cover all the damage caused by the fire. In 2005, Messrs. Baugh and Novak sold Penske Plastics to Alcan Baltec. Up until the time of the closing, Precision's loan obligations were paid from the revenue of Penske Plastics. In late 2005, Mr. Novak sent Mr. Baugh a note essentially "washing his hands" of Precision. In 2006, Mr. Baugh began paying Precision's obligation to the Millers from his personal funds. Mr. Baugh filed suit against the Novaks to enforce the terms of the 1995 agreement, arguing that he was entitled to indemnification and reimbursement for Precision's obligations. The trial court ruled in favor of Mr. Baugh. Mr. Novak appealed, arguing that the trial court erred in several of its evidentiary rulings at trial. The appellate court, on its own motion, reversed the trial court, holding that the purchase agreement and indemnity agreements were contrary to public policy and state law. The Supreme Court found that the evidence did not support the appellate court's holding. The Court reinstated the trial court's decision, and dismissed the Novak's appeal.