Justia Business Law Opinion Summaries

Dorn Sprinkler, formed in 1977 and operated by its owner, David, failed to contribute to benefit funds required by its collective bargaining agreement for three months in 2006-2007. Employees organized a work stoppage. Sprinkler went out of business with its required contributions still unpaid. David’s son, Christopher, lead salesman at Sprinkler, had formed a company called Dorn Fire Protection during the 1990s but had not started doing business. Shortly before financial troubles at his father's business, Christopher began operations. The Union submitted a request to arbitrate to Fire Protection under the theory that it is an alter ego of Sprinkler. Fire Protection refused. The district court, finding that Fire Protection is not an alter ego of Sprinkler, granted summary judgment to defendants. The Sixth Circuit affirmed. The management structures at the companies were not substantially identical; there was no substantial continuity in employees, customers or equipment. There was no proof of intent to avoid the bargaining agreement.

Plaintiff began working for JLF in 2007 at an annual salary of $125,000. He alleges that JLF ceased paying him about a year later because of cash flow problems, but he did not stop working. A few weeks later the entire executive staff was formally laid off. Plaintiff sued under the Fair Labor Standards Act, 29 U.S.C. 201, and various state laws. The district court dismissed the FLSA claim on the ground that plaintiff was an exempt salaried employee, rejecting an argument that withholding compensation for several months converted the position to an hourly position. The Sixth Circuit reversed, holding that plaintiff adequately pleaded a claim under the FLSA, based on new regulations. Employment agreements are no longer the starting point for whether an employee is paid on a salary basis; the question is what compensation plaintiff actually received.The burden should have been on the employer to prove the exemption.

Defendant, a Russian citizen, attended graduate school and owns real property, vehicles, and bank accounts in Ohio. He spends some time in Ohio each year, ranging from 40 days in 2007 to a total of 17 days in 2008–2009. He visits under a tourist visa and does not have an Ohio driver's license. After going to Russia to take part in a business venture with defendant, plaintiff filed suit in Ohio. The contract had no connection to the state. The trial court dismissed for lack of personal jurisdiction, noting that defendant was not served with process in a manner that automatically confers personal jurisdiction. The Sixth Circuit affirmed, finding that notions of fair play and substantial justice weigh against jurisdiction in Ohio. The court quoted a Russian proverb, “If you’re afraid of wolves, don’t go into the forest” that could be read, “If you’re afraid of the Russian legal system, don't do business in Russia.”

Plaintiff claimed that defendants placed 33 unsolicited telemarketing calls to his home over a three-month period in 2008, in violation of the Telephone Consumer Protection Act, 47 U.S.C. 227, and the Ohio Consumer Sales Practices Act, Ohio Rev. Code Ann. 1345.02. Thirty calls were made after he asked to be put on defendant's do-not-call registry. He also alleged invasion of privacy. The district court dismissed for lack of subject-matter jurisdiction. The Sixth Circuit reversed. Federal courts have federal-question jurisdiction over private TCPA and plaintiff alleged damages exceeding $75,000, as required for diversity jurisdiction over state-law claims.

In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d).

Plaintiff a law school faculty member living in Ohio, contracted with defendant (Nevada corporation, doing business in California) for publication of his manuscript, giving a Virginia address. Based on delays in publication, plaintiff sued for breach of contract, interference with contract and prospective advantage, defamation, intentional or reckless infliction of emotional distress, negligent infliction of emotional distress; misrepresentation, and fraud. After several motions, including default judgment and reinstatement, and discovery, defendant successfully moved to dismiss for lack of personal jurisdiction. The Sixth Circuit reversed and remanded. Defendant waived the personal jurisdiction defense and voluntarily submitted to the district courtâs jurisdiction, when its attorney entered a general appearance on its behalf.

The debtor did not pay his $2,902 bill for treatment of an infection, which was turned over to a collections agency. He made payments for several years. When the balance was at $536.35 the agency sued in Michigan court for $678.27, attaching to the complaint a document titled "Combined Affidavit of Open Account and Motion for Default Judgment." An agency employee then incorrectly told the debtor that he owned $1,016. The district court rejected the debtor's suit under the Fair Debt Collection Practices Act 15 U.S.C. § 1692e. The Sixth Circuit reversed in part, holding that the title to the document attached to the complaint could be misleading. The mistaken balance was not given as part of a collection effort and was not a violation of the Act.

In 2007, plaintiff, a carpet dealer, settled state law claims against a competing dealer and a manufacturer, alleging slander and refusal to deal arising from a 1998 agreement between the defendants. The federal district court subsequently dismissed claims under the Sherman Act, 15 U.S.C. 1, based on continuing refusal to deal. The Sixth Circuit reversed. The plaintiff adequately alleged an ongoing conspiracy to restrain trade and that the defendants acted on their agreement after the settlement. Although the lawsuit was a plausible alternative reason for refusal to deal, conspiracies are presumed to be ongoing and the allegation was sufficient for the pleadings stage. The 2007 settlement did not bar the claims because it did not effectuate a withdrawal from the conspiracy. The defendants took no actions inconsistent with a continuing conspiracy.

Plaintiff alleged violation of the Robinson-Patman Act, 15 U.S.C. 13(a), prohibition on selling the same product to different buyers at different prices, by a manufacturer of mowing equipment and a distributor/retailer of that equipment. The district court dismissed. The Sixth Circuit affirmed. In light of recent Supreme Court decisions, courts may no longer accept conclusory allegations that do not include specific facts necessary to establish the cause of action. The new "plausibility" standard is particularly difficult for the plaintiff in this case, because only the defendants have access to the pricing information necessary to show discriminatory pricing, but the plaintiff may not use discovery to obtain those facts. The plaintiff did not have sufficient facts to establish the manufacturer's control of the distributor to proceed under the "indirect purchaser" doctrine.

Plaintiffs alleged that corporate officers committed securities fraud (15 U.S.C. 78j, 78t) by making false statements about about the corporation's financial health and controlled other persons regarding false statements by the corporation and other employees. The district court dismissed; the Sixth Circuit remanded. The district court again dismissed and the Sixth Circuit reversed. The complaint adequately alleged scienter by alleging that the defendants received internal reports and information showing financial distress, yet continually made false, positive statements regarding financial health. The court noted allegations concerning temporal proximity between false statements and corrective statements, defendants' financial motivations, the retirement of one defendant, and that the SEC investigated the company's accounting practices.