Justia Business Law Opinion Summaries

Plaintiffs claimed that defendants, owners and managers of a for-profit website called DMV.org, violated federal and state unfair competition and false advertising laws by actively fostering the belief that DMV.org was an official state DMV website, or was affiliated or endorsed by a state DMV. The district court held that defendants violated section 43(a) of the Lanham Act, 15 U.S.C. 1125(a), but rejected plaintiffs' claim under California's unfair competition statute. The district court issued an injunction ordering DMV.org to present every site visitor with a splash screen bearing a disclaimer and denied monetary relief and an award of attorney's fees to plaintiffs. Both sides appealed. The court held that plaintiffs had established sufficient injury for Article III standing and that plaintiffs had met both prongs of the test in Jack Russell Terrier Network of Northern California v. American Kennel Club, Inc. for Lanham Act standing. The court held that the district court committed no error in holding that defendants violated the Lanham Act but remanded for the district court to reconsider the duration of the splash screen in light of any intervening changes in the website's content and marketing practices, as well as the dissipation of the deception resulting from past practices. The court held that the district court did not err in denying damages. The court held that because the district court erred in finding that defendants'c conduct was not exceptional and that plaintiffs had unclean hands, its denial of attorney's fees was an abuse of discretion. Therefore, the court remanded for the district court to consider the award of attorney's fees anew. The court held that the district court's findings that defendants were jointly and severally liable were not clearly erroneous. The court held that the district court did not abuse its discretion by refusing to hold DMV.org in contempt for technical breaches of the injunction. Accordingly, the court affirmed in part and reversed in part, remanding with instructions.

Debtor filed a Chapter 11 Bankruptcy petition in 1998 and submitted a plan of reorganization ("Plan"), continuing to operate as a debtor-in-possession. Article X of the confirmed Plan provided for the discharge of all debts pursuant to which debtor was the "primary obligor." In 2007, the IRS contacted debtor's principal officers regarding potential assessment of a Trust Fund Recovery Penalty ("TFRP") pursuant to 26 U.S.C. 6672. At issue was whether the collection of a TFRP from the principal officers violated the express terms of Article X discharging such claims. The court affirmed the bankruptcy court's dismissal of the action for lack of jurisdiction where the relief sought by debtor would effectively preclude the IRS's collection of a section 6672 assessment and therefore, fell squarely within the reach of the Anti-Injunction Act, 26 U.S.C. 7421(a), and the court's holding in American Bicycle Ass'n v. United States. The court also held that, in light of the well-established principle that section 6672 liability was a separate and distinct liability, the court agreed with the bankruptcy court's alternative holding that, although a corporation could be the primary obligor on its own underlying tax obligation, it was not the primary obligor on the separate and distinct assessment under section 6672. Rather, the corporate officers were the primary obligors on the TFRP liabilities, as these liabilities were assessed independently under section 6672 for the officers' own willful conduct. Accordingly, the judgment of the bankruptcy court was affirmed.

The SEC brought suit against senior officers of Gateway Incorporated ("Gateway") claiming that they unlawfully misrepresented Gateway's financial condition in the third quarter of 2000 in order to meet financial analysts' earnings and revenue expectations. After a three week trial, a jury found former Gateway financial executives, John J. Todd and Robert D. Manza, liable on all claims by the SEC. All parties appealed the district court's order in part. The court reversed the district court's order granting in part Todd's and Manza's motions for judgment as a matter of law on the antifraud claims under the Securities and Exchange Act of 1934, 15 U.S.C. 78a et seq., because substantial evidence supported the jury's verdict that Todd and Manza at least recklessly misrepresented revenue related to the Lockheed transaction, and that Todd recklessly misrepresented revenue as to the VenServ transaction, in the third quarter of 2000. The court also reversed the district court's order granting Jeffrey Weitzen's, former Gateway President and CEO, motion for summary judgment as to the Section 10(b) and Rule 10b-5 violations because there were genuine issues of material fact regarding whether Weitzen knowingly misrepresented Gateway's financial growth as "accelerated" given his knowledge of the unusual Lockheed and AOL transactions. There were also issues of material fact as to whether Weitzen was a "control person" under Section 20(a). The court affirmed Weitzen's motion for summary judgment as to the Rule 13b2-2 claim because there was no evidence that Weitzen signed a letter to Gateway's auditors knowing that it misrepresented Gateway's financial position. The court also affirmed the district court's order denying in part Todd's and Manza's motions for judgment as a matter of law on the aiding and abetting claims and their motions for a new trial.

Plaintiffs, working as auditors in The Boeing Company's ("Boeing") IT Sarbanes-Oxley ("SOX") Audit group, filed SOX whistleblower complaints under the Sarbanes-Oxley Act, U.S.C. 1514(a)(1), with the Occupation Safety and Health Administration after they were terminated by Boeing when they spoke with a reporter from the Seattle Post-Intelligencer ("Post-Intelligencer") about Boeing's compliance with SOX. At issue was whether plaintiffs' disclosures to the Post-Intelligencer were protected under section 1514(a)(1), which protected employees of publicly-traded companies who disclose certain types of information. The court held that section 1514(a)(1) did not protect employees of publicly-held companies from retaliation when they disclosed information regarding designated types of fraud or securities violations to members of the media.