Articles Posted in U.S. Court of Appeals for the Eighth Circuit

3M filed an insurance claim to recover losses incurred on a number of investments due to fraud perpetrated by its own investment advisors. The Eighth Circuit affirmed the district court's grant of summary judgment to the Insurers, holding that the ownership requirement of Endorsement 8 applies to the Employee Dishonesty provision. Therefore, 3M does not own the stolen earnings and cannot seek coverage for the earnings under the Policy. Until the earnings were distributed to the partners, the stolen earnings were property of WG Trading, not 3M. The court explained that it is fundamental that property acquired with partnership funds is partnership property, and individual partners do not own partnership assets until the winding up of the partnership. Finally, the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., does not alter general commercial property rights, but merely defines the nature and scope of the fiduciary duties owed to plan participants. View "3M v. National Union Fire Insurance" on Justia Law

The court affirmed the grant of a permanent injunction enjoining BC Cleaners from using Martinizing's trademarks, concluding that Martinizing failed to prove willful infringement by BC Cleaners. Because Martinizing failed to prove that it was entitled to monetary remedies against BC Cleaners, the individual defendants were likewise not liable for damages, an accounting for profits, and attorneys' fees. The court also concluded that the district court did not abuse its discretion in not granting injunctive relief against the individual defendants, because BC Cleaners had agreed to stop using the trademarks. Therefore, the court reversed as to these issues; affirmed the denial of a default judgment against Defendants Lundell and Carver; and remanded with directions to enter amended judgments. View "Martinizing International v. BC Cleaners" on Justia Law

Plaintiff filed a shareholder derivative action on behalf of Medtronic, Inc., against current and former directors and officers of Medtronic, and against Medtronic as a nominal defendant. Plaintiff's complaint alleged various bad acts and false and misleading statements stemming from Medtronic's alleged improper promotion to physicians of the "off-label" use of its "Infuse" product. The district court dismissed the action based on a report by a special litigation committee (SLC). The court concluded that defendants' motion to terminate the litigation based on the SLC report could not be construed as a motion under Rule 12(b)(6) nor one arising under Rule 56; the court agreed with the district court and the Eleventh Circuit that the closest fit for a motion to terminate in the Federal Rules was Rule 23.1(c); the proper standard of review was for an abuse of the district court's discretion; the district court did not err in deferring to the SLC under Minnesota's business judgment rule (BJR) where the SLC possessed a disinterested independence, and the SLC's investigative methodologies and procedures were adequate, appropriate, and pursued in good faith; and the district court did not abuse its discretion by denying plaintiff's motion for discovery. Accordingly, the court affirmed the judgment. View "Kokocinski v. Collins, Jr." on Justia Law

Plaintiffs, 92 investors in a Ponzi scheme called the British Lending Program (BLP), filed suit against PNC, alleging, among other things, (1) violations of Missouri's Uniform Fiduciaries Law (UFL); (2) aiding and abetting the breach of fiduciary duties; (3) conspiracy to breach fiduciary duties; and (4) conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d). Specifically, plaintiffs alleged that PNC's predecessor, Allegiant, conspired with and aided Martin Sigillito in his scheme to defraud investors when it served as custodian for the self-directed IRAs of those who chose to invest in the BLP at its inception. The court granted summary judgment to PNC, concluding that even if the court overlooked plaintiffs' failure to cite any legal authorities in support of their RICO and common-law claims, those claims fail on the merits. In this case, the evidence is insufficient to establish a reasonable fact dispute as to whether Allegiant, PNC's predecessor, objectively manifested an agreement to participate in criminal activity with Sigillito, had a meeting of the minds with Sigillito, or substantially assisted or encouraged Sigillito's conduct. The court also rejected plaintiffs' UFL claim, concluding that no evidence exists that Allegiant processed any transaction with actual knowledge that Sigillito was breaching his fiduciary duties, and the evidence fails to show that Allegiant acted in bad faith. Accordingly, the court affirmed the judgment. View "Aguilar v. PNC Bank, N.A." on Justia Law

The district court found third-party plaintiff Qwest failed to prove its claims for intentional interference with a business relationship, unfair competition, and unjust enrichment against third-party defendant FC. The court agreed with the district court that FC did not act with an improper purpose when it contracted with Sancom, a local exchange carrier (LEC), because FC was simply attempting to take advantage of the uncertain regulatory scheme at the time; FC had a legitimate argument that it could be considered an “end user,” and thus Sancom could bill Qwest under its tariff for calls delivered to FC’s call bridges; and thus the district court did not err in finding for FC on Qwest's claim for intentional interference with a business relationship. The court predicted that the South Dakota Supreme Court would not recognize a tort of unfair competition under these circumstances, and found that the district court properly rejected this new tort. The court concluded, however, that the district court incorrectly found FC’s conduct was “neither illegal nor inequitable” because it was simply taking advantage of a loophole until the loophole closed, and the district court improperly considered Sancom’s settlement payments to Qwest when it found FC was not unjustly enriched. Therefore, the court reversed and remanded for reconsideration of whether FC was unjustly enriched. View "Qwest v. Free Conferencing Corp." on Justia Law

Plaintiff filed suit against his brother, an accountant, and a banker, alleging that they siphoned money from the brother's farming business. Plaintiff filed suit against all three, as well as the accountant and banker's employer, for violating the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-68. The court affirmed the district court's dismissal of the complaint because plaintiff failed to plead the existence of an enterprise whose affairs were supposedly conducted in such an illicit manner. View "Nelson v. Nelson" on Justia Law

Plaintiffs, owners of shares of Wal-Mart, filed suit against the corporation's directors and officers, alleging that they violated state and federal law by permitting and then covering up pervasive bribery committed on behalf of Wal-Mart’s Mexican subsidiary, Wal-Mex. Federal Rule of Civil Procedure 23.1 required plaintiffs to explain why they did not first ask the board of directors to cause the corporation to pursue the suit itself because the shareholders sought to enforce rights belonging to Wal-Mart. Plaintiffs claimed that it would have been futile to go to the board first. In this case, the specific facts alleged in plaintiffs’ complaint do not give rise to a reasonable inference that Wal-Mart’s board of directors learned of the suspected bribery by Wal-Mex while the alleged bribery was being covered up and the internal investigation quashed. Therefore, the allegations do not establish “with particularity” that the threat of personal liability rendered a majority of Wal-Mart’s 2012 board incapable of fairly considering whether to pursue the corporate causes of action the shareholders seek to enforce in this case, as required by Rule 23.1 and Delaware’s heightened pleading threshold for derivative lawsuits. Accordingly, the court affirmed the judgment. View "Cottrell v. Duke" on Justia Law

Blake filed suit against CarVal and Lux, alleging tortious interference with Blake's contract to lease a barge and crane to a third party. The district court dismissed the complaint as time-barred. To determine the applicable limitations period the court looked to the choice of law rules of the forum state, which in this case is Minnesota. The court concluded that Alabama's interest in compensating Blake, a resident of that state, outweighs Minnesota's interest and favors the application of Alabama law. Therefore, the court concluded that the fourth choice of law factor favors the application of Alabama law. Since this is the only factor which favors either state's law, the district court did not err by applying Alabama law and dismissing Blake's claim as time barred. The court also concluded that Blake waived its argument that the district court should apply the "fairness exception" to Minnesota's borrowing statute; Blake has not satisfied the first requirement for invoking federal admiralty jurisdiction - the alleged tort occurred on navigable waters - and that laches does not apply; and there was no fraudulent concealment of facts and thus no basis to toll the two year limitations period. Accordingly, the court affirmed the judgment. View "Blake Marine Grp. v. CarVal Investors LLC" on Justia Law

Others First filed suit against the BBB, alleging tort claims for injurious falsehood based on alleged falsehoods contained in a news release, and for interference with business expectancy. The district court granted summary judgment for BBB. The court concluded that the district court properly granted summary judgment on the tortious interference claim where Others First failed to submit sufficient evidence to show that the BBB employed improper means to further its own interests; Others First failed to plead alleged defamatory statements with the particularity required by Missouri law; and the district court properly granted summary judgment dismissing Others First’s claim of injurious falsehood because all of the challenged statements were either true statements of fact or protected opinion, and properly granted summary judgment dismissing the tortious interference claim given the absence of wrongful defamation. Accordingly, the court affirmed the judgment. View "Others First, Inc. v. Better Business Bureau" on Justia Law

This case arises out of the business relationship Joseph H. Whitney entered into with John R. Morrison. The court discussed the relationship and the various corporations in a prior opinion. See Whitney v. The Guys, Inc., 700 F.3d 1118, 1121–23 (8th Cir. 2012). In this appeal, Whitney argues that he was a shareholder of the several companies and that the district court erred in holding otherwise. He also argues that the district court erred in its statute-of-limitations analysis because he was not on inquiry notice prior to October 2007. The court concluded that Whitney was on inquiry notice when he knew he was not being treated as a shareholder. Therefore, a reasonable jury would be compelled to conclude that the July 20, 2007 email and the accompanying deposition testimony show such notice. Accordingly, the court affirmed the judgment. View "Whitney v. The Guys, Inc." on Justia Law