Justia Business Law Opinion Summaries

Pro-Mark Services, Inc., a general contracting construction company, obtained payment and performance bonds from Hartford Accident and Indemnity Company as required by the Miller Act. To facilitate this, Pro-Mark and other indemnitors entered into a General Indemnity Agreement (GIA) with Hartford, assigning certain rights related to bonded contracts. Later, Pro-Mark entered into two substantial business loan agreements with Capital Credit Union (CCU), secured by most of Pro-Mark’s assets, including deposit accounts. Recognizing potential conflicts over asset priorities, Hartford and CCU executed an Intercreditor Collateral Agreement (ICA) to define their respective rights and priorities in Pro-Mark’s assets, distinguishing between “Bank Priority Collateral” and “Surety Priority Collateral,” and specifying how proceeds should be distributed.After Pro-Mark filed for chapter 7 bankruptcy in the United States Bankruptcy Court for the District of North Dakota, CCU placed an administrative freeze on Pro-Mark’s deposit accounts and moved for relief from the automatic stay to exercise its right of setoff against the funds in those accounts. Hartford objected, claiming a superior interest in the funds based on the GIA and ICA. The bankruptcy court held hearings and, after considering the parties’ briefs and stipulated facts, granted CCU’s motion, allowing it to set off the funds. The bankruptcy court found CCU had met its burden for setoff and determined Hartford did not have a sufficient interest in the deposited funds, focusing on the GIA and North Dakota’s Uniform Commercial Code, and not the ICA.On appeal, the United States Bankruptcy Appellate Panel for the Eighth Circuit held that while the bankruptcy court had authority to adjudicate the priority dispute, it erred by failing to analyze the parties’ respective rights under the ICA, which governed the priority of distributions. The Panel reversed the bankruptcy court’s order and remanded the case for further proceedings consistent with its opinion. View "Hartford Accident and Indemnity Company v. Capital Credit Union" on Justia Law

The Securities and Exchange Commission (SEC) initiated a civil enforcement action against several individuals, alleging they orchestrated profitable “pump-and-dump” schemes to artificially inflate stock prices and then sell shares at a profit, harming investors. The SEC ultimately obtained final judgments and recovered over $11 million in sanctions. Under the Dodd-Frank Act, the SEC is required to pay whistleblower awards to individuals who voluntarily provide original information leading to successful enforcement actions. After posting a Notice of Covered Action, five claimants submitted applications for whistleblower awards related to this enforcement action.The SEC’s Claims Review Staff awarded 30 percent of the monetary sanctions to Daniel Fisher, a former executive at a company central to the investigation, finding that Fisher provided new, helpful information that substantially advanced the investigation. The staff denied the other applications, including those from Lee Michael Pederson, John Amster, and Robert Heath, concluding that their information was either duplicative, based on publicly available sources, or not used by enforcement staff. Pederson and Fisher were found not to have acted jointly as whistleblowers, and Amster and Heath’s information was not relied upon in the investigation. The SEC affirmed these determinations in its final order.The United States Court of Appeals for the Eighth Circuit reviewed the SEC’s final order, applying a deferential standard to the agency’s factual findings and reviewing legal conclusions de novo. The court held that substantial evidence supported the SEC’s determinations: Pederson and Fisher did not act jointly, Pederson’s individual tips were not original or helpful, and Amster and Heath’s information did not lead to the enforcement action. The court also rejected Pederson’s due process and procedural arguments and denied his motion to compel. The petitions for review were denied, and the SEC’s order was affirmed. View "Pederson v. U.S. Securities Exch. Comm." on Justia Law

A waste hauling company operating in Kansas City brought suit against a mobile waste compaction business and its franchisor. The waste hauler owns containers that are leased to customers, who sometimes contract separately with the compaction company to compress waste inside those containers. The hauler alleged that the compaction company’s activities damaged its containers and interfered with its business relationships. The hauler sought various forms of relief, including damages, injunctive and declaratory relief, and nominal damages, but ultimately disavowed any claim for actual monetary damages, citing a lack of evidence to support such damages.The United States District Court for the Western District of Missouri denied the hauler’s request for a temporary restraining order, finding no irreparable harm. During discovery, the hauler admitted it could not identify or quantify any actual damages and stipulated it was not seeking damages outside Kansas City. The district court granted the compaction company’s motion to strike the hauler’s jury demand, holding that the hauler had not presented evidence of compensatory damages, that nominal damages were unavailable under Missouri law for the claims asserted, and that the remaining claims were equitable in nature. After a bench trial, the district court entered judgment for the compaction company and its franchisor, finding the hauler failed to prove essential elements of its claims, including actual damages and direct benefit conferred for unjust enrichment.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed. The court held that the hauler was not entitled to a jury trial under the Seventh Amendment because it failed to present evidence of compensatory damages and nominal damages were not available for its claims under Missouri law. The court also affirmed judgment for the compaction company on the trespass to chattels and unjust enrichment claims, finding the hauler failed to prove dispossession, damages, or a direct benefit conferred. View "Allied Services v. Smash My Trash, LLC" on Justia Law

Andrew and Jessie Welsh purchased The Press Bar and Parlor in 2016, managing it through two entities: Horseshoe Club, LLC, which owned the real estate, and Timeless Bar, Inc., which operated the bar. Andrew and Jessie were the sole members and officers of both entities. Illinois Casualty Company (ICC) issued a business owner’s policy covering the bar’s property and operations. Timeless Bar was the named insured, and Horseshoe Club was an additional insured. After their divorce in November 2019, Andrew took sole control of the businesses’ finances. On February 17, 2020, a fire destroyed The Press Bar and Parlor. Andrew and Jessie submitted a claim to ICC, stating the fire was of unknown origin. However, an investigation revealed Andrew had intentionally set the fire, leading to his conviction for arson. ICC denied the claim based on policy exclusions for concealment, misrepresentation, fraud, dishonesty, and intentional acts.The United States District Court for the District of Minnesota dismissed Jessie’s claims due to her lack of standing as a non-insured. On cross-motions for summary judgment, the court ruled in favor of ICC, attributing Andrew’s conduct to both business entities and concluding the policy did not cover the loss. The court also held that Minnesota’s statutory protection for innocent co-insureds did not extend to corporate entities.The United States Court of Appeals for the Eighth Circuit reviewed the district court’s grant of summary judgment de novo. The court affirmed the district court’s judgment, holding that Andrew’s misrepresentations were attributable to the business entities, and thus, ICC was justified in denying coverage. The court found no basis in Minnesota law to extend the innocent co-insured doctrine to corporations or limited liability companies. View "Timeless Bar, Inc. v. Illinois Casualty Co." on Justia Law

Lackie Drug Store, Inc. filed a putative class action against OptumRx, Inc. and other pharmacy benefit managers (PBMs), alleging violations of several Arkansas statutes due to the PBMs' failure to disclose, update, and notify pharmacies of changes to their Maximum Allowable Cost (MAC) lists. Lackie claimed this resulted in under-reimbursement for prescriptions. The case was initially filed in Arkansas state court and later removed to federal court. Lackie amended its complaint to include five claims, and OptumRx moved to dismiss the complaint on various grounds, including failure to state a claim and failure to exhaust administrative remedies.The United States District Court for the Eastern District of Arkansas dismissed two of Lackie's claims but retained three. The court also denied OptumRx's motion to dismiss based on the argument that Lackie failed to comply with pre-dispute procedures outlined in the Network Agreement. OptumRx later filed an answer and participated in discovery. After Lackie amended its complaint again, adding two new claims and tailoring the class definition to OptumRx, OptumRx moved to compel arbitration based on the Provider Manual's arbitration clause.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that OptumRx waived its right to compel arbitration for the original three claims by substantially invoking the litigation machinery before asserting its arbitration right. However, the court found that OptumRx did not waive its right to compel arbitration for the two new claims added in the amended complaint. The court also held that the district court erred in addressing the arbitrability of the new claims because the Provider Manual included a delegation clause requiring an arbitrator to decide arbitrability issues.The Eighth Circuit affirmed the district court's decision in part, reversed it in part, and remanded the case with instructions to grant OptumRx's motion to compel arbitration for the two new claims. View "Lackie Drug Store, Inc. v. OptumRx, Inc." on Justia Law

During the COVID-19 pandemic, K7 Design Group, Inc. (K7) offered to sell hand sanitizer to Walmart, Inc., doing business as Sam’s Club (Sam’s Club). K7 and Sam’s Club discussed and agreed upon the product, price, quantity, and delivery terms for various hand sanitizer products through email communications. K7 delivered over 1,000,000 units of hand sanitizer to Sam’s Club, which paid approximately $17.5 million. However, Sam’s Club did not collect or pay for the remaining hand sanitizer, leading to storage issues for K7.The United States District Court for the Western District of Arkansas held a jury trial, where the jury found in favor of K7 on its breach of contract claim and awarded $7,157,426.14 in damages. Sam’s Club’s motions for judgment as a matter of law and for a new trial were denied by the district court.The United States Court of Appeals for the Eighth Circuit reviewed the case. Sam’s Club argued that K7 failed to present sufficient evidence of an obligation to pay for the products, the jury’s verdict was against the weight of the evidence, and the district court abused its discretion in instructing the jury. The Eighth Circuit affirmed the district court’s decision, holding that the communications between K7 and Sam’s Club constituted binding orders under Arkansas’s Uniform Commercial Code (UCC). The court found that the evidence supported the jury’s verdict and that the district court did not abuse its discretion in its jury instructions or in denying Sam’s Club’s motions. The court also affirmed the district court’s award of prejudgment interest and attorney fees and costs. View "K7 Design Group, Inc. v. Walmart, Inc." on Justia Law

Anderson & Koch Ford, Inc., a Ford dealership in North Branch, Minnesota, operates under a Ford Sales and Service Agreement. In late 2022, Ford announced plans to establish a new dealership in Forest Lake, Minnesota, and to reassign half of Anderson & Koch’s designated sales area to the new dealership. Anderson & Koch filed a lawsuit in state court, alleging violations of the Minnesota Motor Vehicle Sale and Distribution Act (MVSDA), specifically sections 80E.13(k) and (p). Ford removed the case to federal court and moved to dismiss the claims.The United States District Court for the District of Minnesota partially granted Ford’s motion to dismiss, ruling that Anderson & Koch failed to state a claim under sections 80E.13(k) and (p) regarding the establishment of the new dealership. However, the court allowed Anderson & Koch to challenge the proposed change to its designated sales area under the same sections. Anderson & Koch then appealed the dismissal of its claims related to the new dealership.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo and affirmed the district court’s decision. The appellate court agreed that Anderson & Koch could not challenge the establishment of the new dealership under sections 80E.13(k) or (p) of the MVSDA. The court held that the establishment of a new dealership did not modify the existing franchise agreement, as required by section 80E.13(k), nor did it arbitrarily change the dealer’s area of sales effectiveness under section 80E.13(p). The court also noted that Anderson & Koch had dismissed its claims regarding the change to its sales area, leaving only the challenge to the new dealership on appeal. View "Anderson & Koch Ford, Inc. v. Ford Motor Company" on Justia Law

The case involves a group of in-state and out-of-state precious metal traders and their representatives (the "Bullion Traders") challenging Minnesota Statutes Chapter 80G, which regulates bullion transactions. The Bullion Traders argued that the statute violated the dormant Commerce Clause due to its extraterritorial reach, as defined by the term "Minnesota transaction."The United States District Court for the District of Minnesota initially found that Chapter 80G violated the dormant Commerce Clause. The case was then remanded by the United States Court of Appeals for the Eighth Circuit for a severability analysis. The district court concluded that striking portions of the "Minnesota transaction" definition cured the extraterritoriality concern and complied with Minnesota severability law.The Bullion Traders appealed, arguing that the severed statute still applied extraterritorially and that the district court erred in applying Minnesota severability law. The United States Court of Appeals for the Eighth Circuit reviewed the case de novo and affirmed the district court's decision. The appellate court found that the severed definition of "Minnesota transaction" no longer regulated wholly out-of-state commerce and that the statute, as severed, was complete and capable of being executed in accordance with legislative intent.The Eighth Circuit held that the district court correctly severed the extraterritorial provisions from Chapter 80G, and the remaining statute did not violate the dormant Commerce Clause. The court also agreed that the severed statute complied with Minnesota severability law, as the valid provisions were not essentially and inseparably connected with the void provisions, and the remaining statute was complete and executable. The judgment of the district court was affirmed. View "Styczinski v. Arnold" on Justia Law

Crabar/GBF, Inc. (Crabar) sued Mark Wright, Wright Printing Co. (WPCO), Mardra Sikora, Jamie Frederickson, and Alexandra Kohlhaas for trade secret violations and related claims. Crabar alleged that after purchasing WPCO's folder business, WPCO retained and used confidential information, including customer lists and sales data, to launch a competing folder business. Crabar also claimed that former employees Kohlhaas and Frederickson took and used Crabar's confidential information to aid WPCO's new business.The United States District Court for the District of Nebraska held an eleven-day trial, where the jury found all defendants liable on each count, awarding Crabar over five million dollars in compensatory and exemplary damages. Post-trial motions led to a final amended judgment of roughly four million dollars against the defendants. Defendants appealed, challenging several of the district court’s rulings.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court's decisions, including the denial of WPCO's motion for judgment as a matter of law regarding a contractual damages limitation, finding WPCO waived the argument by not raising it in the final pretrial order. The court also upheld the enforceability of confidentiality agreements signed by Frederickson and Kohlhaas, and found sufficient evidence to support the jury's findings on trade secret misappropriation, tortious interference, and causation of damages.The Eighth Circuit also ruled that the district court did not abuse its discretion in admitting expert testimony on damages, as the expert's assumptions were not fundamentally unsupported. The court found no error in the jury's award calculations, rejecting the argument of double recovery and affirming the sufficiency of evidence linking defendants' actions to Crabar's damages. The court concluded that the jury's awards were not excessive or the result of passion or prejudice. The judgment of the district court was affirmed. View "Crabar/GBF, Inc. v. Wright" on Justia Law

InfoDeli, LLC and Breht C. Burri (collectively, InfoDeli) brought a lawsuit against Western Robidoux, Inc. (WRI), Engage Mobile Solutions, LLC, and other defendants, including members of the Burri family and several companies. InfoDeli alleged copyright infringement, tortious interference, and violations of the Missouri Computer Tampering Act (MCTA). The dispute arose from a joint venture between InfoDeli and WRI, where InfoDeli created webstores for clients, and WRI provided printing and fulfillment services. The relationship deteriorated when WRI hired Engage to replace InfoDeli's webstores, leading to the lawsuit.The United States District Court for the Western District of Missouri granted summary judgment to the defendants on the copyright infringement claim, dismissed or tried the remaining claims before a jury, which found in favor of the defendants. The district court also granted in part and denied in part InfoDeli's sanctions motion and awarded attorney’s fees and costs to the defendants. InfoDeli appealed these decisions.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court's grant of summary judgment on the copyright infringement claim, finding that InfoDeli failed to show that the nonliteral elements of its webstores were protected by copyright. The court also upheld the district court's denial of InfoDeli's motion for summary judgment on CEVA's conversion counterclaim, finding it was timely under Missouri law. Additionally, the court affirmed the district court's denial of InfoDeli's posttrial motions for judgment as a matter of law and a new trial as untimely.The Eighth Circuit also reviewed the sanctions imposed by the district court and found no abuse of discretion in the amount awarded or the decision not to impose additional sanctions under Rule 37(e). Finally, the court upheld the award of attorney’s fees and costs to the defendants, finding that the district court did not abuse its discretion in its assessment. The court affirmed the district court's decisions in all respects. View "InfoDeli, LLC v. Western Robidoux, Inc." on Justia Law