Justia Business Law Opinion Summaries

From 1992-2013, a Milwaukee ordinance limited taxicab permits to those in existence on January 1, 1992 that were renewed. The ordinance lowered the ceiling over time by virtue of the nonrenewals. By 2013 the number of permits had diminished from 370 to 320. The price of permits on the open market soared as high as $150,000. In 2013, after a successful equal protection and substantive due process challenge, the city conducted a lottery, which attracted 1700 permit seekers. Milwaukee had only one taxicab per 1850 city residents, a much lower ratio than comparable cities. The city eliminated the cap in 2014. In the meantime, “ridesharing” companies such as Uber, had diminished the profitability of the existing taxi companies. Plaintiffs, cab companies, alleged that the increased number of permits has taken property without compensation. The Seventh Circuit affirmed dismissal. The taxi companies were aware that there was no guarantee that the ordinance would remain in force indefinitely, and that, were it repealed, they would be faced with new competition that would threaten their profits. The ordinance gave them no property right; its repeal invaded no right conferred by the Constitution. The court similarly rejected state-law claims of breach of contract, promissory estoppel, and equitable estoppel. View "Joe Sanfelippo Cabs, Inc. v. City of Milwaukee" on Justia Law

Darren's parents began operating S&N Fireworks in the 1970s and obtained a Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) license (18 U.S.C. 842(f)) to import explosives. Darren founded DCV in 2004, intending to eventually buy out S&N. DCV shared S&N’s Lincoln, Illinois place of business and obtained its own ATF import license. From 2004-2011, S&N ordered fireworks from DCV, which imported them from China and immediately transferred them to S&N, which packaged and sold fireworks for shows. Darren was employed by S&N and was listed as a “responsible person” on S&N’s license. DCV was not storing any explosives during this period and had no ATF violations. S&N, however, was cited for numerous violations in a 2006 inspection, relating to records and storage of fireworks. A 2009 inspection revealed multiple violations. Darren attended a meeting and signed a report acknowledging the violations. ATF notified S&N that its license would not be renewed. S&N voluntarily surrendered its license. DCV bought out S&N’s inventory, equipment, and contracts Darren delegated substantial responsibility to his brother, who had been responsible for many of S&N’s problems. ATF inspected in 2013, found multiple violations, and notified Darren that it did not intend to renew DCV’s license. DCV argued that its violations should not be deemed willful given its perfect compliance record before 2013. The agency responded that S&N and DCV were essentially the same operation and equated the S&N violations with DCV. After a hearing, the license was not renewed. The Seventh Circuit upheld the decision as supported by substantial evidence. View "D.C.V. Imports, L.L.C. v. Bureau of Alcohol, Tobacco, Firearms & Explosives" on Justia Law

Clorox decided to sell the largest-sized containers of its products only to discount warehouses such as Costco and Sam’s Club. Ordinary grocery stores, including Woodman’s, could only obtain smaller packages. Arguing that package size is a promotional service, Woodman’s sued Clorox for unlawful price discrimination under the Robinson-Patman Act, 15 U.S.C. 13(e). The district court denied Clorox’s motion to dismiss. On interlocutory appeal, the Seventh Circuit reversed. Only promotional “services or facilities” fall within subsection 13(e). Size alone is not enough to constitute a promotional service or facility for purposes of subsection 13(e); any discount that goes along with size must be analyzed under subsection 13(a). The convenience of the larger size is not a promotional service or facility. View "Woodman's Food Mkt, Inc. v. Clorox Co." on Justia Law

Witter contends that in August 2007 he telephoned Skelton, an employee of his broker, TransAct, with instructions to cancel several standing orders. Skelton did not do so, and Witter lost $23,000 on the resulting market position. Skelton claims that Witter never told him to cancel all seven of the working orders at issue. Witter filed a complaint with the Commodity Futures Trading Commission, 7 U.S.C. 18(a), which found no violation. The judgment officer refused to draw an adverse inference based on TransAct’s failure to produce a recording of the “one crucial conversation” because TransAct was not required to record the call; he found that Skelton’s version was more plausible and Witter had a “propensity to confuse trading terms” like “position” and “order.” The Seventh Circuit affirmed, finding the Commission’s decision was supported by the evidence. Federal regulations require that, before buying or selling a commodity, a merchant must receive either “specific authorization” or “authorization in writing,” 17 C.F.R. 166.2. No regulation requires the merchant to record phone calls to cancel previously authorized orders to buy or sell. View "Witter v. Commodity Futures Trading Comm'n" on Justia Law

In 2012 Walgreens acquired a 45 percent equity stake in Alliance, plus an option to acquire the rest of Alliance’s equity for a mixture of cash and Walgreens stock. Walgreens later announced its intent to purchase the remainder of Alliance and engineer a reorganization whereby Walgreens would become a wholly-owned subsidiary of a new corporation, Walgreens Boots Alliance. Within two weeks after Walgreens filed a proxy statement seeking shareholder approval, a class action was filed; 18 days later, less than a week before the shareholder vote, the parties agreed to settle. The settlement required Walgreens to issue several requested disclosures and authorized class counsel to request $370,000 in attorneys’ fees, without opposition from Walgreens. The Seventh Circuit reversed approval of the settlement, calling the supplemental disclosures “a trivial addition to the extensive disclosures already made in the proxy statement.” “The oddity of this case is the absence of any indication that members of the class have an interest in challenging the reorganization.... The only concrete interest suggested … is an interest in attorneys’ fees.... Certainly class counsel, if one may judge from their performance in this litigation, can’t be trusted to represent the interests of the class.” View "Hays v. Berlau" on Justia Law

Caudill, the owner of a real estate brokerage, sued Keller Williams for breach of a 2001 franchise contract. Caudill's position as Regional Director of Keller Williams was terminated in 2010; her franchise was terminated in 2011. The suit settled with an agreement including a prohibition against disclosure of its terms, except to tax professionals, insurance carriers, and government agencies; those recipients had to promise to keep them in confidence. Any violation entitled the victim to damages of $10,000. Months later, Keller Williams issued an FDD (Franchise Disclosure Document) to about 2000 existing or potential franchisees and other parties, describing Caudill’s lawsuit in detail. The FDD was not required by the Federal Trade Commission under 16 C.F.R. 436.2(a). Caudill sought $20 million (2000 x $10,000) in damages. The district judge rejected her claim, noting that under Texas law a liquidated damages clause is enforceable only if “the harm caused by the breach is incapable or difficult of estimation and … the [specified] amount of liquidated damages is a reasonable forecast of just compensation.” The Seventh Circuit affirmed. It is unreasonable to suppose, without evidence, that the dissemination of the FDD caused Caudill a $20 million loss. Although the burden of proving that a liquidated damages clause is actually a penalty clause is on the defendant, Keller Williams established that there was no basis for the requested damages. View "Caudill v. Keller Williams Realty, Inc." on Justia Law

In 2013, Panther, a marketing and brand management company, signed a contract with IndyCar, to purchase access to coveted space in the “Fan Village” at IndyCar racing events, an area where sponsors set up displays to attract fans. The Army National Guard had been Panther’s team sponsor, 2008-2013. After it signed the 2013 contract, Panther learned that another team, RLL, intended to provide the Guard with Fan Village space. Believing that RLL had conspired with IndyCar and the Docupak agency to persuade the Guard to sponsor RLL instead of Panther, Panther brought suit in state court against RLL, Docupak, IndyCar, and active‐duty Guard member Metzler, who acted as the liaison between the Guard and Panther. The defendants removed the case to federal court, where the United States was substituted as a party for Metzler, 28 U.S.C. 2679(d); Panther filed an amended complaint that did not name either Metzler or the United States. The district court dismissed the complaint against RLL, IndyCar, and Docupak and found the United States’s motion to dismiss for lack of jurisdiction moot. The Seventh Circuit vacated and remanded for dismissal for lack of jurisdiction; the basis for federal jurisdiction disappeared when Panther amended its complaint. View "Panther Brands, LLC v. Indy Racing League, LLC" on Justia Law

HMC was a shipping and shipyard services company, whose president was Hannah. HMC had a collective bargaining agreement with the mechanics union that required it to make contributions to the union’s pension fund to finance pensions for HMC’s employees. Hannah’s son, Mark, formed FCG, which bought the assets of HMC. No significant liabilities of HMC were explicitly transferred to FCG, which tried to negotiate its own collective bargaining agreement with the union. When HMC employees voted to decertify the union in 2009. the pension fund assessed withdrawal liability under the Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381. HMC had become insolvent, so the fund sought to impose HMC’s liability to the fund on FCG as HMC’s successor. The district court entered summary judgment in favor of FCG. The Seventh Circuit reversed in part, stating that lack of evidence that Mark knew about the pension fund and the possibility of withdrawal liability cannot excuse that liability. The court stated that fraudulent intent, while a factor in deciding whether there is alter ego liability, is not necessarily an essential factor, so summary judgment on a theory of successor liability was premature. View "Bd. of Trs. of the Auto. Mechs' Local v. Full Circle Group, Inc." on Justia Law

Attorney Conour stole more than $4.5 million from clients’ trust funds, was convicted of fraud, and is serving 10 years in prison. Shortly before Conour’s crimes came to light, attorney Devereux left Conour Law Firm, taking clients with him to Ladendorf’s law firm. These clients ultimately produced attorneys’ fees aggregating some $2 million. The money was claimed by Devereux and the Ladendorf Firm (the Lawyers), several of Conour’s victims, and the lender on a loan to the Conour Firm to finance contingent-fee cases. The district court concluded that the Conour Firm was entitled to about $775,000 under principles of quantum meruit and that the lender had priority over the victims. The Seventh Circuit reversed, first holding that the Lawyers owe the Conour Firm less than the current value of the Conour Firm’s indebtedness to the lender and substantially less than what Conour owes to the victims. Conour converted the victims’ funds before taking the loan; victims of a lawyer’s breach of trust have a remedy notwithstanding the later grant of a security interest to a commercial lender, as reflected in Indiana Code 30-4-3-22(c)(2). That priority applies notwithstanding that Conour’s firm was an LLC, a separate entity. View "ACF 2006 Corp v. Devereux" on Justia Law

Riverside, owned half by GMH and half by Heritage (Rezko’s company), owned a valuable Chicago property. Sirazi had helped Rezko finance several investments, including guaranteeing a $5 million loan from Republic. The loan came due in 2006. Rezko was already in default on millions of dollars borrowed from Sirazi. Sirazi and Rezko signed a settlement agreement: Rezko gave Sirazi a security interest in all distributions from Heritage and committed to a priority order for paying off debts using Heritage proceeds. Rezko defaulted on another loan, triggering Sirazi’s guaranty, so that Rezko then owed Sirazi $12.9 million. Meanwhile, Rezko had been indicted. GMH bought him out for $31.8 million. Rezko received $5 million, which paid for his criminal defense; the balance consisted of forgiveness of Rezko’s debt to GMH. With the approval of Heritage’s general counsel and GMH chairman Auchi, the agreement ignored Sirazi’s interest. A jury awarded Sirazi compensatory damages of $12.9 million against GMH and Auchi and punitive damages of $5 million against each; the judge set aside the award against Auchi. The Seventh Circuit affirmed in part, in favor of Sirazi. Rezko breached the settlement by failing to pay Sirazi; the jury reasonably found GMH liable for tortious interference with contract. GMH was enriched unjustly. The award was reduced by $524,000 that Sirazi received in Rezko’s bankruptcy and the award against Auchi was reinstated. View "Sirazi v. Gen. Mediterranean Holding, S.A." on Justia Law