Justia Business Law Opinion Summaries

A company that supplies allergy testing materials and personnel to primary-care physicians in Tennessee alleged that several insurers and a dominant allergy-care medical group conspired to drive it and its contracting physicians out of the market. The company provided technicians and supplies to physicians, who then billed insurers for allergy services. The company claimed that the insurers and the medical group coordinated audits, denied claims, and set restrictive reimbursement policies, which led physicians to stop using its services and caused it financial harm.The United States District Court for the Eastern District of Tennessee dismissed the company’s federal antitrust claims at the pleading stage, finding it lacked standing to sue under the antitrust laws, and later granted summary judgment to the defendants on the company’s state-law tort claims. The company appealed both the dismissal of its antitrust claims and the grant of summary judgment on its tort claims.The United States Court of Appeals for the Sixth Circuit affirmed the district court’s decisions. The Sixth Circuit clarified that, under federal antitrust law, a plaintiff must show both antitrust injury and proximate causation. The court held that the company’s injuries were only indirect, as they resulted from harms inflicted on the physicians, who were the direct victims of the alleged anticompetitive conduct. Applying the Supreme Court’s rule from Illinois Brick Co. v. Illinois, the court found that indirect sellers—those two or more steps removed in the distribution chain—may not sue for antitrust violations. The court also affirmed summary judgment on the state-law claims, concluding that the company failed to show either malice or causation as required for tortious interference, and that its civil conspiracy claim could not survive without an underlying tort. View "Academy of Allergy & Asthma in Primary Care v. Amerigroup Tennessee, Inc." on Justia Law

Diego Pavia, a college football player, sought to play for Vanderbilt University during the 2025 season. After a successful 2024 season, Pavia faced ineligibility under National Collegiate Athletic Association (NCAA) rules, which limit athletes to four seasons of intercollegiate competition, including seasons played at junior colleges. Pavia’s path included time at a junior college, New Mexico State University, and Vanderbilt. The NCAA counted his 2021 junior college season toward his eligibility, effectively barring him from playing in 2025. Pavia argued that this rule violated the Sherman Act and sought injunctive relief to allow him to play in the 2025 and 2026 seasons.The United States District Court for the Middle District of Tennessee granted Pavia a preliminary injunction, preventing the NCAA from enforcing the rule against him for the 2025 season and from applying its restitution rule to Vanderbilt or Pavia based on his participation. The NCAA appealed this decision to the United States Court of Appeals for the Sixth Circuit.While the appeal was pending, the NCAA issued a waiver allowing all similarly situated athletes, including Pavia, to play in the 2025 season. The NCAA confirmed that this waiver would remain in effect regardless of the outcome of the appeal. The United States Court of Appeals for the Sixth Circuit determined that, because Pavia had already received the relief he sought at the preliminary injunction stage, the appeal was moot. The court held that it could not grant any further effectual relief and dismissed the appeal for lack of jurisdiction. The court also declined to vacate the preliminary injunction, finding that the NCAA’s own actions had caused the case to become moot. View "Pavia v. NCAA" on Justia Law

A closely held Kentucky corporation, operated by members of the Tarter family, experienced a transfer of shares from the third generation (David, Donald, and Joy) to their children in December 2012. Despite this transfer, the corporation failed to observe corporate formalities such as holding annual shareholder or board meetings, leaving the composition of the board unclear. This ambiguity became significant when three shareholders sought to sue a family member, Josh Tarter, for alleged misconduct during his tenure as president. The plaintiffs attempted to have the board authorize the corporation to sue, and, alternatively, brought a derivative action on behalf of the corporation.The United States District Court for the Eastern District of Kentucky initially dismissed the complaint, finding the plaintiffs lacked standing for direct claims and failed to make a demand or show futility for derivative claims. After the plaintiffs attempted to cure these defects by calling a special board meeting and authorizing the suit, the district court first allowed the claims to proceed, then later granted summary judgment to the defendants, holding that the board vote was invalid because the third-generation members had resigned by transferring their shares. Upon reconsideration, the court vacillated, at one point accepting a theory that Anna Lou was the sole board member, but ultimately reinstated summary judgment for the defendants, reasoning that the plaintiffs had not properly pleaded this theory.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo. It held that under Kentucky law and the corporation’s bylaws, the third-generation board members did not effectively resign by merely transferring their shares, as resignation required written or oral notice. Therefore, the board remained as constituted before the share transfer, and the special meeting authorizing the direct suit was valid. The court vacated the district court’s judgment, allowing the direct suit by the corporation to proceed, but affirmed dismissal of the derivative claims where demand was made and refused. View "C-Ville Fabricating, Inc. v. Tarter" on Justia Law

Between 2017 and 2020, a major energy company and its senior executives allegedly orchestrated a large-scale bribery scheme, funneling approximately $60 million to key Ohio political figures and regulators through a network of shell companies and political action committees. In exchange, the company secured favorable legislation (Ohio House Bill 6), which provided substantial financial benefits, including a $2 billion bailout for its nuclear power plants. The scheme was concealed from shareholders and the public, with the company issuing public statements and regulatory filings that failed to disclose the true nature and risks of its political activities. When the bribery was exposed in 2020, the company’s stock and debt securities plummeted, resulting in significant losses for investors.After the scheme was revealed, investors filed multiple class actions in the United States District Court for the Southern District of Ohio, which were consolidated. The plaintiffs alleged violations of the Securities Exchange Act of 1934, specifically section 10(b) and SEC Rule 10b-5, claiming that the company and its executives made material misstatements and omissions that artificially inflated the value of its securities. The district court denied motions to dismiss and later certified a class of investors, holding that the plaintiffs were entitled to a presumption of reliance under Affiliated Ute Citizens of Utah v. United States, and that their damages methodology satisfied the predominance requirement for class certification.On interlocutory appeal, the United States Court of Appeals for the Sixth Circuit reviewed the class certification order. The court held that the district court erred in applying the Affiliated Ute presumption of reliance because the case was primarily based on misrepresentations, not omissions. The Sixth Circuit established a framework for distinguishing between omission- and misrepresentation-based cases and clarified that the Affiliated Ute presumption applies only if a case is primarily based on omissions. The court also found that the district court failed to conduct the required “rigorous analysis” of the plaintiffs’ damages methodology under Comcast Corp. v. Behrend. The Sixth Circuit vacated the class certification order to the extent it relied on the Affiliated Ute presumption and remanded for further proceedings consistent with its opinion. View "Owens v. FirstEnergy Corp." on Justia Law

Two companies, HBKY and Elk River, each claimed rights to thousands of acres of timber in Kentucky based on their respective contracts with a third party, Kingdom Energy Resources. Kingdom had entered into a timber sales contract with Elk River, allowing Elk River to cut and remove timber from certain land. Separately, Kingdom obtained a $22 million loan from a group of lenders, with HBKY acting as their agent, and mortgaged several properties—including the timber in question—as collateral for the loan. Kingdom later breached both agreements: it ousted Elk River from the land, violating the timber contract, and defaulted on the loan, leaving both HBKY and Elk River with competing claims to the timber.After HBKY secured a judgment in a New York federal court declaring Kingdom in default, it registered the judgment in the United States District Court for the Eastern District of Kentucky and initiated foreclosure proceedings on the collateral, including the timber. Elk River and its president, Robin Wilson, were joined as defendants due to their claimed interest. The district court granted summary judgment to HBKY, finding that Elk River did not obtain title to the timber under its contracts, did not have a superior interest, and was not a buyer in the ordinary course of business under Kentucky law.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo. The court held that the loan documents did not authorize a sale of the timber free of HBKY’s security interest, as the mortgage explicitly stated that the security interest would survive any sale. The court also found that Elk River failed to provide sufficient evidence to establish its status as a buyer in the ordinary course of business. Accordingly, the Sixth Circuit affirmed the district court’s grant of summary judgment in favor of HBKY. View "HBKY, LLC v. Elk River Export, LLC" on Justia Law

Veltor Underground LLC, a construction business, applied for a $125,000 loan under the Paycheck Protection Program (PPP) during the COVID-19 pandemic, claiming it had six employees. However, the Small Business Administration (SBA) later discovered that these "employees" were actually independent contractors. Consequently, the SBA denied Veltor's request for loan forgiveness, as payments to independent contractors do not qualify as "payroll costs" under the CARES Act.The United States District Court for the Eastern District of Michigan granted summary judgment in favor of the defendants, the SBA and associated individuals. The court found that Veltor's payments to independent contractors did not meet the statutory definition of "payroll costs," which is a requirement for loan forgiveness under the PPP.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the CARES Act's definition of "payroll costs" includes only payments to employees and not to independent contractors. The court reasoned that the Act distinguishes between businesses with employees and self-employed individuals, including sole proprietors and independent contractors, and that the term "payroll costs" does not encompass payments made to independent contractors by businesses. Therefore, Veltor was not entitled to loan forgiveness and must repay the loan. View "Veltor Underground, LLC v. SBA" on Justia Law

The defendants, Richard Maike, Doyce Barnes, and Faraday Hosseinipour, were involved in a company called Infinity 2 Global (I2G), which the FBI determined to be a pyramid scheme. The company collected approximately $34 million from investors, most of whom lost money. After a 25-day trial, a jury convicted the defendants of conspiracy to commit mail fraud and conspiracy to commit securities fraud. The defendants appealed their convictions, presenting numerous arguments for reversal.The United States District Court for the Western District of Kentucky initially handled the case, where the jury found the defendants guilty on both counts. The defendants were sentenced to varying prison terms: Maike received 120 months, Barnes 48 months, and Hosseinipour 30 months. The defendants then appealed to the United States Court of Appeals for the Sixth Circuit, challenging the sufficiency of the evidence and the jury instructions, among other issues.The United States Court of Appeals for the Sixth Circuit reviewed the case and rejected all the defendants' arguments. The court found that there was sufficient evidence to support the jury's verdicts on both counts. The court also determined that the jury instructions were appropriate and did not mislead the jury. The court affirmed the criminal judgments of Maike and Barnes. For Hosseinipour, the court affirmed her criminal judgment but vacated the district court's denial of her Rule 33 motion for a new trial, remanding her case for reconsideration of that motion. View "United States v. Maike" on Justia Law

Tina McPherson purchased a car from Suburban Ann Arbor, a Michigan car dealership, in July 2020. She was misled into believing she had been approved for financing, paid a $2,000 down payment, and drove the car home. Later, she was informed that the financing had fallen through and was given the option to sign a new contract with worse terms or return the car. McPherson refused the new terms, and Suburban repossessed the car and kept her down payment and fees. McPherson sued Suburban, alleging violations of state and federal consumer protection laws.A federal jury found Suburban liable for statutory conversion under Michigan law and violations of the Michigan Regulation of Collection Practices Act, among other claims. The jury awarded McPherson $15,000 in actual damages, $23,000 for the value of the converted property, and $350,000 in punitive damages. The district court denied McPherson's request for treble damages but awarded her $418,995 in attorney’s fees, $11,212.61 in costs, and $6,433.65 in prejudgment interest, totaling $824,641.26. McPherson appealed the denial of treble damages and the amount of attorney’s fees awarded, while Suburban cross-appealed the fee award as excessive.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the district court did not abuse its discretion in denying treble damages, as the $350,000 punitive damages already served to punish and deter Suburban's conduct. The court also found that the district court properly calculated the attorney’s fees, considering the market rates and the skill of McPherson’s attorneys. The court affirmed the district court’s judgment in all respects. View "McPherson v. Suburban Ann Arbor, LLC" on Justia Law

A publicly traded company, CoreCivic, which operates private prisons, faced scrutiny after the Bureau of Prisons raised safety and security concerns about its facilities. Following a report by the Department of Justice's Inspector General highlighting higher rates of violence and other issues in CoreCivic's prisons compared to federal ones, the Deputy Attorney General recommended reducing the use of private prisons. This led to a significant drop in CoreCivic's stock price and a subsequent shareholder class action lawsuit.The United States District Court for the Middle District of Tennessee, early in the litigation, issued a protective order allowing parties to designate discovery materials as "confidential." This led to many documents being filed under seal. The Nashville Banner intervened, seeking to unseal these documents, but the district court largely maintained the seals, including on 24 deposition transcripts, without providing specific reasons for the nondisclosure.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court emphasized the strong presumption of public access to judicial records and the requirement for compelling reasons to justify sealing them. The court found that the district court had not provided specific findings to support the seals and had not narrowly tailored the seals to serve any compelling reasons. The Sixth Circuit vacated the district court's order regarding the deposition transcripts and remanded the case for a prompt decision in accordance with its precedents, requiring the district court to determine if any parts of the transcripts meet the requirements for a seal within 60 days. View "Grae v. Corrections Corp. of Am." on Justia Law

In 2008, Kinzel, then CEO of Cedar Fair, borrowed $8,000,000 from Merrill Lynch to finance his exercise of the company’s stock options and to pay estimated taxes that would be due immediately upon exercise. Kinzel pledged the shares that he would acquire as collateral and entered into an agreement that allowed Merrill Lynch, “in its sole discretion and without prior notice,” to “liquidate” the collateral upon any of twelve events, including “if the value of the . . . collateral is in the sole judgment of [Merrill Lynch] insufficient.” The market value of the company dropped from the exercise price of $23.19 per share in April 2008 to $6.99 per share in March 2009. Having set a $7.00-per-share “trigger” to liquidate, Merrill Lynch began selling Kinzel’s shares, without advance notice to Kinzel and without first making demand upon Kinzel for repayment. Kinzel appealed the district court’s denial of leave to file an amended complaint to reassert a breach-of-contract claim that had been dismissed, and final judgment in favor of Merrill Lynch on a breach-of-good-faith claim. The Sixth Circuit affirmed, finding that Kinzel could not state a claim for breach of contract and that Merrill Lynch exercised its discretion within the “contemplated range” of “judgment based upon sincerity, honesty, fair dealing and good faith.” View "Kinzel v. Bank of America" on Justia Law