Justia Business Law Opinion Summaries

The complaint and referenced documents show that Quiznos fast-food franchise had borrowed heavily before its business sharply declined. From 2007 to 2011, Quiznos lost roughly 3,000 franchise restaurants and profitability plunged. With this plunge, Quiznos could no longer satisfy its loan covenants. As a result, Avenue Capital Management II, L.P., “Fortress” (a collective of investment entities) and others could foreclose on collateral, call in debt, or accelerate payments. To avoid a calamity, Quiznos restructured its debt. This securities-fraud matter arose out of the attempt to restructure that debt. Multiple investment funds purchased equity in Quiznos, and despite efforts, Avenue and Fortress sued former Quiznos managers and officers, claiming they had fraudulently misrepresented Quiznos’ financial condition. The district court dismissed the causes of action based on securities fraud based on a failure to state a valid claim. Finding no reversible error in that dismissal, the Tenth Circuit affirmed the district court’s decision. View "Avenue Capital Management II, v. Schaden" on Justia Law

Defendants-Appellants Ultegra Financial, its CEO Muhammad Howard, (collectively Ultegra Defendants) and Clive Funding, Inc., appealed a district court’s order denying their motion to compel arbitration. In 2013, Ragab entered into business relationship with the Ultegra Defendants. The parties had six agreements. The agreements contained conflicting arbitration provisions; the conflicts involved: (1) which rules would govern, (2) how the arbitrator would be selected, (3) the notice required to arbitrate, and (4) who would be entitled to attorneys’ fees and on what showing. In 2015, Ragab sued the Ultegra Defendants for misrepresentation and for violating several consumer credit repair statutes. The district court found that Ragab’s claims fell within the scope of all six agreements. The Ultegra Defendants moved to compel arbitration. The district court denied the motion to compel, concluding that there was no actual agreement to arbitrate as there was no meeting of the minds as to how claims that implicated the numerous agreements would be arbitrated. The Ultegra Defendants appealed that finding, and seeing no reversible error in the judgment, the Tenth Circuit affirmed. View "Ragab v. Howard" on Justia Law

This case involved a dispute between two competing prefabricated steel building companies in Colorado. Defendants-Appellants Atlantic Building Systems, LLC d/b/a Armstrong Steel Corporation and its CEO, Ethan Chumley (collectively, “Armstrong Steel”), appealed the district court’s denial of immunity under the Communications Decency Act (“CDA”). The underlying dispute involved Armstrong Steel’s negative online advertising campaign against General Steel. When internet users searched for “General Steel,” negative advertisements from Armstrong Steel would appear on the results page. Clicking on the advertisements would direct users to Armstrong Steel’s web page entitled, “Industry Related Legal Matters” (“IRLM Page”). General Steel brought four claims: (1) unfair competition and unfair trade practices under the Lanham Act, (2) libel and libel per se, (3) intentional interference with prospective business advantage, and (4) civil conspiracy. Armstrong Steel sought summary judgment, claiming immunity from suit and liability under Section 230 of the CDA. The district court found that Armstrong Steel was entitled to immunity for three posts because those posts simply contained links to content created by third parties. The court refused, however, to extend CDA immunity to the remaining seventeen posts and the internet search ads. The court found that the “defendants created and developed the content of those ads,” and were therefore not entitled to immunity. After review, the Tenth Circuit dismissed this appeal for lack of jurisdiction, concluding that the CDA provided immunity from liability, not suit, and the district court’s order did not qualify under the collateral order doctrine. View "General Steel Domestic Sales v. Chumley" on Justia Law

Vehicle Market Research, Inc. (VMR) sued Mitchell International, Inc. (Mitchell) to recover royalties Mitchell allegedly owed pursuant to a software licensing agreement. The jury returned a verdict for Mitchell, and VMR appealed. VMR argued: (1) the district court erred by allowing Mitchell, contrary to the law of the case doctrine, to cross-examine VMR’s sole shareholder on the value of VMR as he stated in his personal bankruptcy; and (2) the district court erred in omitting part of VMR’s proposed jury instruction on Rule 30(b)(6) witnesses. Finding no error, the Tenth Circuit affirmed. View "Vehicle Market Research v. Mitchell International" on Justia Law

Prior to petitioner-appellant Corbin McNeill retiring as an executive to a utility company, "he came across a complicated little scheme suggested by some well-heeled tax advisors." At its core, the scheme was to transfer to McNeill losses that foreign debt holders had already suffered: McNeill would claim the losses as deductions against his income; the foreign debt holders would transfer their assets for a slight premium over their current (and much reduced) market value because McNeill could use them to secure a tax advantage they didn’t need. To accomplish this, McNeill's tax advisors established a series of partnerships to which the foreign debt holders contributed their underwater debt instruments and their basis in them. McNeill contributed a relatively small sum of money, but owned over 90% of the partnership. When the partnership sold the debt to third parties, it could claim to realize the whole of the losses, and McNeill could claim his income was offset by the losses. In aid of the scheme, various accounting and law firms supplied opinion letters affirming that the scheme would withstand IRS scrutiny. The IRS indeed questioned McNeill's partnerships, and determined McNeill owed back taxes. McNeill paid the tax then filed suit seeking a partial refund. McNeill didn’t suggest that the partnership scheme was lawful or that he should have been excused the taxes the IRS assessed. Instead, he argued only that he should have been excused from the penalties and associated interest the IRS had imposed. The district court declined to decide the merits of McNeill’s partner level defense, holding it was precluded from doing so by Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). The Tenth Circuit concluded this judgment was made in error, reversed and remanded for further proceedings. View "Mc Neill v. United States" on Justia Law

Plaintiff Forney Industries, Inc.'s product packaging has, since at least 1989, used some combination of red, yellow, black, and white coloration. The issue in this case was whether Forney's use of colors in its metalworking product line was a protected mark under the Lanham Act. Forney alleged that Defendant Daco of Missouri, Inc., which did business as KDAR Co. (KDAR), infringed on its protected mark by packaging KDAR’s “Hot Max” products with similar colors and a flame motif. The district court granted summary judgment to KDAR and the Tenth Circuit affirmed. Forney’s use of color, which was not associated with any particular shape, pattern, or design, was not adequately defined to be inherently distinctive, and Forney failed to produce sufficient evidence that its use of color in its line of products had acquired secondary meaning. View "Forney Industries v. Daco of Missouri" on Justia Law

CEEG (Shanghai) Solar Science & Technology Co., Ltd. (“CEEG”), a Chinese company, agreed to sell solar energy products to LUMOS, LLC, a U.S. company. After receiving certain shipments, LUMOS filed a warranty claim alleging workmanship defects, and refused to remit the balance due. After two years of "fitful" negotiations, CEEG filed an arbitration proceeding pursuant to the parties’ agreements. Although the parties had communicated exclusively in English to that point, CEEG served LUMOS with a Chinese-language notice of the proceedings, and LUMOS did not immediately realize what the notice was. After the arbitration panel ruled in its favor, CEEG moved for the district court to confirm the award. LUMOS filed a motion to dismiss, arguing that the Chinese-language notice caused it to miss the deadline to participate in appointing the arbitration panel. The district court granted the motion, finding that the notice was not reasonably calculated to apprise LUMOS of the arbitration proceedings. The Tenth Circuit agreed and affirmed. View "CEEG (Shanghai) Solar Science v. Lumos" on Justia Law

Plaintiffs, shareholders of ZAGG Inc., a publicly held Nevada corporation, filed a shareholder-derivative action seeking damages, restitution, and other relief for ZAGG. They alleged that past and present officers and directors of ZAGG violated section 14(a) of the Securities Exchange Act of 1934, breached their fiduciary duties to ZAGG, wasted corporate assets, and were unjustly enriched. The district court dismissed the suit on two alternative grounds: (1) Plaintiffs filed suit before presenting the ZAGG Board of Directors (the Board) with a demand to bring suit and they failed to adequately allege that such demand would have been futile; and (2) the complaint failed to state a claim. Plaintiffs appealed the dismissal on both of the district court's alternative grounds. Because the Tenth Circuit denied the challenge to the first ground, it did not address the second. View "Pikk v. Pedersen" on Justia Law

This appeal grew out of a conflict between the business models of Sprint Nextel Corporation and The Middle Man, Inc. Middle Man bought mobile telephones, including Sprint’s, and tries to resell them at a profit. Sprint brought a breach of contract lawsuit against Middle Man, and Middle Man counterclaimed seeking a declaration that its business model did not violate the contract that accompanied the purchase of Sprint telephones. The district court held as a matter of law that the contract unambiguously prohibited Middle Man from selling new mobile telephones purchased from Sprint regardless of whether they were active on Sprint’s network. In light of this holding, the district court: (1) granted judgment on the pleadings to Sprint on Middle Man’s counterclaim for a declaratory judgment; and (2) granted summary judgment to Sprint on its breach of contract claim, awarding Sprint nominal damages of $1. Middle Man appealed, contending that the entry of judgment on Sprint’s claim and Middle Man’s counterclaim was made in error and that the district court should have awarded judgment to Middle Man on both claims. The Tenth Circuit, after review of the contract at issue here, determined parts were ambiguous, and that the district court erred in ruling as a matter of law that it was not. As such, Sprint was not entitled to judgment on the pleadings or summary judgment. The district court's judgment was vacated and the matter remanded for further proceedings. View "Sprint Nextel Corp. v. Middle Man" on Justia Law

This case involved competing claims to the ownership of Alderney Investments, LLC by relatives of Rudolf Skowronska (Rudolf), a Polish national. The initial filing with the Wyoming Secretary of State identified two Panamanian corporations as Alderney’s only two members: Nominees Associated Inc. and Management Nominees Inc. (MNI). In the years that followed, the beneficial ownership of Alderney went through a series of transformations: Rudolf initially held beneficial ownership of Alderney through a series of intermediary entities, including MNI and Nominees Associated Inc., as well as UEB Services, LTD and Morgan & Morgan Corporation Services S.A. In August 1999, Rudolf, although not individually a member of Alderney, purported to transfer ownership of Alderney to his half-sister, Dagmara Skowronska. Alderney’s managers subsequently voted to give Dagmara “power of attorney” over Alderney’s affairs. The Appellee, MNI, was Belizean corporation also named Management Nominees Inc., which contended that in 2003, Dagmara transferred her interest in Alderney to Rico Sieber, her husband and MNI’s sole shareholder. The Appellants, Alderney and Edyta Skowronska, Rudolf’s wife, contend that Dagmara transferred 90% of her interest to Edyta and her two children after Rudolf’s disappearance in 2005. Further complicating matters, in 2012, Alderney’s members, Management Nominees Inc. and Nominees Associated Inc., transferred their membership interest in Alderney to MNI, making MNI the sole member of Alderney. The dispute over ownership of Alderney came to a head in 2013, when Edyta sought to dissolve Alderney. Edyta, on behalf of Alderney, filed articles of dissolution with the Wyoming Secretary of State. The Secretary issued a certificate of dissolution for Alderney in March 2013, and this lawsuit followed. This case raised a dispute regarding the citizenship Alderney and whether, in light of the Tenth Circuit's decision in "Siloam Springs Hotel, L.L.C. v. Century Surety Co.," (781 F.3d 1233 (2015)), the district court lacked subject-matter jurisdiction over the case. The Tenth Circuit concluded that Alderney was an unincorporated association for purposes of federal diversity jurisdiction, with its citizenship therefore determined by that of its members. Because Alderney’s members were foreign corporations, there was not complete diversity between Alderney and MNI. As a result, the district court lacked subject-matter jurisdiction over the action. The trial court's grant of summary judgment was vacated and the case remanded for dismissal. View "Management Nominees v. Alderney Investments" on Justia Law