Justia Business Law Opinion Summaries

Michael Queen, an NBC Employee, claimed an entitlement to a portion of Ed Schultz's income from the "The Ed Show" on MSNBC based on their alleged agreement to co-develop a show. Queen sued Schultz in district court, and Schultz counterclaimed against Queen for fraud, slander, and liable. On cross-motions for summary judgment, the district court ruled that neither Queen nor Schultz was liable to the other for anything. Queen appealed. The court concluded that the district court correctly granted summary judgment to Schultz on Queen's claim that he, Max Schindler, and Schultz entered into an enforceable contract to divide the profits from a potential television show 50/25/25. However, the court concluded that there existed a genuine issue of material fact as to whether Queen and Schultz formed a partnership to develop a television show and, if so, whether Schultz was liable to Queen for breach of partnership duties. Therefore, the court reversed that portion of the district court's judgment and remanded to enable Queen to present his partnership theory to a jury. View "Queen v. Schultz" on Justia Law

Indiana Boxcar, a holding company that owns several railroads, petitioned for review of the Board's determination that Indiana Boxcar was an "employer" for purposes of the Railroad Retirement Act and the Railroad Unemployment Insurance Act, 45 U.S.C. 231, 351. To be an employer under those two Acts, a company such as Indiana Boxcar must be "under common control" with a railroad. Before this case, the Board repeatedly held that parent corporations like Indiana Boxcar were not under common control with their railroad subsidiaries. Under Board precedent, the term "common control" did not usually apply to two companies in a parent-subsidiary relationship. Here, however, the Board did not adhere to that precedent and did not reasonably explain and justify its deviation from its precedent. Therefore, the court held that the Board's decision was arbitrary and capricious under the Administrative Procedure Act, 5 U.S.C. 706(2)(A). Accordingly, the court vacated and remanded to the Board. View "Indiana Boxcar Corp. v. RRRB" on Justia Law

Appellants challenged the IRS's deficiency finding, as well as an accuracy-related penalty. On appeal, appellants argued that the Tax Court misunderstood relevant law when it affirmed the IRS's calculation of their remaining basis in their S corporation. They also challenged the factual basis for the Tax Court's decisions affirming the Service's rejection of their over-reporting claim and upholding its imposition of the penalty. The court rejected defendant's first challenge, concluding that a shareholder's basis was decreased "for any period" by the amount of that shareholder's pro rata share of the corporation's losses, and a shareholder incurred previously unabsorbed losses in the first year the shareholder had adequate basis to do so. In regards to the over-reporting claim, the court held that the Tax Court made no clear error when it upheld the IRS's determination not to reduce the sole proprietorship's income. Consequently, there was no dispute that appellants' 2003 tax return understated their taxes by an amount that qualified as substantial. Accordingly, the court affirmed the judgment. View "Barnes, et al v. Commissioner, IRS" on Justia Law

Plaintiffs filed derivative actions asserting claims against Fannie Mae's directors regarding accounting irregularities. The district court entered three orders now on appeal, substituting Fannie Mae's conservator, the FHFA, for plaintiff shareholders. The court affirmed the orders but reversed and remanded with instructions to dismiss the complaint without prejudice. The court also held that dismissal on the grounds of claim preclusion was moot.

McKesson, a United States company, claimed that after the Islamic Revolution, the government of Iran expropriated McKesson's interest in an Iranian dairy (Pak Dairy) and withheld its dividend payments. McKesson filed its complaint in 1982, the case reached the court on five prior occasions, and was remanded by the court for numerous trials by the district court. At issue was whether the court had jurisdiction over McKesson's claim and whether any recognized body of law provided McKesson with a private right of action against Iran. The court affirmed the district court's holding that the act of state doctrine did not apply in this case. While the court reversed the district court's holding that McKesson could base its claim on customary international law, the court affirmed the district court's alternative holding that the Treaty of Amity, construed as Iranian law, provided McKesson with a private right of action, and the court further affirmed the district court's finding that Iran was liable for the expropriation of McKesson's equity interest in Pak Dairy and the withholding of McKesson's dividend payments. Finally, the court reversed the district court's award of compound interest and remanded for calculation of an award consisting of the value of McKesson's expropriated property and withheld dividends plus simple interest.

Petitioners, each of which had corporate members that issued publicly traded securities, petitioned for review of Exchange Act Rule 14a-11. At issue was whether the Securities and Exchange Commission promulgated the rule in violation of the Administrative Procedure Act, 5 U.S.C. 551 et seq., because, among other things, the Commission failed adequately to consider the rule's effect upon efficiency, competition, and capital formation, as required by Section 3(f) of the Exchange Act and Section 2(c) of the Investment Company Act and Section 2(c) of the Investment Company Act of 1940, 15 U.S.C. 78c(f) and 80a-2(c). The court held that the Commission acted arbitrarily and capriciously for having failed once again to adequately assess the economic effects of a new rule. The court also held that the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters. Therefore, the Commission's decision to apply the rule to investment companies was also arbitrary. Because the court concluded that the Commission failed to justify Rule 14a-11, the court need not address petitioners' additional argument that the Commission arbitrarily rejected proposed alternatives that would have allowed shareholders of each company to decide for that company whether to adopt a mechanism for shareholders' nominees to get access to proxy materials. Accordingly, the petition was granted and the rule was vacated.

This case stemmed from a contract between the Indonesian government and the Exxon Mobil Corporation (Exxon), a United States corporation, and several of its wholly owned subsidiaries where Exxon operated a large natural gas extraction and processing facility in the Aceh province. Plaintiffs were fifteen Indonesian villagers. Eleven villagers filed a complaint in 2001 alleging that Exxon's security forces committed murder, torture, sexual assault, battery, and false imprisonment in violation of the Alien Tort Statute (ATS) and the Torture Victim Protection Act (TVPA), 28 U.S.C. 1350, and various common law torts. Four villagers alleged that in 2007, Exxon committed various common law torts. All plaintiffs alleged that Exxon took actions both in the United States and at its facility in the Aceh province that resulted in their injuries. Plaintiffs challenged the subsequent dismissal of their claims and Exxon filed a cross-appeal, inter alia, raising corporate immunity for the first time. The court concluded that aiding and abetting liability was well established under the ATS. The court further concluded that neither the text, history, nor purpose of the ATS supported corporate immunity for torts based on heinous conduct allegedly committed by its agents in violation of the law of nations. The court affirmed the dismissal of the TVPA claims in view of recent precedent of the court. The court concluded, however, that Exxon's objections to justiciability were unpersuasive and that the district court erred in ruling that plaintiffs lacked prudential standing to bring their non-federal tort claims and in the choice of law determination. The court finally concluded that Exxon's challenge to the diversity of parties in the complaint at issue was to be resolved initially by the district court. Therefore, the court affirmed the dismissal of plaintiffs' TVPA claims, reversed the dismissal of the ATS claims at issue, along with plaintiffs' non-federal tort claims, and remanded the cases to the district court.

This appeal stemmed from a short sale transaction that raised UTA Management's outside basis in the UTAM partnership. On October 13, 2006, more than six years after the filing of UTAM's 1999 partnership return, but less than six years from the filing of the individual partner's 1999 individual return, the IRS mailed a notice of final partnershp administrative adjustment to DDM Management, UTAM's "tax matters" partner, pertaining to UTAM's 1999 tax year. At issue was whether the mailing of a notice of final partnership administrative adjustment by the IRS tolled an individual partner's limitation period under I.R.C. 6501. The court held that the six-year limitations period applied with regard to the individual partner's 1999 return and that the assessment period, suspended pursuant to I.R.C. 6229(d), was the partner's open assessment period under section 6501. Accordingly, the judgment of the Tax Court on the statute of limitations issue was reversed and the case was remanded for further proceedings.

Two businesses with nearly identical names, John C. Flood, Inc. ("1996 Flood") and John C. Flood of Virginia, Inc. ("Virginia Flood"), brought suit against each other over which company had the right to use two trademarks: JOHN C. FLOOD and its abridged form FLOOD. At issue was whether the district court erred in concluding that 1996 Flood was the proper owner of the two trademarks and that Virginia Flood, as the licensee of the marks, was estopped from challenging 1996 Flood's ownership. The court affirmed the district court's order granting 1996 Flood's motion for partial summary judgment and held that 1996 Flood was the proper successor-in-interest to John C. Flood, Inc. ("1984 Flood"), and that Virginia Flood was barred by the doctrine of licensee estoppel from challenging 1996 Flood's ownership of those marks. Accordingly, the court affirmed the judgment but remanded the case back to the district court for clarification regarding whether Virginia Flood's use of the mark JOHN C. FLOOD OF VIRGINIA was prohibited by the court's decision.

Appellant submitted a request pursuant to the Freedom of Information Act ("FOIA"), 5 U.S.C. 552, to the Board of Governors of the Federal Reserve System ("Board") seeking information related to the Board's March 14, 2008 decision to authorize the Federal Reserve Bank of New York to provide a temporary loan to The Bear Stearns Companies, Inc. through an extension of credit to JPMorgan Chase & Co. The Board produced documents in response to appellant's request but withheld others pursuant to FOIA Exemptions 4, 5, 6, and 8. Appellee filed suit in district court to compel disclosure of the withheld documents and subsequently appealed the district court's entry of summary judgment in favor of the Board. At issue was whether the district court properly withheld documents under FOIA Exemption 5 or, in the alternative, Exemption 8, and granted summary judgment in favor of the Board. The court affirmed summary judgment and held that the withheld materials constituted "intra-agency memorandum or letters" under FOIA Exemption 5 and that disclosure of the type of information withheld here would, under the deliberative process privilege, impair the Board's ability to obtain necessary information in the future and could chill the free flow of information between the supervised institutions and the Board and Reserve Bank. The court also held that a document withheld under Exemption 5 pursuant to the attorney work product privilege was prepared in anticipation of litigation and therefore, the Board properly withheld the document. Accordingly, the court affirmed summary judgment in favor of the Board.