Justia Business Law Opinion SummariesArticles Posted in US Court of Appeals for the Eleventh Circuit
MSPA Claims 1, LLC. v. Tower Hill Prime Insurance Co.
MSPA Claims 1 LLC—the assignee of a now-defunct Medicare Advantage Organization—sued Tower Hill Prime Insurance Company to recover a reimbursable payment. The district court granted Tower Hill’s motion for summary judgment because it determined that MSPA Claims 1’s suit was untimely.The Eleventh Circuit affirmed. The court explained that because it is at least “plausible” that the term “accrues” in Section 1658(a) incorporates an occurrence rule—in fact, and setting presumptions aside, the court wrote that it thinks that’s the best interpretation—that is how the court interprets it. Therefore, MSPA Claims 1’s cause of action accrued in 2012 when MSPA Claims 1’s assignor, Florida Healthcare, paid D.L.’s medical bills and became entitled to reimbursement through the Medicare Secondary Payer Act. Because that was more than four years before MSPA Claims 1 filed suit in 2018, its suit is not timely under 28 U.S.C. Section 1658(a). View "MSPA Claims 1, LLC. v. Tower Hill Prime Insurance Co." on Justia Law
Jerrell Whitten v. Ronald F. Clarke, et al.
Plaintiff, a shareholder and citizen of Illinois, brought this shareholder derivative action alleging breach of fiduciary duties by FleetCor’s directors and executives without first making a demand on the board. Plaintiff argued that demand was excused because a majority of the board faced a substantial likelihood of liability for their breach of fiduciary duties. The district court held that Plaintiff had failed to adequately plead that demand was excused and dismissed Plaintiff’s claims. The Eleventh Circuit affirmed the district court’s dismissal of Plaintiff’s complaint under Rule 23.1. The court held that Plaintiff failed to plead particularized facts showing demand was excused. The court explained that because Plaintiff failed to adequately plead Board knowledge of the allegedly fraudulent scheme, all three of his claims that purportedly show that a majority of the Board faced a substantial likelihood of liability fail. View "Jerrell Whitten v. Ronald F. Clarke, et al." on Justia Law
Dukes Clothing, LLC v. The Cincinnati Insurance Company
Dukes Clothing, LLC (“Dukes”) operated two clothing stores. As a result of the state orders and a customer’s exposure to COVID-19, Dukes was forced to close its doors. These closures resulted in lost business income for Dukes. Dukes’s insurer, The Cincinnati Insurance Company (“Cincinnati”), had issued an all-risk commercial insurance policy to Dukes. Dukes submitted a claim under its policy to recover its loss of business income due to its store closures caused by COVID-19. Cincinnati denied the claim on the basis that Dukes’s income loss was not caused by a direct physical loss or damage to the insured’s property. The Eleventh Circuit affirmed the district court’s dismissal of Plaintiff’s claims holding that Plaintiff’s income loss was not caused by a direct physical loss or damage to the insured’s property. The court explained that when examining insurance policies, Alabama courts consider the language of the policy as a whole, not in isolation. There are no Alabama appellate court decisions interpreting the relevant terms here—physical loss or damage—or interpreting these types of all-risk policies in the COVID-19 context so the court looked to its’ decisions interpreting nearly identical terms under Florida and Georgia law. Ultimately, the court found that since COVID-19 does not cause a “tangible alteration of the property” such that the property could not be used in the future or needed repairs to be used, lost business income resulting from COVID-19 could not constitute a “physical loss of or damage to” the property necessary for insurance coverage. View "Dukes Clothing, LLC v. The Cincinnati Insurance Company" on Justia Law
SA Palm Beach, LLC v. Certain Underwriters at Lloyd’s London, et al.
In a consolidated appeal each of the insured businesses, SA Palm Beach, LLC, Emerald Coast Restaurants, Inc., Rococo Steak, LLC, and R.T.G. Furniture, Corporation, were denied after seeking coverage under an all-risk insurance policy that provides compensation for losses and expenses incurred in connection with “direct physical loss of or damage to” the covered property or “direct physical loss or damage to” the covered property. The Eleventh Circuit addressed the question of whether under Florida law, all-risk commercial insurance policies provide coverage for “direct physical loss of or damage to” property or “direct physical loss or damage to” property insure against losses and expenses incurred by businesses as a result of COVID-19. The court affirmed in part and vacated in part, the district court’s dismissal of the complaints. The court held that under Florida law there is no coverage because COVID-19 did not cause a tangible alteration of the insured property. The court reasoned that under Florida law, an insurance policy should be read “as a whole, endeavoring to give every provision its full meaning and operative effect.” Further, Florida Supreme Court has explained, that an “all-risk policy” does not extend coverage to “every conceivable loss.” Thus, the court found that it believes that the Florida Supreme Court would hold that, under the allegations in the complaints before the court, there is no coverage. The court vacated in part the dismissal of Emerald Coast’s complaint finding that the district court did not address the Plaintiff’s Spoilage provision claim. View "SA Palm Beach, LLC v. Certain Underwriters at Lloyd's London, et al." on Justia Law
Del Castillo v. Secretary, Florida Department of Health
Heather operated a health-coaching business called Constitution Nutrition. She started her business in California, which did not require a license. After moving to Florida in 2015, she continued to run her business—meeting online with most of her clients and meeting in person with two clients who lived in Florida. She described herself as a “holistic health coach” and not as a dietician. Heather tailored her health coaching to each client, which included dietary advice. After a complaint was filed against her and she paid $500.00 in fines and $254.09 in investigatory fees, Heather sued, claiming that Florida’s Dietetics and Nutrition Practice Act, which requires a license to practice as a dietician or nutritionist, violated her First Amendment free speech rights to communicate her opinions and advice on diet and nutrition to her clients. The district court granted the Florida Department of Health summary judgment.The Eleventh Circuit affirmed, after considering the Supreme Court’s decision in National Institute of Family & Life Advocates v. Becerra (2018). The Act “is a professional regulation with a merely incidental effect on protected speech,” and is constitutional under the First Amendment. View "Del Castillo v. Secretary, Florida Department of Health" on Justia Law
Parks v. BitConnect International PLC
An online promotions team posted thousands of videos to persuade people to buy BitConnect Coin, a new cryptocurrency. BitConnect coin was not a sound investment; it was a Ponzi scheme. BitConnect’s original investors received “returns” from the money paid by new investors. The promoters were siphoning off money. At one point, BitConnect was bringing in around $10 million per week in investments from the United States.Two victims of the BitConnect collapse filed a putative class action, alleging that the promoters were liable under section 12 of the Securities Act for selling unregistered securities through their BitConnect videos, 15 U.S.C. 77l(a)(1); 77e(a)(1). The district court dismissed because the plaintiffs based their case on interactions with the promoters’ “publicly available content,” the plaintiffs had never received a “personal solicitation” from the promoters. The Eleventh Circuit reversed. Neither the Securities Act nor precedent imposes that kind of limitation. Solicitation has long occurred through mass communications, and online videos are merely a new way of doing an old thing. The Securities Act provides no free pass for online solicitations. View "Parks v. BitConnect International PLC" on Justia Law
Vital Pharmaceuticals, Inc. v. Alfieri
Vital produces and sells energy-drink products. In 2019, Vital hired Alfieri, Perry, LaRocca, and Maros. All four signed employment agreements containing restrictive covenants, including an agreement not to work for a competing company and not to solicit Vital employees while employed by and for one year after leaving Vital and “never to disclose” or utilize any of Vital’s confidential information. All four left Vital in 2020. Vital sued, alleging that they violated their non-compete covenants by working for Elegance, which sells a cannabidiol-infused caffeinated drink, within a year after leaving Vital; that Alfieri violated the employee non-solicitation covenant by encouraging the others to join Elegance; and that Elegance and Alfieri engaged in tortious interference with Vital’s contractual relationships with the other former employees.The district court determined that the restrictive covenants were enforceable under Florida law, rejecting an argument that Vital was required to “identify specific customers” to establish a legitimate business interest in its customer relationships. The court entered a preliminary injunction. The two time-limited provisions in the preliminary injunction had expired; the prohibition against using Vital’s confidential information had no time limit. The Eleventh Circuit dismissed as moot the portions of the appeal that concerned the expired provisions. The court vacated with respect to the unexpired provisions because Vital failed to prove its entitlement to preliminary relief. View "Vital Pharmaceuticals, Inc. v. Alfieri" on Justia Law
Financial Information Technologies, LLC v. iControl Systems, USA, LLC
Fintech, a seller of software that processes alcohol-sales invoices within 24 hours, filed suit against its competitor, iControl, alleging misappropriation of trade secrets. After the jury found in favor of Fintech, iControl sought a new trial on liability and judgment as a matter of law on damages. Fintech then sought a permanent injunction broadly prohibiting iControl from using either company's software. The district court denied all motions and both parties appealed.The Eleventh Circuit concluded that the district court correctly denied iControl's new trial motion on liability where there is no "absolute absence of evidence" to set aside the jury's findings; erred in denying iControl's judgment as a matter of law motion on damages because Fintech did not deduct marginal costs in calculating lost profits; and correctly refused Fintech's requested injunction, which sweeps too broadly. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. The court noted that, on remand, the district court should require an accounting of marginal costs to enable a proper lost-profits calculation. View "Financial Information Technologies, LLC v. iControl Systems, USA, LLC" on Justia Law
Ginsburg v. United States
Under the 1982 Tax Treatment of Partnership Items Act, 26 U.S.C. 6221–6232, partnership-related tax matters are resolved in two stages. During the partnership-level proceedings, the IRS may adjust items relevant to the partnership as a whole and determine the “applicability of any penalty.” The partnership can challenge the adjustment. All partners are bound by any final decision in a partnership-level proceeding.On its 2001 partnership tax return, AHG reported a $25,618 total loss. Ginsburg’s individual 2001 tax return reported a $10,069,505 loss from AHG to offset his income. In 2008, the IRS sent Ginsburg notice that it was proposing adjustments to AHG’s returns, alleging that AHG “was formed . . . solely for purposes of tax avoidance.” For Ginsburg, the IRS “disallowed” the $10,069,505 loss and said it would impose a 40 percent penalty for “gross valuation misstatement.”Based on Ginsburg’s concessions that he was not entitled to deduct AHG’s losses because he was not at risk and the partnership’s transactions did not have a substantial economic effect., the tax court found that AHG must be “disregarded for federal income tax purposes,” and adjusted AHG’s 2001 tax return. The court denied Ginsburg’s petition concerning the penalty, rejecting his argument that the government did not get “written approval of the penalty by an immediate supervisor,” as required by 26 U.S.C. 6751(b)(1). The district court agreed that Ginsburg could not have reasonably relied on the advice of his tax, legal, and financial advisors and would not consider Ginsburg’s supervisory approval argument because he did not exhaust it in his IRS refund claim.The Eleventh Circuit affirmed. In partnership tax cases, the supervisory approval issue must be exhausted with the IRS before the partner files his refund lawsuit and must be raised during the partnership-level proceedings. View "Ginsburg v. United States" on Justia Law
Latele Television, C.A. v. Telemundo Communications Group, LLC
In 2012, LaTele, a Venezuelan television corporation, acting through its president, Fraiz, sued the American television network Telemundo, claiming that Telemundo infringed LaTele’s copyrighted telenovela. While the lawsuit was pending in Miami, a Venezuelan criminal court appointed a governmental board, “La Junta” to displace Fraiz and manage the affairs of LaTele. Fraiz asked the district court to determine that he was the proper representative of LaTele and that La Junta should be excluded from participating in the lawsuit. In 2018, the district court lifted its stay, removed Fraiz’s attorneys from participation in the case, and affirmed that La Junta’s attorney was counsel of record.The Eleventh Circuit dismissed an appeal after holding that it had jurisdiction to entertain the matter. Under the collateral order doctrine, the district court’s order can be treated as final for purposes of appeal. The order conclusively determined an important issue that was completely separate from the merits of the copyright claim, and would otherwise be unreviewable on appeal from a final judgment. However, La Junta and Telemundo challenged Fraiz’s standing to bring the appeal on behalf of LaTele. The district court correctly determined, based on its review of four foreign court orders, that La Junta has the lawful authority to manage the affairs of LaTele and this lawsuit. View "Latele Television, C.A. v. Telemundo Communications Group, LLC" on Justia Law