Justia Business Law Opinion Summaries

Articles Posted in US Court of Appeals for the First Circuit
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The First Circuit affirmed the judgment of the district court ruling against Paraflon Investments, Ltd. on its state-law misrepresentation claims against Fullbridge, Inc. and its principals, Peter Olson and Candice Olson, holding that there was no clear error in the district court's determinations. Fullbridge sought investments from Paraflon regarding a project involving the production of online training courses. After its investment deteriorated, Paraflon brought suit against Fullbridge and the Olsons in federal district court, alleging federal securities fraud claims and common law claims for, inter alia, negligent misrepresentation,and fraudulent misrepresentation. After the case was transferred to the District of Massachusetts the court ruled against Paraflon, finding that Fullbridge did not knowingly or intentionally make a false statement. Paraflon appealed, challenging the district court's disposition of the state-law misrepresentation claims. The First Circuit affirmed, holding (1) there was no clear error in the district court's determination that Fullbridge had a good faith belief that it had received a lucrative award from a third party related to the project; and (2) there was no clear error in the court's determination that Fullbridge's good-faith belief was objectively reasonable based on its experience with the third-party and what it knew at the time of Paraflon's investment. View "Paraflon Investments, Ltd. v. Fullbridge, Inc." on Justia Law

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In this class action lawsuit stemming from the 2011 nuclear disaster at the Fukushima Daiichi Nuclear Power Plant (FNPP) in Japan, the First Circuit affirmed the judgment of the United States District Court for the District of Massachusetts dismissing Plaintiffs' suit under the doctrine of forum non conveniens, holding that the district court did not abuse its discretion in finding that an adequate alternative forum was available in Japan. Plaintiffs were individuals and business entities who suffered property damage and/or economic harm as a result of the FNPP disaster. Plaintiffs filed suit against General Electric Company (GE) alleging that GE negligently designed the FNPP's nuclear reactors and safety mechanisms, both of which were implicated in the explosions. Plaintiffs alleged that venue was proper in the District of Massachusetts because GE maintained its corporate headquarters and principal place of business in Boston, Massachusetts. The district court dismissed the suit under the doctrine of forum non conveniens, determining that an adequate alternative forum was available to Plaintiffs in Japan and that dismissal was in the private and public interest. The First Circuit affirmed, holding that Japan satisfied the forum availability requirement despite the jurisdictional idiosyncrasies presented in this case. View "Imamura v. General Electric Co." on Justia Law

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The First Circuit affirmed the decision of the district court entering summary judgment against Plaintiff Jay Furtado and in favor of Defendants, attorney Amy Page Oberg and the law firm DarrowEverett LLP, and dismissing Plaintiff's claims of legal malpractice, breach of fiduciary duty, and misrepresentation, holding that summary judgment was properly granted. Plaintiff was one of three members of a limited liability company (LLC) for a gym. In 2008, Plaintiff engaged Oberg to help to establish the LLC. After the LLC stopped operations, Plaintiff brought this action. The district court entered summary judgment for Defendants. The First Circuit affirmed, holding that, even if there were any doubt that Plaintiff had waived on appeal an argument that a reasonable jury could find that a breach by Defendants proximately caused his harm, this Court would still conclude that summary judgment was proper in this case. View "Furtado v. Oberg" on Justia Law

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In this case concerning the potential liability of two private equity funds for pension fund withdrawal owed by a company owned by the two funds when the company went bankrupt, the First Circuit reversed the judgment of the district court holding the two funds jointly and severally responsible for the company's withdrawal liability, holding that summary judgment should be granted to the two funds. At issue was whether two private equity funds, Sun Capital Partners III, LP (Sun Fund III) and Sun Capital Partners IV, LP (Sun Fund IV), were liable for $4.5 million in pension fund withdrawal liability owed by a brass manufacturing company that was owned by the Sun Funds when the manufacturing company went bankrupt. Under the Multiemployer Pension Plan Amendments Act, the issue of liability depended on whether the two funds had created an implied partnership-in-fact that constituted a control group. That question, in turn, depended on the application of the partnership test in Luna v. Commissioner, 42 T.C. 1067 (1964). The district court that there was an implied partnership-in-fact constituting a control group. The First Circuit reversed, holding that the Luna test was not met in this case and that there was no firm indication of congressional intent to impose liability on the private investors. View "Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund" on Justia Law

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The First Circuit affirmed the district court's dismissal of Appellants' claims in this putative class action against Lexington Insurance Company and other insurers alleging fraudulent misrepresentation and violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961 et seq., holding that the facts Appellants pleaded demonstrated the absence of any circumstances constituting fraud. Appellants entered into structured settlement agreements with Lexington Insurance Company pursuant to which Lexington agreed that Appellants would receive specific periodic payments from annuities that Lexington would purchase. Appellants later brought this action alleging that Lexington and other affiliated insurers misrepresented the amount Appellants would receive from the settlements. The district court dismissed Appellants' claims with prejudice. The First Circuit affirmed, holding that Appellants failed to state with particularity the circumstances constituting fraud under Fed. R. Civ. P. 9(b). View "Ezell v. Lexington Insurance Co." on Justia Law

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The First Circuit affirmed the decision of the district court dismissing the complaint brought by the plan administrator of R&G Financial Corporation (Administrator) alleging that negligence and breach of fiduciary duties owed to R&G Financial (the Holding Company) caused the failure of R-G Premier Bank of Puerto Rico (the Bank) and the Holding Company's resultant loss of its investment in the Bank, holding that the complaint must be dismissed because the claims the Administrator asserted for the Holding Company were the Federal Deposit Insurance Corporation's (FDIC) under 12 U.S.C. 1821(d)(2)(A). R&G Financial entered Chapter 11 bankruptcy after the Bank, its primary subsidiary, failed. Previously, Puerto Rican regulators had closed the Bank and named the FDIC as the Bank's receiver. After the Bank failed, the Administrator filed this suit against six of the Holding Company's former directors and officers and their insurer. The FDIC intervened. The district court dismissed the complaint. The First Circuit affirmed on different grounds, holding that, under section 1821(d)(2)(A), the FDIC succeeded to the Administrator's claims. View "Zucker v. Rodriguez" on Justia Law

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The First Circuit affirmed the judgment of the district court dismissing this contract action for lack of personal jurisdiction over the defendants in Maine, holding that the district court did not err in concluding that the exercise of jurisdiction over Defendants would not comport with due process. The underlying dispute involved agreements about Defendants’ interests in an Illinois limited partnership, Elm Street Plaz Venture, LLLP. LP Solutions LLC (LPS), a Maine company, offered to buy limited interests owned by Defendants, who mostly resided in Illinois. Defendants accepted the offer and made distribution payments. When Defendants later refused to deliver partnership distributions that LPS said were assigned to it, LPS sued Defendants in Maine. The case was removed to federal district court, which determined that there was no personal jurisdiction because Defendants' contacts with Maine did not make the exercise of personal jurisdiction foreseeable. The First Circuit affirmed, holding that Defendants could not foresee the exercise of jurisdiction. View "LP Solutions LLC v. Duchossois" on Justia Law

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The First Circuit vacated the judgment of the district court in part ruling in favor of Putnam Investments, LLC and other fiduciaries of Putnam’s defined-contribution 401(k) retirement plan on Plaintiffs’ lawsuit claiming that Defendants breached fiduciary duties to the plan's participants, clarifying several principles for the district court that should guide its subsequent rulings on remand. Plaintiffs, two former Putnam employees who participated in the Plan, brought this lawsuit on behalf of a now-certified class of other participants in the Plan and on behalf of the Plan itself pursuant to the civil enforcement provision of ERISA, see 29 U.S.C. 1132(a)(2), arguing that Defendants offered a range of mutual investments, including Putnam’s mutual funds, without regard to whether such funds were prudent investment options and that Defendants treated Plan participants worse than other investors in Putnam mutual funds. The district court ruled in favor of Defendants. The First Circuit (1) affirmed the district court’s dismissal of Plaintiffs’ prohibited transaction claim under 1106(a)(1)(C), breach of loyalty claim, and disgorgement claim; (2) vacated the court’s dismissal of Plaintiffs’ prohibited transaction claim under 1106(b)(3) and the finding that Plaintiffs failed as a matter of law to show loss; and (3) remanded for further proceedings. View "Brotherston v. Putnam Investments, LLC" on Justia Law

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The First Circuit addressed questions that were “intricate, entangled, and in some instances novel” in this case implicating Massachusetts law. The questions included (1) whether a non-majority shareholder who also serves as a director can be deemed a controlling shareholder; (2) what effect, if any, shareholder ratification may have with respect to a self-interested transaction; and (3) whether, in the absence of economic loss, equitable disgorgement can be ordered as a remedy for a breach of fiduciary duty. The First Circuit affirmed both the district court’s multi-million-dollar disgorgement order in favor of the plaintiff class and the jury’s take-nothing verdict in favor of Defendant, holding that the district judge committed no reversible error in handling the issues presented in this case. View "MAZ Partners LP v. Shear" on Justia Law

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The First Circuit affirmed the district court’s judgment affirming the bankruptcy court’s ruling that the largely debt-financed purchase of a family-owned leather manufacturer was not a fraudulent conveyance and was not a violation of the fiduciary duties of the company’s directors. The trustee of a trust established to benefit the creditors of several related insolvent entities filed a complaint alleging that the transaction at issue was a fraudulent conveyance and that the company’s directors were in breach of their fiduciary duties by approving it. The bankruptcy court ruled in the defendants’ favor on every count. The district court affirmed, holding that the bankruptcy court’s factual determinations were not clearly erroneous, and the bankruptcy court found sufficient facts to support its conclusions. View "Development Specialists, Inc. v. Kaplan" on Justia Law