Justia Business Law Opinion Summaries

Articles Posted in US Court of Appeals for the Sixth Circuit
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The 2008 financial crisis caused GM and Chrysler into bankruptcy. In Europe, Fiat faced similar troubles. Fiat CEO Marchionne forged a relationship with the United Auto Workers (UAW). Fiat negotiated a partial purchase of Chrysler. Chrysler and the UAW agreed to Marchionne’s request to jettison certain traditional union protections. The companies emerged from bankruptcy with the UAW large percentages of their equity.GM alleges that Marchionne subsequently implemented a bribery scheme to revive Chrysler and harm GM. Fiat acquired the UAW’s stake in Chrysler. The new entity, “FCA,” allegedly “began a long-running intentional scheme of improper payments" to UAW officials … to influence the collective bargaining process, providing Chrysler with labor peace and competitive advantages. GM rejected Marchionne's proposal for a merger in 2015; although bribed UAW executives pressed GM to agree. During subsequent collective bargaining, the UAW and FCA allegedly conspired “to force enormous costs on GM.”In 2017, the Justice Department criminally charged numerous FCA executives and UAW officials. Several entered guilty pleas. FCA pleaded guilty and agreed to a $30 million fine. The UAW agreed to a consent decree, requiring federal monitoring.GM sued FCA, Fiat, and individuals, asserting RICO claims, 18 U.S.C. 1962(b), (c), and (d). The district court dismissed. Assuming that FCA committed RICO violations, they were either indirect or too remote to have proximately caused GM’s alleged injuries. The Sixth Circuit affirmed, first rejecting an argument that the NLRB had exclusive jurisdiction. The court noted the existence of a more “immediate victim,” the FCA workers, “better situated to sue.” GM has not alleged that it would have received the same benefits as FCA absent the corruption. View "General Motors, LLC v. FCA US, LLC" on Justia Law

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Hackers compromised customer-payment information at several Wendy’s franchisee restaurants. Shareholders took legal action against Wendy’s directors and officers on the corporation’s behalf to remedy any wrongdoing that might have allowed the breach to occur. Three shareholder derivative legal efforts ensued—two actions and one pre-suit demand—leading to a series of mediation sessions. Two derivative actions (filed by Graham and Caracci) were consolidated and resulted in a settlement, which the district court approved after appointing one of the settling shareholder’s attorneys as the lead counsel. Those decisions drew unsuccessful objections from Caracci, who had not participated in the latest settlement discussions. No other shareholder objected. Caracci appealed decisions made by the district court, which together had the effect of dramatically reducing Caracci’s entitlement to an attorney’s fees award.The Sixth Circuit affirmed. The court acted within the bounds of its wide discretion to manage shareholder litigation in its appointment of a lead counsel, its approval of the settlement, and its interlocutory orders on discovery and the mediation privilege. View "Graham v. Peltz" on Justia Law

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The FDIC removed Calcutt, a bank executive and director, from his position, prohibited him from participating in the conduct of the affairs of any insured depository institution, and imposed civil money penalties. Calcutt challenged the conduct and findings in his individual proceedings and brought constitutional challenges to the appointments and removal restrictions of FDIC officials. His first hearing occurred before an FDIC ALJ in 2015. Before the ALJ released his recommended decision, the Supreme Court decided Lucia v. SEC (2018), which invalidated the appointments of similar ALJs in the Securities and Exchange Commission. The FDIC Board of Directors then appointed its ALJs anew, and in 2019 a different FDIC ALJ held another hearing in Calcutt’s matter and ultimately recommended penalties.The Sixth Circuit denied Calcutt’s petition for review, concluding that his 2019 hearing satisfied Lucia’s mandate. Even if he were to establish a constitutional violation with respect to FDIC Board of Directors and ALJs being shielded from removal by the President, he would not be entitled to relief. Any error by the ALJ in curtailing cross-examination about bias of the witnesses was harmless. Substantial evidence supports the FDIC Board’s findings regarding the elements of 12 U.S.C. 1818(e)(1). View "Calcutt v. Federal Deposit Insurance Corp." on Justia Law

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NOCO manufactures and sells battery chargers and related products. Although it sells these products itself, NOCO also authorizes resellers if they sign an agreement. NOCO discovered that OJC was selling NOCO’s products on Amazon without authorization. NOCO complained to Amazon that OJC was selling NOCO’s products in violation of Amazon’s policy. Around the same time, another company (Emson) also complained to Amazon about OJC. Amazon asked OJC for proof that it was complying with its policy concerning intellectual property rights. OJC did not provide adequate documents. Amazon temporarily deactivated OJC’s account.OJC claimed that NOCO submitted false complaints, and sued for defamation, tortious interference with a business relationship, and violation of the Ohio Deceptive Trade Practices Act. The Sixth Circuit affirmed the summary judgment rejection of OJC’s claims. To succeed on those claims, OJC must establish that NOCO was the proximate cause of its injury. It cannot do this because three intervening causes broke the causal chain, relieving NOCO of any liability: Emson’s complaint, Amazon’s independent investigation and decision, and OJC’s opportunity to prevent the harm to itself. View "NOCO Co. v. OJ Commerce, LLC" on Justia Law

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Sunless sells tanning booths and spray tan solution under the “Mystic Tan” mark. Sunless claims that applying Mystic Tan solution in a Mystic Tan booth results in a “Mystic Tan Experience.” Palm Beach owns and franchises tanning salons. It owns several Mystic Tan-branded booths, and previously bought Mystic Tan-branded tanning solution to use in them; the booths were designed to accept only Mystic Tan solution. Palm Beach jury-rigged the booths so that they will operate with its own distinctly branded spray tan solution, unapproved by Sunless.Sunless sought a preliminary injunction under the Lanham Act, 15 U.S.C. 1114, 1125, arguing that the jury-rigging is likely to confuse consumers into believing they are getting a genuine “Mystic Tan Experience” when they are not. The district court denied the motion, finding that Sunless had failed to show, at this stage of the litigation, that Palm Beach’s salon customers would be confused. The Sixth Circuit affirmed. Palm Beach never conceded that it sells a “Mystic Tan Experience” as an indivisible whole. Palm Beach argued there are two products: booths and solutions, each displaying its own distinct mark. Palm Beach continues to use the Mystic Tan-branded booths (which it owns outright), but neither uses nor claims to use Mystic Tan solutions. View "Sunless, Inc. v. Palm Beach Tan, Inc." on Justia Law

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IMSS is the main social-service agency of the Mexican government, responsible for government-run medical care for most Mexican citizens. It purchases medical products from private companies. Stryker manufactures and sells medical devices. Stryker’s parent company is based in Kalamazoo, Michigan. It has subsidiaries around the world. IMSS sued Stryker, alleging that in 2003-2015 Stryker bribed government officials and that the U.S. government has established the existence of that bribery. These bribes allegedly totaled tens of thousands of dollars and were handled by a non-party Mexican law firm. Stryker moved to dismiss on the ground of forum non conveniens, arguing that the Mexican judicial system was better suited to hear the case. IMSS argued that the United Nations Convention against Corruption forecloses the application of forum non conveniens and, alternatively, that the relevant factors favored hearing the case in the U.S. courts.The Sixth Circuit affirmed the dismissal of the case. Requiring that American courts be open to foreign states in cases that implicate the Convention does not require the alteration of established domestic legal frameworks, such as forum non conveniens, that predate the Convention. IMSS’s choice of forum receives little deference, Mexican courts are available to hear this case, and the public and private interest factors support Stryker. View "Instituto Mexicano del Seguro v. Stryker Corp." on Justia Law

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In response to the COVID-19 pandemic, Kentucky temporarily (for about six weeks) barred healthcare corporations like Estes, which operates two dental clinics from providing nonemergency care. Estes lost substantial income as a result. Estes’ property insurance policy required Cincinnati Insurance to pay Estes for lost business income that results from a “direct” “physical loss” to its dental offices.The Sixth Circuit affirmed the dismissal of Estes’ suit against Cincinnati, noting that circuit courts have uniformly interpreted this “physical loss” language not to cover similar pandemic-related claims under the laws of many other states. The court concluded that Kentucky’s highest court would agree with those decisions. The phrase “physical loss” would convey to the “average person” that a property owner has been tangibly deprived of the property or that the property has been tangibly destroyed. COVID-19 and the government shutdown orders caused only intangible or economic harm. View "Estes v. Cincinnati Insurance Co." on Justia Law

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The 1949 Federal Property and Administrative Services Act is intended to facilitate the “economical and efficient” purchase of goods and services on behalf of the federal government, 40 U.S.C. 101. In November 2021, the Safer Federal Workforce Task Force, under the supposed auspices of the Act, issued a “Guidance” mandating that employees of federal contractors in “covered contract[s]” with the federal government become fully vaccinated against COVID-19. Ohio, Kentucky, and Tennessee and Ohio sheriffs’ offices sued, alleging that the Property Act does not authorize the mandate, that the mandate violates other federal statutes, and that its intrusion upon traditional state prerogatives raises federalism and Tenth Amendment concerns.The district court enjoined enforcement of the mandate throughout the three states and denied the federal government’s request to stay the injunction pending appeal. The Sixth Circuit denied relief. The government has established none of the showings required to obtain a stay. The government is unlikely to succeed on claims that the plaintiffs lack standing and the plaintiffs likely have a cause of action under the Administrative Procedure Act. The court noted the plaintiff’s concerns about disruptions to the supply chain if workers leave their jobs rather than receiving vaccinations and also stated: Given that expansive scope of the Guidance, the interpretive trouble is not figuring out who’s “covered”; the difficult issue is understanding who, based on the Guidance’s definition of “covered,” could possibly not be covered. View "Commonwealth of Kentucky v. Biden" on Justia Law

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Long and the Piercys operated a Tennessee quarry. Their agreement was silent as to whether their division of “profit” would be based on gross profit after payment of a royalty or net profit after payment of the royalty plus other costs. Based on the division of labor and respective contributions, Long believed that the four individuals should receive equal shares of the gross profit. When Long complained, the Piercys padlocked him off the property and threatened to call the sheriff, then stopped paying Long. A state court chancellor found that Long was entitled to the difference between what the Piercys had paid him and what Long should have received ($151,670.87) but rejected Long’s claim for lost anticipated profits, declining to find that the Piercys breached the partnership agreement but assessing costs against the Piercys.The Piercys sought Chapter 7 bankruptcy relief. Long initiated adversary proceedings, seeking a declaration that the judgment was nondischargeable under 11 U.S.C. 523(a)(4) for debts incurred by embezzlement, or through defalcation while acting in a fiduciary capacity. The Sixth Circuit reversed the bankruptcy court and district court. Long’s state-court judgment may be declared nondischargeable if Long can produce evidence of wrongful intent. The state-court judgment is unclear as to the basis for its relief and does not preclude a finding of fraud. Under the Tennessee Revised Uniform Partnership Act, partners owe each other fiduciary duties. View "Long v. Piercy" on Justia Law

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In November 2021, 5he Occupational Safety and Health Administration (OSHA), the federal agency tasked with assuring a safe and healthful workplace, issued an Emergency Rule on COVID-19 Vaccination and Testing, 86 Fed. Reg. 61402. The rule does not require anyone to be vaccinated but allows covered employers—employers with 100 or more employees—to determine for themselves how best to minimize the risk of contracting COVID-19 in their workplaces. Employers may require unvaccinated workers to wear a mask on the job and test for COVID-19 weekly; they can require workers to do their jobs exclusively from home. Workers who work exclusively outdoors are exempt. The next day, the Fifth Circuit stayed the rule pending judicial review; it renewed that decision in an opinion issued on November 12. Under 28 U.S.C. 2112(a)(3), petitions challenging the rule, filed in Circuits across the nation, were consolidated into the Sixth Circuit, which dissolved the stay issued by the Fifth Circuit. The language of its enabling act plainly authorizes OSHA to act on its charge “to assure safe and healthful working conditions for the nation’s workforce and to preserve the nation’s human resources.” OSHA’s issuance of the rule is not a transformative expansion of its regulatory power, The factors regarding irreparable injury weigh in favor of the government and the public interest. View "In re: MCP No. 165, Occupational Safety and Health Admin., Interim Final Rule: COVID19 Vaccination and Testing, 86 Fed. Reg. 61402" on Justia Law