Justia Business Law Opinion Summaries

Kevin Diep, a stockholder of El Pollo Loco Holdings, Inc. (“EPL”), filed derivative claims against some members of EPL’s board of directors and management, as well as a private investment firm. The suit focused on two acts of alleged wrongdoing: concealing the negative impact of price increases during an earnings call and selling EPL stock while in possession of material non-public financial information. After the Delaware Court of Chancery denied the defendants’ motion to dismiss, the EPL board of directors designated a special litigation committee of the board (“SLC”) with exclusive authority to investigate the derivative claims and to take whatever action was in EPL’s best interests. After a lengthy investigation and extensive report, the SLC moved to terminate the derivative claims. All defendants but the private investment firm settled with Diep while the dismissal motion was pending. The Court of Chancery granted the SLC’s motion after applying the two-step review under Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981). Diep appealed, but after its review of the record, including the SLC’s report, and the Court of Chancery’s decision, the Delaware Supreme Court found that the court properly evaluated the SLC’s independence, investigation, and conclusions, and affirm the judgment of dismissal. View "Diep v. Trimaran Pollo Partners, L.L.C." on Justia Law

Turo, an Internet-based platform, allows vehicle owners to list, and customers to rent, specific passenger vehicles, processes reservations and payments and retains a percentage of the proceeds of each rental transaction. Turo provides a liability insurance policy through a third-party insurer. Turo competes with traditional on-airport and off-airport rental car companies and has used phrases like “rent” and “rental car” in its advertisements.The government sued Turo under the Unfair Competition Law (Bus. & Prof. Code 17200) for operating a rental car business at SFO without the required permit, engaging in prohibited curbside transactions at SFO, and using airport roadways and offering services on airport property without permission. Turo sought a declaratory judgment that it is not a rental car company and alleged that SFO had unlawfully demanded that Turo obtain an off-airport rental car company permit, and pay fees that SFO is authorized to charge only “rental car companies” under Government Code 50474.1(a).The court of appeal held that Turo is not a rental car company. That term is not defined in the Government Code but is defined in nearly identical language in three separate California statutes to mean a person or entity in the business of renting passenger vehicles to the public. A rental car company has control over the vehicles in its fleet in a way Turo does not View "Turo v. Superior Court of the City and County of San Francisco" on Justia Law

Arrive and Tech, compete to help customers coordinate shipments. Six employees at Arrive departed for Tech despite restrictive covenants. Arrive sued the six individuals and Tech for injunctive relief under the Defend Trade Secrets Act, 18 U.S.C. 1836(b)(3), claiming irreparable harm because the individuals had breached their restrictive covenants and misappropriated trade secrets.The Seventh Circuit affirmed the denial of a preliminary injunction. Arrive has an adequate remedy at law for each of its claimed injuries, and faces no irreparable harm. Even if its argument were not forfeited, lost opportunities cannot support a showing of irreparable harm under these circumstances. The type of harm Arrive alleges would ultimately translate into lost profits, albeit indirectly, as in the end there is no economic value to opportunities that are not converted to sales. Given the balance of harms, the district court was within its discretion to deny injunctive relief. The court noted that the expiration of the time period of a former employee’s restrictive covenants does not render moot an employer’s request for an injunction to prevent the former employee from violating those restrictive covenants. A court could still grant Arrive effectual relief in the form of an injunction, even though certain individual defendants no longer work for Traffic Tech. View "DM Trans, LLC v. Scott" on Justia Law

The co-tenancy provision in the parties’ lease required a shopping center to have either: (1) three anchor tenants; or (2) 60 percent of the space leased, and, if it did not, Tenant-respondent JoAnn Stores, LLC was permitted to pay “Substitute Rent.” In 2018, Jo-Ann informed JJD it intended to start paying Substitute Rent effective July 1, 2018, because the co-tenancy provision was not met after two anchor tenants closed. Landlord-appellant JJD-HOV Elk Grove, LLC (JJD) responded that the co-tenancy provision was an unenforceable penalty under the holding in Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc., 232 Cal.App.4th 1332 (2015). Jo-Ann contended Grand Prospect was distinguishable and the co-tenancy provision was enforceable. JJD and Jo-Ann filed competing complaints for declaratory relief and cross-motions for summary judgment. The trial court found the co-tenancy provision was enforceable, and thus granted Jo- Ann’s motion, denied JJD’s, and entered judgment accordingly. JJD appealed. The Court of Appeal declined to follow the rule announced in Grand Prospect here, and instead held that this case was governed by the general rule that courts enforce contracts as written. The Court therefore agreed with the trial court’s conclusion that the co-tenancy provision at issue in this case was enforceable, and affirmed the judgment. View "JJD-HOV Elk Grove, LLC v. Jo-Ann Stores" on Justia Law

Between 2004 and 2008, respondents HEI Resources, Inc. (“HEI”), and the Heartland Development Corporation (“HEDC”), both corporations whose principal place of business is Colorado, formed, capitalized, and operated eight separate joint ventures related to the exploration and drilling of oil and gas wells. They solicited investors for what they called Los Ojuelos Joint Ventures by cold calling thousands of individuals from all over the country. Those who joined the ventures became parties to an agreement organized as a general partnership under the Texas Revised Partnership Act. In 2009, the Securities Commissioner for the State of Colorado (“the Commissioner”) initiated this enforcement action, alleging that respondents had violated the Colorado Securities Act (CSA) by, among other things, offering and selling unregistered securities to investors nationwide through the use of unlicensed sales representatives and in the guise of general partnerships. The Commissioner alleged that HEDC and HEI used the general partnership form deliberately in order to avoid regulation. Each of the Commissioner’s claims required that the Commissioner prove that the general partnerships were securities, so the trial was bifurcated to permit resolution of that threshold question. THe Colorado Supreme Court granted review in this matter to determine how courts should evaluate whether an interest in a “general partnership” is an “investment contract” under the CSA. The Court concluded that when faced with an assertion that an interest in a general partnership is an investment contract and thus within the CSA’s definition of a “security,” the plaintiff bears the burden of proving this claim by a preponderance of the evidence. No presumption beyond that burden applies. Accordingly, the Court reversed the court of appeals’ judgment on the question of whether courts should apply a “strong presumption,” and the Court remanded the case to the trial court for further findings. View "Chan v. HEI Resources, Inc." on Justia Law

In this case involving a dispute related to Texas liquor laws, the court previously certified the following two questions to the Supreme Court of Texas:1.) Does Texas Alcoholic Beverage Code Section 22.16(f) “continue[] to exempt a public corporation if that corporation sells some or all its shares to a non-exempt corporation, and, if so,2.) Whether the exempt corporation can acquire additional package store permits.The Supreme Court of Texas affirmatively answered both questions, resolving the appeal. Thus, the court reversed the district court's judgment and remanded for further proceedings. View "Gabriel Invst v. Texas Alcoholic" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment entered by the district court in this action involving former co-counsel on a contingent-fee case, holding that the district court erred in finding insufficient evidence that the Hope Law Firm's new entity, Hope Law Firm & Associates, P.C., was a successor entity to Hope Law Firm, P.L.C.Lawyer James Larew had an of-counsel arrangement with the Hope Law Firm and agreed to work on a particular client's case in exchange for a portion of the firm's fee. Larew and the firm later ended the of-counsel arrangement, and Larew ultimately won a large judgment at trial. This litigation concerned the disposition of the fee. On appeal, Larew appealed the district court's determination on the terms of an implied-in-fact contract, quantum meruit calculation, successor liability, and other causes of action. The Supreme Court reversed the district court's ruling as to successor liability and otherwise affirmed, holding that Larew showed that Hope Law Firm & Associates, P.C. was a successor entity to Hope Law Firm, P.L.C. View "Larew v. Hope Law Firm, P.L.C." on Justia Law

The Supreme Court affirmed the judgment of the district court finding that the Nebraska Real Estate License Act, Neb. Rev. Stat. 81-885.01 to 81-885.55, barred Choice Homes, LLC's claims regarding a failed purchase agreement, holding that the district court did not err.Choice attempted to buy certain real estate from Owners in order to sell it to Buyers, but after the closing failed, Buyers purchased the property directly from Owners. Choice brought this action seeking damages related the purchase claims. Choice also asserted a defamation claim stemming from an online review posted by Buyers. The district court granted summary judgment against Choice. The Supreme Court affirmed, holding (1) the Act barred Choice's nondefamation claims; and (2) Choice was not defamed by the review at issue because it did not state or imply a false statement of fact. View "Choice Homes v. Donner" on Justia Law

Plaintiff’s libel per se claim was based on a Google review, written by the manager of plaintiff’s business competitor, that subsequently was removed from the internet without a trace. The Oregon Court of Appeals reversed a grant of summary judgment to defendants. The issues this case presented for the Oregon Supreme Court were: (1) whether plaintiff could reach a jury on his libel claim when the text was no longer available; (2) whether the First Amendment’s public comment defense was available in these circumstances and, relatedly, whether a defendant speaker’s identity or motive was part of the court’s inquiry on the defense’s availability; and (3) whether Oregon should require a plaintiff claiming defamation to prove that the defendant acted with a heightened culpable mental state, “actual malice,” in all cases when the speech was on a “matter of public concern” protected under the First Amendment, abolishing the distinction that requires such proof only when the defendant is a member of the media. The Court of Appeals concluded the trial court had erred because plaintiff’s evidence of the allegedly defamatory statements sufficed to create a question of fact for trial on his claim and the lack of the review’s printed text did not affect the analysis of defendants’ First Amendment defense. The Supreme Court concurred with the appellate court's conclusion that the lack of a copy of the review was not fatal to plaintiff’s libel claim and that two of the three allegedly defamatory statements in the review were actionable. The Court thus affirmed the decision of the Court of Appeals in part and remanded the case to the trial court for further proceedings. View "Lowell v. Wright" on Justia Law

Plaintiff Rick Fowler sought a writ of mandate against defendant Golden Pacific Bancorp, Inc. (Bancorp), to enforce his statutory rights as a director and majority shareholder to inspect corporate books and records. Bancorp opposed the petition, arguing that the trial court should limit Fowler’s inspection rights because he was involved in ongoing litigation with Bancorp and could use the information to undermine Bancorp’s position in the lawsuit. The trial court granted Fowler’s writ petition. Bancorp appealed. After the Court of Appeal issued an oral argument waiver notice, Bancorp moved to dismiss the appeal as moot, citing that because Bancorp had been acquired by Social Finance, Inc., Fowler was no longer a Bancorp board member, and therefore it was impossible for the Court to grant effective relief. Ultimately, the Court of Appeal found Fowler was indeed no longer a member of Bancorp’s board of directors and therefore had no director’s inspection rights. Nevertheless, exercising discretion, the Court reached the merits of the case because it presented an issue of substantial and continuing public interest: whether a director’s “absolute” right of inspection under California Corporations Code section 1602 could be curtailed because the director and corporation were involved in litigation and there was a possibility the documents could be used to harm the corporation. “[T]he mere possibility that information could be used adversely to the corporation is not by itself sufficient to defeat a director’s inspection rights. Rather, any exception to the general rule favoring unfettered access must be limited to extreme cases, where enforcing an ‘absolute’ right of inspection would produce an absurd result, such as when the evidence establishes the director’s clear intent to use the information to breach fiduciary duties or otherwise commit a tort against the corporation.” The Court declined to reach the other question referenced in the parties’ briefs concerning Fowler’s inspection rights as a shareholder, because that issue was not resolved by the trial court and the record was insufficiently developed for a determination of whether it was moot. The case was remanded for the trial court to consider whether that issue was moot and, if not, to resolve any remaining disputes in the first instance. View "Fowler v. Golden Pacific Bancorp." on Justia Law