Justia Business Law Opinion Summaries

The National Advertising Division (“NAD”), a self-regulatory organization, concluded that Defendant Young Living Essential Oils, LC’s (“Young Living”) claims that its oils are “therapeutic-grade” and impart physical and/or mental health benefits are “unsupported,” and recommended that Young Living stop making these claims. Plaintiff had already spent money on Young Living’s products, including lavender oil advertised to “promote [a] feeling of calm and fight occasional nervous tension” and peppermint oil that allegedly “helps to  maintain energy levels.” Feeling misled by claims that the products would have effects like “promoting feelings of relaxation & tranquility,” Plaintiff sued, on behalf of herself and other similarly situated individuals, asserting claims under common law and various state statutes that she believes protect consumers like her against companies like Young Living. The district court dismissed Plaintiff’s suit, finding that Young Living’s claims that its products would do things like “help to maintain energy levels” was run-of-the-mill puffery that companies use when trying to persuade potential customers to part with their dollars.   The Second Circuit vacated in part and affirmed in part. The court vacated the district court’s ruling insofar as it dismissed the New York General Business Law claims for being based on statements of non-actionable puffery and the unjust enrichment claim for not satisfying the Rule 9(b) requirement. The court affirmed the ruling as to the dismissal of the breach of warranty claims. The court found that Plaintiff’s stated the circumstances constituting fraud with sufficient particularity to satisfy Rule 9(b) and certainly with enough particularity to give fair notice of her claim and enable the preparation of a defense. View "MacNaughton v. Young Living Essential Oils, LC" on Justia Law

The landlord is a four-member LLC with a single asset--a building in downtown Napa. The tenant, Stone Brewing, a large beer brewing and retail corporation, operates a brewpub in the building. Stone Brewing did not pay rent for several months during the pandemic. The landlord sued for unlawful detainer. Stone argued it was excused from paying rent because COVID-19 regulations and business interruptions triggered a force majeure provision in its lease.The trial court granted the landlord summary judgment, finding that the force majeure provision only excused performance if the claiming party was unable to meet its obligations due to factors outside its control; the tenant admitted during discovery it had the financial resources to pay rent during the period of the COVID-19 regulations but simply refused to do so. The court of appeal affirmed. The force majeure provision does not apply where the tenant had the ability to meet its contractual obligations but chooses not to perform due to financial constraints. The plain meaning of the force majeure provision does not support an interpretation that ties a party’s obligation to pay rent to its profitability or revenue stream instead of a delay or interruption caused by the force majeure event itself. View "West Pueblo Partners, LLC v. Stone Brewing Co., LLC" on Justia Law

While working for Adnet, Inc. (“Adnet”), Defendants learned of a subcontract that Adnet was attempting to win. Thereafter, Defendants, through their own company, submitted a bid for that same subcontract. After Defendants won the subcontract, Adnet brought claims against them for breach of the duty of loyalty, tortious interference with a business relationship, and business conspiracy. The district court granted Defendants’ motion for summary judgment, concluding that Defendants did not compete against Adnet, that Adnet did not have a business expectancy in the subcontract, and that, without proof of an underlying tort, there was no business conspiracy. Adnet appealed.   The Fourth Circuit reversed the district court’s grant of summary judgment to Defendants on Adnet’s claims for breach of the duty of loyalty and tortious interference with a business relationship. Further, the court vacated the district court’s grant of summary judgment to Defendants on Adnet’s business conspiracy claim and remanded. The court explained that there is sufficient evidence of a direct competition for the subcontract between Adnet and Defendants while they were working for Adnet to bar a grant of summary judgment to Defendants. A reasonable juror could conclude that employees, like Defendants, breach their duty of loyalty to their employer when they learn of a potential business opportunity through their employment and then participate in direct competition with their employer for that opportunity while still employed. View "Adnet, Inc. v. Rohit Soni" on Justia Law

Louis DeGidio, the father of Plaintiffs, began purchasing, distributing, and servicing Industrial Combustion, LLC’s (“IC”) burners for institutional boiler systems in a sales area including most of Minnesota. IC’s non-exclusive distributors are responsible for installing and servicing the IC burners they sell. In 1996, the family incorporated Louis DeGidio, Inc. (“LDI”) and Louis DeGidio Services, Inc. (“LDSI”). LDI continued purchasing burners from IC. LDSI installed and serviced the burners LDI sold, purchasing replacement parts from IC. The two corporations shared the same location, officers, and shareholders. Plaintiffs were joint 50% shareholders and key officers of both. Whatever written agreement was then in effect is not in the record, but it is undisputed that LDI was the distributor. At issue is whether a manufacturer collects an indirect “franchise fee” within the meaning of the Minnesota Franchise Act if it charges the distributor a price based on the retail price the manufacturer paid a third-party vendor for the parts.   The Eighth Circuit affirmed and agreed with the district court the answer is clearly no, and therefore, the distributorship agreement here at issue was not a franchise. The court further agreed that the manufacturer did not breach an oral implied-in-fact contract and was not barred by promissory estoppel when it terminated the DeGidio sales representative without cause. Applying Minnesota law and reviewing de novo, the court affirmed the grant of summary judgment in favor of IC and its parent company, Cleaver-Brooks, Inc. View "Louis DeGidio, Inc. v. Industrial Combustion, LLC" on Justia Law

The junior creditor, WBL SPO, LLC (WBL), claimed it was entitled to sue the foreclosing creditor, West Town Bank & Trust (West Town), for not bidding a high enough price for an encumbered property. In 2015, West Town loaned $4.4 million to DIA Lodging and DJ Lodging (collectively, DJ Lodging). The loan was secured not only by the Biloxi hotel but also by another hotel in Forrest City, Arkansas. At the time of the loan, the preloan appraisal valued the Biloxi hotel at $5.45 million. WBL had the second mortgage on the Biloxi hotel; both loans were secured by the Biloxi and Arkansas hotels. DJ Lodging quickly fell behind on its weekly payments to WBL. It also defaulted on its payments to West Town. Based on the default, West Town informed WBL of its intention to commence a nonjudicial foreclosure. West Town had obtained an appraisal of the hotel in January 2020 that indicated the fair market value of the property was $2.75 million. The year before, in February 2019, West Town had obtained an appraisal from a different firm valuing the property at just $1.7 million. West Town decided to split the difference between the two appraisals and make a $2.195 credit bid at the foreclosure sale. West Town averred that, at the time of foreclosure, DJ Lodging still owed $4.5 million. WBL was owed half a million dollars. The foreclosure sale proceeded in March 2020, and West Town’s $2.195 million credit bid was the only bid. West Town transferred its interest in the hotel to Patriarch, LLC, a single-purpose entity established to hold properties West Town acquired in foreclosure. Patriarch then sold the property to a third party for $1.9 million. WBL claimed it was entitled to an “equitable credit” in the form of money damages for the difference between the amount West Town purchased the hotel at the foreclosure sale and the allegedly higher commercially reasonable value of the property. The trial court rejected WBL’s equitable-credit claim. Because WBL’s claims against West Town were based on an asserted legal right that did not exist, the Mississippi Supreme Court concurred West Town was entitled to summary judgment as a matter of law. View "WBL SPO I, LLC v. West Town Bank & Trust" on Justia Law

After receiving frequent criticism from tourists and residents alike, the City of Myrtle Beach, South Carolina became concerned that the proliferation of smoke shops and tobacco stores were repelling families from the area due to those stores' merchandise and advertising practices. More specifically, the city was troubled with those shops' sale of sexually explicit items, cannabidiol (CBD)-infused products, and tobacco paraphernalia. In an effort to improve the "family friendly" nature of the downtown area, the city created a zoning overlay district that prohibited the operation of smoke shops and tobacco stores, among others, in the city's downtown. Appellants, nine of the twenty-five affected stores located in the area, were each issued a citation by the city's zoning administrator for failing to comply with the zoning overlay ordinance. Following a complicated legal battle, appellants raised a host of constitutional challenges to the zoning overlay ordinance. The circuit court found the ordinance survived appellants' complaints, and appellants directly appealed that decision to the South Carolina Court. The Supreme Court held that, under its long-standing precedent, the overlay ordinance did not impermissibly spot zone the city's historic downtown area. Additionally, the Court found the overlay ordinance was a constitutional exercise of the city's police powers. The Court therefore affirmed the decision of the circuit court and upheld the validity of the ordinance. View "Ani Creation, Inc., et al. v. City of Myrtle Beach" on Justia Law

The Supreme Court affirmed the order of the superior court entering a preliminary injunction enjoining the enforcement of certain amendments to the New Shoreham General Ordinance, entitled Motorized Cycle Rental, holding that the hearing justice did not err in her decision granting in part Plaintiff's motion for preliminary injunction.Plaintiffs, businesses in the Town of New Shoreham that rented mopeds, filed a complaint against the Town requesting declaratory and injunctive relief and alleging that the Town had attempted to amend the ordinance at issue in contravention of a settlement agreement reached by the parties and in contravention of Mass. Gen. Laws ch. 31-19.3-5. the hearing justice granted Plaintiffs' motion to enjoin preliminarily enforcement of the amendments. The Supreme Court affirmed, holding that Plaintiffs were not entitled to relief on their allegations of error. View "Finnimore & Fisher Inc. v. Town of New Shoreham" on Justia Law

William West, the founder of Access Control Related Enterprises, LLC (“ACRE”), was forced out as an officer of the company by its majority owners, LLR Equity Partners, IV, L.P. and LLR Equity Partners Parallel IV, L.P. (collectively, “LLR”). He filed a wrongful termination suit against ACRE and others in California state court. The California court stayed the case based on the forum selection provisions in the controlling agreements that designated Delaware as the exclusive forum for disputes arising out of the agreements. After a failed detour to Delaware District Court, West filed the same claims in the Delaware Superior Court. A Delaware jury eventually found against West on his breach of contract claim. West did not appeal the jury’s adverse verdict. Instead, he sought to undo his loss in Delaware by challenging the Superior Court’s procedural rulings, arguing: (1) the Superior Court no longer had jurisdiction once it issued the order transferring the case to the Court of Chancery; (2) the Superior Court improperly denied his motions for voluntary dismissal; and (3) if the Superior Court had applied forum non conveniens, it would have dismissed the Delaware case in favor of the California litigation. Finding no reversible error, the Delaware Supreme Court affirmed the Superior Court's decisions. View "West v. Access Control Related Enterprises, LLC" on Justia Law

Plaintiff was on active duty with the United States Army. He bought a car from Select Cars of Thornburg in Fredericksburg, Virginia, and financed his purchase with a loan from United Auto Credit Corporation. The loan financed not only the car’s cost but also the cost of Guaranteed Asset Protection. Guaranteed Asset Protection is like extra insurance, covering any amount still due on the car loan after auto insurance is paid out if the car is totaled or stolen. Plaintiff’s claims arise from this single loan. This loan, Plaintiff alleged, violated the Military Lending Act because the loan agreement mandated arbitration and failed to disclose certain information. The district court dismissed the case, holding that the loan was not covered by the Act at all.   The Fourth Circuit affirmed. The court explained that a statutory provision must be given the ordinary meaning it had when it was enacted. Relevant dictionaries, carefully considered, sometimes shed light on that ordinary meaning. Yet here, dueling dictionaries provide more than one linguistically permissible meaning.  But by examining the relevant phrase in its statutory context. This context shows that while “the express purpose” can be used in different senses, it is best read in Section 987(i)(6) to mean the specific purpose. This loan was offered for the specific purpose of financing Plaintiff’s car purchase. And that satisfies Section 987(i)(6)’s relevant condition and the Act is inapplicable. View "Jerry Davidson v. United Auto Credit Corporation" on Justia Law

In a matter of first impression, the issue presented for the Tenth Circuit's review centered on whether a district court could appropriately dismiss part of an action pursuant to the forum non conveniens doctrine while allowing the other part to proceed before it. Reasoning that the forum non conveniens doctrine was fundamentally concerned with the convenience of the venue the Court concluded the answer to that question was “no:” a district court clearly abuses its discretion when, as here, it elects to dismiss an action as to several defendants under a theory of forum non conveniens while simultaneously allowing the same action to proceed against other defendants. View "DIRTT Environmental Solutions, et al. v. Falkbuilt, et al." on Justia Law