Justia Business Law Opinion Summaries

The Supreme Court reversed the decision of the court of appeals affirming in part and reversing in part the judgment of the trial court holding that the settlement agreement between the parties in this case barred the claims asserted in this suit and in an arbitration proceeding, holding that the trial court did not err.A billion-dollar break-up between two large corporations engaged in the international petroleum business resulted in numerous claims and lawsuits, which the parties finally resolved through a comprehensive settlement agreement. The trial court concluded that the settlement agreement, including its release provisions and a disclaimer of reliance, were valid and enforceable and barred the claims asserted in both this lawsuit and in the arbitration proceeding. The court of appeals reversed in part, concluding that the settlement agreement did not bar certain claims. The Supreme Court reversed and reinstated the final judgment of the trial court, holding that the parties fully and finally resolved the current claims through their comprehensive settlement agreement. View "Transcor Astra Group S.A. v. Petrobras America Inc." on Justia Law

Grove, an employee of Juul, a Delaware corporation that was headquartered in San Francisco, received options to acquire company stock. Grove stopped working for Juul in 2017, then exercised those options. In 2019, Grove sought to inspect the company’s books and records under California Corporations Code section 1601 to determine the value of his stock and to investigate potential breaches of fiduciary duty. Juul sought declaratory and injunctive relief in Delaware. Grove filed a shareholder class action and derivative complaint in California. Juul cited a forum selection clause, requiring that derivative and class claims proceed in Delaware. Grove filed an amended complaint, alleging only violations of section 1601. The California court stayed Grove's action, reasoning that the Agreement Grove signed states that Delaware courts have exclusive jurisdiction to enforce the agreement. The Court of Chancery of Delaware then granted Juul judgment on the pleadings; Grove did not waive inspection rights under California law but “[s]tockholder inspection rights are a core matter of internal corporate affairs,” so Grove’s rights as a stockholder are governed by Delaware law; Grove may litigate his inspection rights only in a Delaware court.The California court of appeal affirmed the stay order. It was reasonable to enforce the forum selection clause as to the class and derivative claims. Grove’s claim to inspect the books and records has already been adjudicated in the Delaware court, whose decision is entitled to full faith and credit. View "Grove v. Juul Labs, Inc." on Justia Law

Host operates airport concessions. MarketPlace is the landlord at Philadelphia International Airport (PHL). After competitive bidding, Host won PHL concession spots, planning to open a coffee shop and a restaurant. MarketPlace insisted on a lease term allowing it to grant “third-parties exclusive or semi-exclusive rights to be sole providers" of certain foods and beverages, including a “pouring-rights agreement” (PRA), “granting a beverage manufacturer, bottler, distributor or other company (e.g., Pepsi or Coca-Cola) the exclusive control over beverage products advertised, sold and served at [PHL].”Host abandoned the deal and sued, alleging that MarketPlace would receive payoffs from a “big soda company” courtesy of an exclusive PRA. The complaint alleged an unlawful tying arrangement and an illegal conspiracy and agreement in restraint of trade, in violation of Section 1 of the Sherman Act. The district court dismissed the case with prejudice, finding Host failed to adequately plead a relevant geographic market. The Third Circuit affirmed. Host lacks antitrust standing and has not adequately pled a violation of the Sherman Act. Host alleged harm only to itself; failure to secure preferred contractual terms is not an antitrust injury. Host was not being forced to purchase any product. MarketPlace’s control over the non-alcoholic beverage suppliers at PHL does not stem from market power but from its role as a landlord. View "Host International Inc v. MarketPlace PHL LLC" on Justia Law

The Supreme Court granted a writ of prohibition sought by Thornhill Motor Care, Inc. to prevent the Circuit Court of Mingo County from enforcing its order denying Petitioner's motion to dismiss based on improper venue, holding that Thornhill established that it was entitled to the writ.Moore Chrysler, Inc. brought this action against Thornhill in Mingo County, alleging violations of W. Va. Code 17A-6A-1 to -18 and seeking declaratory and injunctive relief. Thornhill moved to dismiss the complaint pursuant to W. Va. R. Civ. P. 12(b)(3) on the basis of improper venue, asserting that the proper venue for this lawsuit was in Logan County pursuant to the general venue statute, W. Va. Code 56-1-1. The circuit court denied the motion, basing its ruling on a specific venue statute, W. Va. Code 17A-6A-12(3), which governs declaratory judgment actions brought by new motor vehicle dealers against manufacturers or distributors. Thornhill then sought the writ of prohibition at issue. The Supreme Court granted the writ, holding that the circuit court committed clear legal error in applying section 17A-6A-12(3) rather than section 56-1-1. View "Thornhill Motor Car, Inc. v. Honorable Miki Thompson" on Justia Law

Taj Jerry Mahabub, founder and Chief Executive Officer (“CEO”) of GenAudio, Inc. (“GenAudio”; collectively referred to as “Appellants”) attempted to secure a software licensing deal with Apple, Inc. (“Apple”). Mahabub intended to integrate GenAudio’s three-dimensional audio software, “AstoundSound,” into Apple’s products. While Appellants were pursuing that collaboration, the Securities and Exchange Commission (“SEC”) commenced an investigation into Mr. Mahabub’s conduct: Mahabub was suspected of defrauding investors by fabricating statements about Apple’s interest in GenAudio’s software and violating registration provisions of the securities laws in connection with sales of GenAudio securities. The district court found Mahabub defrauded investors and violated the securities laws. The court determined that Appellants were liable for knowingly or recklessly making six fraudulent misstatements in connection with two offerings of GenAudio’s securities in violation of the antifraud provisions of the securities laws. Appellants appealed, but finding no reversible error, the Tenth Circuit affirmed the district court’s grant of summary judgment in favor of the SEC. View "SEC v. GenAudio Inc., et al." on Justia Law

Over four years, Plaintiffs-Appellants Eighteen Seventy, LP and the Marie Kennedy Foundation (the “Kennedy Entities” or “Entities”) lost more than $10 million they invested in CRUPE Pte. Ltd. (“CRUPE”) and its subsidiaries. CRUPE was a foreign company organized under the laws of Singapore and managed in Zurich, Switzerland. Believing that CRUPE’s co-founder and CFO, Defendant-Appellee Richard Jayson, induced their investment losses through misrepresentations and material omissions, the Kennedy Entities sued Jayson for gross negligence and breach of fiduciary duty in the U.S. District Court for the District of Wyoming. The Entities, both of which had their principal place of business in Wyoming, averred that Jayson surreptitiously used their financial support to compensate himself and another company co-founder while failing to provide the Kennedy Entities with information about CRUPE’s viability and the true nature of their investments. Jayson, a domiciliary and resident of the United Kingdom, moved to dismiss the Kennedy Entities’ suit, pursuant to Federal Rule of Civil Procedure 12(b)(2), arguing that the court lacked personal jurisdiction over him. The district court agreed with Jayson and dismissed the complaint. The Kennedy Entities appealed appeal, claiming the district court erred when it held Jayson lacked the requisite minimum contacts with Wyoming to afford the court personal jurisdiction. They contended Jayson purposefully directed activities at Wyoming by preparing investment documents that encouraged the Kennedy Entities’ investments and by communicating with the Entities’ owners about the investments. These contentions notwithstanding, the Tenth Circuit Court of Appeals affirmed the district court’s dismissal of this case for want of personal jurisdiction. “Although the Kennedy Entities meet the first prong of the purposeful direction test, they fail to satisfy the second: that is, they fail to show that Mr. Jayson expressly aimed his conduct at Wyoming.” View "Eighteen Seventy, et al. v. Jayson" on Justia Law

The owners and operators of six boutique hotels sued San Francisco, seeking refunds of about $1.7 million in penalties that had been assessed for failure to timely file returns and pay certain hotel taxes. The plaintiffs contended they were entitled to refunds because, exercising ordinary care, they had hired and then relied on an employee to file the returns and make the payments, only to learn after the taxes were past due that the employee was dishonest and had never filed the returns or paid the taxes. Section 6.17-4 of the ordinance required the waiver of certain penalties when “[f]ailure to make timely payment or report of tax liability . . . occurred notwithstanding the exercise of ordinary care by the taxpayer.”The court of appeal affirmed a judgment in favor of the plaintiffs. The court rejected San Francisco’s arguments that as a matter of law, reliance on an employee cannot constitute ordinary care under section 6.17-4, no matter how careful the plaintiffs were in hiring and supervising the employee, and that even if the plaintiffs were entitled to refunds of some penalties under section 6.17-4, other penalties had been assessed under section 6.11-3, a Code section to which the refund provision of section 6.17-4 does not apply. View "Gajanan v. City and County of San Francisco" on Justia Law

While shopping at the Carmel Mountain Ranch location of Costco in San Diego, plaintiff Lilyan Hassaine slipped and fell on a slippery substance that she believed was liquid soap. Claiming serious injuries from the fall, she sued Costco and Club Demonstration Services (CDS), an independent contractor that operated food sample tables within the store. The trial court granted a motion for summary judgment filed by CDS, concluding that the company owed Hassaine no duty of care. In the court’s view, it was dispositive that CDS’s contract with Costco limited its maintenance obligations to a 12-foot perimeter around each sample table, and that Hassaine’s fall occurred outside that boundary. The Court of Appeal reversed, finding the trial court erred in concluding CDS’s contract with Costco delineated the scope of its duty of care to business invitees under general principles of tort law. Businesses have a common law duty of ordinary care to their customers that extends to every area of the store in which they are likely to shop. "While the CDS-Costco agreement may allocate responsibility and liability as a matter of contract between those parties, it does not limit the scope of CDS’s common law duty to customers. ... Breach and causation present triable factual issues here, precluding summary judgment on those grounds." View "Hassaine v. Club Demonstration Services, Inc." on Justia Law

Plaintiff, a Hollywood restaurant, maintained a business interruption insurance policy through Defendant.  In response to COVID-19, the Governor, Mayor of Los Angeles, and several public health agencies ordered Plaintiff to close its restaurant, resulting in the loss of all its business. Plaintiff filed a claim with Defendant insurance company, which was denied based on the grounds that the policy only covered “direct physical loss of or damage to” the property, and expressly excluded coverage for losses resulting from a government order and losses caused by or resulting from a virus. Plaintiff appealed after Defendant's demurrer was sustained without leave to amend.   The California Court of Appeal affirmed the dismissal and held that Plaintiffs cannot establish a breach of contract.  At issue is whether the clause’s requirement can be construed to cover the pandemic-related closure. The court held that under California law a business interruption policy that covers physical loss and damages does not provide coverage for losses incurred by reason of the COVID-19 pandemic. Moreover, the court explained that the fact that loss and damage requirements are sometimes found in exclusionary provisions does not change the plain meaning of the terms. The court noted that even if Plaintiff could bring itself within the coverage clause, the virus exclusion would bar coverage. View "Musso & Frank Grill v. Mitsui Sumitomo Ins. USA" on Justia Law

Infinity Business Group used an accounting practice that artificially inflated its accounts receivable and therefore its revenues. The company’s CEO, board of directors, and outside auditors affirmed the wrongdoing. Appellant, the company’s trustee, alleges that the true mastermind was a financial services company and an adviser of the company (“Defendants”) that Infinity contracted with to unsuccessfully solicit investments.The Fourth Circuit held that even assuming that the financial services company played some role in creating or perpetuating the flawed accounting technique, Appellant still cannot succeed in holding Defendants liable. Infinity engaged Defendant for the limited purpose of assisting with “a private placement of” Infinity stock. Defendants’ task was to help prepare a confidential information memorandum for potential investors, which was to include Infinity’s financial information from 2003 to 2005. Infinity’s CEO prepared and provided the relevant information for all three years. The accounting practice the company used was inconsistent with the generally accepted accounting principles endorsed by the Securities and Exchange Commission.Appellant first contends that he represents Infinity as well as Infinity’s creditors. Thus, when he was acting on behalf of the presumptively blameless creditors, Appellant insists he is immune from in pari delicto. The court held that when a trustee pursues a right of action that ultimately derives from the debtor—even if the trustee is nominally exercising a creditor’s powers when doing so—the trustee remains subject to the same defenses as the debtor. The court ultimately found that Infinity’s officers and auditors were the authors of the company’s demise—not Defendants. View "Robert F. Anderson v. Morgan Keegan & Company, Inc." on Justia Law