Justia Business Law Opinion Summaries

In this case, the plaintiff, Shandor S. Badaruddin, was sanctioned by the Nineteenth Judicial District Court, Lincoln County, for his conduct as defense counsel in a criminal trial involving his client, Kip Hartman, who faced multiple felony charges related to securities and insurance fraud. The trial was conducted under strict time constraints due to the COVID-19 pandemic, and the court allocated equal time for both the prosecution and defense. Badaruddin was accused of mismanaging his allotted time, leading to a mistrial declaration by the District Court.The District Court found that Badaruddin had deliberately delayed the trial, which led to the mistrial. Consequently, the court imposed monetary sanctions amounting to $51,923.61 against Badaruddin for the costs associated with the trial. Badaruddin appealed the sanctions, arguing that he was not given adequate notice of the court's concerns and that his actions were not deliberate but rather a result of the challenging circumstances.The Supreme Court of the State of Montana reviewed the case and noted that the U.S. District Court had previously ruled that the mistrial declaration was erroneous. The U.S. District Court found that Badaruddin's actions did not constitute deliberate delay and that his efforts to manage the trial time were competent. The U.S. District Court's ruling was affirmed by the U.S. Court of Appeals for the Ninth Circuit, which held that Hartman could not be retried due to double jeopardy protections.Given the federal court's findings, the Supreme Court of Montana concluded that there was no basis for the sanctions under § 37-61-421, MCA, as there was no multiplication of proceedings. The court reversed the District Court's sanction order, determining that the costs incurred were not "excess costs" as defined by the statute. View "Badaruddin v. 19th Judicial District" on Justia Law

The case involves BioPoint, Inc., a life sciences consulting firm, which accused Catapult Staffing, LLC, and Andrew Dickhaut of misappropriating trade secrets, confidential business information, and engaging in unfair trade practices. BioPoint alleged that Catapult, with the help of Dickhaut and Leah Attis (a former BioPoint employee and Dickhaut's fiancée), used BioPoint's proprietary information to recruit candidates and secure business from BioPoint's clients, including Vedanta and Shire/Takeda.The U.S. District Court for the District of Massachusetts handled the initial proceedings. The jury found Catapult liable for misappropriating BioPoint's trade secrets concerning three candidates and two clients, and for tortious interference with BioPoint's business relationship with one candidate. The jury awarded BioPoint $312,000 in lost profits. The judge, in a subsequent bench trial, found Catapult liable for unjust enrichment and violations of the Massachusetts Consumer Protection Law (chapter 93A), awarding BioPoint $5,061,444 in damages, which included treble damages for willful and knowing conduct, as well as costs and attorneys' fees.The United States Court of Appeals for the First Circuit reviewed the case. The court largely affirmed the lower court's findings but reduced the judge's award by $157,068, as it found that BioPoint could not recover both lost profits and unjust enrichment for the same placement. The court also reversed the district court's imposition of joint-and-several liability on Andrew Dickhaut, ruling that he could not be held liable for profits he did not receive. The case was remanded for further proceedings to determine Dickhaut's individual liability. View "BioPoint, Inc. v. Dickhaut" on Justia Law

Josh and Mackie were partners in a marijuana business, Culta, LLC, in Maryland. Josh temporarily relinquished his ownership due to concerns about a past misdemeanor affecting their license application, with an agreement to be reinstated later. However, Mackie prevented Josh from rejoining. Josh sued Mackie and Trellis Holdings Maryland, Inc. (Trellis), Mackie’s company, for breach of contract. The district court found Mackie and Trellis liable and awarded Josh $6.4 million in damages. Mackie and Trellis did not appeal or pay the judgment.Josh sought to enforce the judgment. The district court ordered Mackie and Trellis to sell Trellis’s equity in Culta and turn over the proceeds to Josh, and to avoid devaluing the equity until the sale. Mackie and Trellis appealed, arguing for the first time that enforcing the judgment would violate the Controlled Substances Act (CSA) and that the district court lacked authority under Colorado Rule of Civil Procedure (C.R.C.P.) 69(g). They also moved the district court to reconsider the original judgment, which was denied, leading to a second appeal. The appeals were consolidated.The United States Court of Appeals for the Tenth Circuit reviewed the case. It affirmed the original judgment, rejecting Mackie and Trellis’s argument that Josh lacked standing. The court found that Josh had standing as he suffered an injury from the breach of contract, caused by Mackie and Trellis, and the damages awarded were redressable. The court also held that the district court had authority under C.R.C.P. 69(g) to issue the judgment enforcement order, as a charging order was not the exclusive remedy and Mackie and Trellis had sufficient control over Trellis’s equity.However, the Tenth Circuit vacated the judgment enforcement order due to concerns that it might require Mackie and Trellis to violate federal drug laws, and remanded the case for further proceedings to address these public policy concerns. View "Bartch v. Barch" on Justia Law

The case involves a pass-through billing scheme orchestrated by Beau Gertz, Mark Blake, SeroDynamics, and LabMed Services (collectively, the Sero Defendants). They made it appear that blood tests conducted at their Colorado lab were performed at a small hospital in Unionville, Missouri, resulting in a $26.3 million profit. The scheme involved billing Blue Cross using the hospital's provider numbers, despite the tests not being conducted there. Blue Cross paid the hospital $18,053,015 for these tests. The Sero Defendants were found liable for fraud, tortious interference with contract, civil conspiracy, and money had and received.The United States District Court for the Western District of Missouri oversaw the trial. After five days of evidence, the jury found the Sero Defendants liable and awarded Blue Cross $18,053,015 in compensatory damages and $1.9 million in punitive damages against each of the four Sero Defendants. The Sero Defendants appealed, raising multiple claims of error, including the exclusion of their lead counsel from delivering closing arguments and the admission of certain evidence.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court's judgments, finding no abuse of discretion in the exclusion of lead counsel from closing arguments due to repeated misconduct. The court also upheld the admission of a portion of an audit report, finding it relevant and not unfairly prejudicial. The court found sufficient evidence to support the jury's findings of fraud and tortious interference, noting that the Sero Defendants had actual knowledge of the contract between Putnam and Blue Cross and intentionally interfered with it. The court also upheld the jury's award of damages and punitive damages, finding no miscarriage of justice.In conclusion, the Eighth Circuit affirmed the district court's judgments, rejecting all of the Sero Defendants' claims of error. View "RightCHOICE Managed Care v. Labmed Services, LLC" on Justia Law

George Moses was convicted of mail and wire fraud, money laundering, lying to the FBI, and other charges for defrauding two nonprofit community organizations he led. He used funds from these organizations for personal expenses, including a timeshare, cruise tickets, and other personal items. Moses was sentenced to 78 months of imprisonment.The United States District Court for the Western District of New York (Wolford, C.J.) handled the initial trial. Moses was convicted on 28 counts, but he appealed 14 of these counts. He argued that the district court improperly excluded a document he claimed was his employment contract, gave erroneous jury instructions, and that the evidence was insufficient for his convictions. He also claimed procedural errors at sentencing.The United States Court of Appeals for the Second Circuit reviewed the case. The court found that the district court did not abuse its discretion in excluding the employment contract because Moses failed to authenticate it. The jury instructions were deemed proper, including those on fraud by omission and the lack of a need for a specific instruction on ratification by an authorized agent. The appellate court also found sufficient evidence to support Moses's convictions on the challenged counts, including detailed schemes of fraud and misuse of funds.The Second Circuit affirmed the district court's judgment, rejecting all of Moses's arguments on appeal. The court upheld the 78-month sentence, finding no procedural errors in the district court's sentencing process. View "United States v. Moses" on Justia Law

The case involves Dianna Murphy, who sued Thomas Schaible, her financial advisor and brother-in-law, for breaching his fiduciary duty. Thomas managed an investment account jointly held by Dianna and her husband Michael. Amidst marital difficulties, Michael instructed Thomas to transfer $2.5 million from the joint account to a bank account in Colorado, which Michael then moved to a Mexican account solely under his control. Dianna was not informed of this transfer and claimed that Thomas failed to protect her interests, despite knowing about the couple's marital issues and her interest in dividing their assets.The United States District Court for the District of Colorado heard the case. The jury found Thomas liable for breaching his fiduciary duty and awarded Dianna $600,000 in economic damages. Thomas filed a motion for judgment as a matter of law under Fed. R. Civ. P. 50(b), arguing that Dianna suffered no legally compensable injury and that he did not breach any fiduciary duty by following Michael’s instructions. The district court denied this motion and awarded Dianna prejudgment interest.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court affirmed the district court’s judgment, holding that Thomas breached his fiduciary duty by failing to inform Dianna of the transfer and not advising her on steps to protect her interests. The court also upheld the award of prejudgment interest, rejecting Thomas’s procedural arguments. The court emphasized that fiduciary duties include the duty to inform and act impartially, which Thomas failed to do. The judgment against Thomas was affirmed, and the award of prejudgment interest was deemed procedurally sound. View "Murphy v. Schaible" on Justia Law

F.C. Bloxom Company, a Seattle-based distributor of fresh produce, entered into an agreement with Seven Seas Fruit to deliver three loads of onions to Honduras. The onions required phytosanitary certificates from the U.S. Department of Agriculture to clear Honduran customs, but the parties did not explicitly discuss who would procure these certificates. Bloxom believed Seven Seas would handle it, based on past practices and vague assurances. However, the onions were shipped without the necessary certificates, leading to their rejection in Honduras and eventual spoilage upon return to the U.S.Seven Seas initiated administrative proceedings under the Perishable Agricultural Commodities Act (PACA) when Bloxom refused to pay for the onions. The Secretary of Agriculture ruled in favor of Seven Seas, finding no evidence that Seven Seas had agreed to procure the certificates. Bloxom appealed to the U.S. District Court for the Central District of Illinois, which granted summary judgment for Seven Seas. The court found that Bloxom had accepted the onions at the Port of Long Beach and did not revoke that acceptance, thus obligating Bloxom to pay for the onions.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that Bloxom had accepted the onions by shipping them to Honduras and did not revoke this acceptance even after learning the certificates were missing. The court also found no abuse of discretion in the district court's denial of Bloxom's request for additional discovery time, as further discovery would not have changed the outcome. The court concluded that Bloxom was liable for the payment under PACA. View "F.C. Bloxom Company v. Tom Lange Company International, Inc." on Justia Law

The case involves a dispute between two parties who entered into a partnership agreement that specified the financial conditions under which the appellant would receive a distribution upon the sale of the partnership’s principal asset. The agreement set a net-sale-price threshold above which the appellant would receive a distribution, and it directed the general partner to calculate that net sale price by deducting certain categories of costs from the gross sales price. The general partner determined that the deductions reduced the net sale price below the minimum threshold for a distribution. The appellant challenged several of these deductions, particularly the costs incurred to defease the interest payments on the mortgage.The Court of Chancery of the State of Delaware reviewed the case and held that the deduction for the costs to defease the interest payments on the mortgage was proper under the partnership agreement. The court concluded that this deduction was outcome determinative and entered judgment in favor of the partnership. The court also noted that the general partner acted in good faith in calculating the net sale price, which eliminated any breach of contract claim.The Supreme Court of the State of Delaware reviewed the case and affirmed the Court of Chancery’s judgment. The Supreme Court held that the plain language of the partnership agreement and the formula used permitted the challenged deduction for defeasance costs. The court did not reach the effect or correctness of the Court of Chancery’s alternative holding regarding the general partner’s good faith. The Supreme Court concluded that the defeasance costs were properly deducted, which reduced the net resale price below the threshold required for the appellant to receive a distribution. View "Exit Strategy, LLC v. Festival Retail Fund BH, L.P." on Justia Law

The New Jersey Staffing Alliance, the American Staffing Association, and the New Jersey Business and Industry Association sought to enjoin a New Jersey law designed to protect temporary workers. The law, known as the Temporary Workers’ Bill of Rights, mandates recordkeeping, disclosure requirements, and state certification procedures for staffing firms. It also imposes joint and several liability on clients hiring temporary workers and requires staffing firms to pay temporary workers wages equivalent to those of permanent employees performing similar work.The United States District Court for the District of New Jersey denied the preliminary injunction, concluding that the Staffing Associations were unlikely to succeed on the merits of their claims. The court found that the law did not discriminate against out-of-state businesses, as it imposed the same burdens on both in-state and out-of-state firms. The court also rejected the void-for-vagueness claim, reasoning that the law provided sufficient guidance on its requirements. Additionally, the court determined that the law was a reasonable exercise of New Jersey’s police power, as it was rationally related to the legitimate state interest of protecting temporary workers.The United States Court of Appeals for the Third Circuit affirmed the District Court’s decision. The Third Circuit agreed that the Staffing Associations failed to show a likelihood of success on their claims. The court held that the law did not violate the dormant Commerce Clause, as it did not favor in-state businesses over out-of-state competitors. The court also found that the law was not unconstitutionally vague, as it provided adequate notice of its requirements. Finally, the court upheld the law as a permissible exercise of state police power, as it was rationally related to the goal of protecting temporary workers. View "New Jersey Staffing Alliance v. Fais" on Justia Law

Hedge funds Walleye Opportunities Master Fund Ltd. and Walleye Manager Opportunities LLC sued large shareholders of Intelsat S.A., alleging that the shareholders engaged in insider trading by using material non-public information obtained from a meeting between Intelsat and the Federal Communications Commission (FCC). The plaintiffs claimed that the shareholders sold Intelsat stock during an after-hours block sale based on this information, which was not disclosed to the public.The United States District Court for the Northern District of California dismissed the complaint, finding that Walleye failed to adequately plead that the defendants possessed material non-public information and acted with scienter. The court also held that Walleye had statutory standing under Section 20A of the Securities Exchange Act, which requires that plaintiff-buyers trade contemporaneously with defendant-sellers. Walleye amended the complaint, but the district court dismissed the second amended complaint on similar grounds.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The Ninth Circuit held that Walleye had Article III standing to sue because it sufficiently pleaded both injury and causation by alleging that it bought Intelsat stock at a price inflated due to the defendants’ failure to disclose material information. The court also held that Walleye had statutory standing under Section 20A, even though it traded on the public market and did not buy the Intelsat shares sold during the after-hours block trade.However, the Ninth Circuit concluded that Walleye failed to adequately plead that the defendants possessed material non-public information. The court found that Walleye did not specifically allege how Silver Lake, BC Partners, or David McGlade learned of the FCC meeting or what material non-public information they possessed. The court also held that the alleged information was not material, as it did not significantly alter the total mix of information available to the public. The judgment of the district court was affirmed. View "WALLEYE OPPORTUNITIES MASTER FUND LTD. V. SILVER LAKE GROUP, L.L.C." on Justia Law