Justia Business Law Opinion Summaries

Following the merger of Centene Corporation ("Centene") and Health Net, Inc. ("Health Net)," certain shareholders of Centene (collectively, Plaintiffs) brought five claims on behalf of the corporation against certain of its former and then-current directors and officers and nominal defendant Centene (collectively, Defendants). Plaintiffs did not make a pre-suit demand on Centene's Board of Directors (the Board). The district court dismissed their complaint with prejudice, finding that the plaintiffs failed to plead particularized facts demonstrating that a demand would have been futile.The Eighth Circuit found that the plaintiffs failed to plead facts showing the relevant documents contained a material misrepresentation. Further, the court did not consider the second or third claims because the plaintiffs made no argument contesting the district court's finding that a majority of the Board faces a substantial likelihood of liability. Next, the circuit court held that the plaintiffs' futility argument was patently insufficient. Finally, the circuit court found that at least half of the Board does not face a substantial likelihood of liability under the plaintiffs' insider trading claim. As such, the circuit court found the same as to plaintiffs' unjust enrichment claim pertaining to alleged insider trading. The circuit court affirmed the district court's decisions. View "Carpenters' Pension Fund of IL v. Michael Neidorff" on Justia Law

Leslie Murphy, a former shareholder of Covisint Corporation, brought an action against Samuel Inman, III and other former Covisint directors, alleging they breached their statutory and common-law fiduciary duties owed to plaintiff when Covisint entered into a cash-out merger agreement with OpenText Corporation in 2017. Defendants moved for summary judgment, arguing plaintiff lacked standing because his claim was derivative in nature and he did not satisfy the requirements for bringing a derivative shareholder action under MCL 450.1493a. Plaintiff responded that he was permitted to bring a direct shareholder action under MCL 450.1541a, and that defendants owed common-law fiduciary duties to plaintiff as a shareholder. The trial court granted defendants’ motion, ruling that plaintiff lacked standing to bring a direct shareholder action because he could not demonstrate an injury to himself without showing injury to the corporation, nor could he show harm separate and distinct from that of other Covisint shareholders. The court also rejected plaintiff’s common-law theory because it arose out of the same alleged injury as his statutory claim. The Court of Appeals affirmed. The Michigan Supreme Court reversed, however, finding that a shareholder who alleges the directors of the target corporation breached their fiduciary duties owed to the shareholder in handling a cash-out merger could bring that claim as a direct shareholder action. The Court of Appeals erred by concluding that plaintiff’s claim was derivative. View "Murphy v. Inman" on Justia Law

The Supreme Court affirmed the judgment of the circuit court reducing the jury's punitive damages award against HALO Branded Solutions, Inc., holding that the circuit court's application of the punitive damages cap in Mo. Rev. Stat. 510.265 did not violate All Star Awards & Ad Specialities Inc.'s right to a jury trial, and the reduced award did not violate HALO's due process rights.All Star brought this action against HALO and All Star's employee, Doug Ford. A jury found HALO tortiously interfered with All Star's business expectancy, that Ford breached his duty of loyalty to All Star, and that HALO conspired with Ford to breach this duty of loyalty. The jury awarded All Star $525,542 in actual damages and assessed $5.5 million in punitive damages against HALO. The circuit court applied section 510.265 and capped the punitive damages award at five times All Star's actual damages - or $2,627,709 - and entered final judgment in accordance with the jury's verdicts. The Supreme Court affirmed, holding (1) the circuit court properly reduced All Star's award of punitive damages; and (2) the reduced award was within the constitutional parameters of due process. View "All Star Awards & Ad Specialties, Inc. v. HALO Branded Solutions, Inc." on Justia Law

Corporate taxpayer Raytheon Company's 2012 income tax return was due on March 15, 2013. Raytheon filed its return on September 27, 2013, after securing an authorized extension of the deadline. Raytheon later discovered that the return overstated the company's annual income based upon the inadvertent inclusion of Arizona property sales. The company filed an amended 2012 return on September 27, 2016, claiming a refund of $321,444.00. The Oklahoma Tax Commission denied the refund claim, reasoning taxpayer submitted its demand more than three years after paying the taxes. An administrative law judge found the claimed refund was time barred under 68 O.S.2011, section 2373, and the Commissioners affirmed this finding. The company appealed, and after review the Oklahoma Supreme Court reversed, finding the taxpayer timely brought the claim for refund, having paid taxes to the Oklahoma Tax Commission upon filing its amended original return with a proper extension. View "In the matter of the Income Tax Protest of Raytheon Company" on Justia Law

This decision held that an irrevocable proxy did not run with majority shares and that a transfer restriction applied to any sale to an affiliate but not to a sale to a third party.A Delaware limited partnership (Partnership) dissolved in 2021. At issue was the seventy-five percent shares (Majority Shares) that the Partnership owned of the issued and outstanding equity of a corporation. More than two decades ago, the previous owner of the Majority Shares executed an irrevocable proxy granting three individuals the authority to vote the Majority Shares (the Irrevocable Proxy), and when the Partnership acquired the Majority Shares, it bound itself to the Irrevocable Proxy. Plaintiff sought a declaratory judgment that the Irrevocable Proxy, from which Defendants benefitted, did not run with the Majority Shares and that the Partnership can sell the shares clear of the Irrevocable Proxy. The Court of Chancery held (1) the Irrevocable Proxy did not run with the Majority Shares; (2) a transfer restriction in the addendum to the Irrevocable Party applied to any sale to an affiliate, but not to a sale to a third party; and (3) any judicial declaration at this stage would constitute an advisory opinion. View "Hawkins v. Daniel" on Justia Law

In 2006 Pierre opened a credit card account. She accumulated consumer debt and defaulted. Midland Funding bought the debt and sued Pierre in Illinois state court in 2010 but voluntarily dismissed the lawsuit. In 2015. Midland Credit sent Pierre a letter seeking payment, listing multiple payment plans, stating that the offer would expire in 30 days. The letter stated that because of the age of the debt, Midland would neither sue nor report to a credit agency and that her credit score would be unaffected by either payment or nonpayment. The statute of limitations had run. Pierre sued Midland under the Fair Debt Collection Practices Act, 15 U.S.C. 1692e(2). Asking for payment of a time-barred debt is not unlawful, but Pierre contended that the letter was a deceptive, unfair, and unconscionable method of debt collection. She sought to represent a class of Illinois residents who had received similar letters from Midland.The district court certified the class and granted it summary judgment on the merits. A jury awarded statutory damages totaling $350,000. The Seventh Circuit vacated and remanded with instructions to dismiss the suit. The letter might have created a risk that Pierre would suffer harm, such as paying the time-barred debt; that risk alone is not enough to establish an Article III injury in a suit for money damages, as the Supreme Court held in “TransUnion" (2021). View "Pierre v. Midland Credit Management, Inc." on Justia Law

As part of an asset-purchase agreement, ISI promised to pay Indigo $2 million with interest on a defined schedule. Guido guaranteed the debt. Under a subordination agreement signed by the parties, a bank is entitled to be paid ahead of Indigo unless ISI meets certain financial conditions designed for the bank’s security.The Seventh Circuit affirmed the dismissal of Indigo’s suit to collect on the guaranty. Indigo is entitled to enforce Guido’s obligation without first trying to collect from ISI but must show that ISI has failed to keep its promise to pay. Indigo’s complaint did not allege that ISI has retired the bank’s loan or met the financial conditions. ISI is, therefore, forbidden to pay Indigo, and is not in default under the note. The guaranty kicks in on ISI’s failure “to timely make payment as required under the Note” and, under Illinois law, “instruments executed at the same time, by the same parties, for the same purpose, and in the course of the same transaction are regarded as one contract and will be construed together.” View "Indigo Old Corp., Inc. v. Guido" on Justia Law

The Supreme Judicial Court held that, where a franchisee is an "individual performing any service" for a franchisor, the three-prong test set forth in the independent contractor statute, Mass. Gen. Laws ch. 149, 148B, applies to the relationship between a franchisor and the individual and is not in conflict with the franchisor's disclosure obligations under the "FTC Franchise Rule."Plaintiffs filed a complaint alleging that they were 7-Eleven employees and had been misclassified as independent contractors in violation of the independent contractor statute, Mass. Gen. Laws ch. 149, 148B. A federal judge granted summary judgment in favor of Eleven, concluding that the independent contractor statue does not apply to franchisee-franchisor relationships because there is a conflict because that statute and the FTC franchise Rule, 16 C.F.R. 436.1 et seq., a series of regulations promulgated by the Federal Trade Commission (FTC) regarding franchises. The Supreme Judicial Court answered a certified question, holding that the independent contractor statute applies to the franchisor-franchisee relationship and is not in conflict with the franchisor's disclosure obligations set forth in the FTC Franchise Rule. View "Patel v. 7-Eleven, Inc." on Justia Law

In June 2017, Google engineers alerted Intel’s management to security vulnerabilities affecting Intel’s microprocessors. Intel management formed a “Problem Response Team” but made no public disclosures. In January 2018, media reports described the security vulnerabilities. Intel acknowledged the vulnerabilities, and management’s prior knowledge of them. Intel’s stock price dropped. Tola filed a shareholder derivative complaint, alleging that certain Intel officers and directors breached fiduciary duties. After obtaining records from Intel, Tola filed a third amended complaint, alleging that certain officers “knowingly disregarded industry best practices, material risks to the Company’s reputation and customer base, and their fiduciary duties of care and loyalty … the Board of Directors willfully failed to exercise its fundamental authority and duty to govern Company management and establish standards and controls.”The trial court dismissed, concluding that Tola failed to allege, with the requisite particularity, that it was futile to make a pre-suit demand on Intel’s board of directors. The court of appeal affirmed. Tola does not support his conclusory allegations with sufficient particularized facts that support an inference of bad faith. At most, Tola alleged that two directors received a material personal benefit from alleged insider trading, which still leaves an impartial board majority to consider a demand. View "Tola v. Bryant" on Justia Law

The Supreme Court affirmed in part and reversed in part the latest decision of the trial court in this third appeal addressing remaining contests between the parties in this case, holding that the trial court erred in part.World Telecom Exchange Communications, LLC, a wholly owned American subsidiary of a Dubai parent company, sued Yacoub Sidya, alleging tortious interference with a business expectancy, misappropriation of protected trade secrets, and civil conspiracy. On two prior occasions the case was before the Supreme Court, which reversed in part the rulings at issue and remanded the cause. In this latest appeal, the Supreme Court held (1) there was no error or abuse of discretion in the trial court's partial final judgment; (2) the trial court did not err in refusing to strike the evidence in support of a claim for attorney fees; and (3) the trial court erred in awarding post-judgment interest on the punitive and treble damages. View "Sidya v. World Telecom Exchange Communications, LLC" on Justia Law