Justia Business Law Opinion Summaries

Vitamin Energy is the defendant in 5-hour Energy’s 2019 lawsuit under the Lanham Act for trademark infringement, false designation of origin, false advertising, and trademark dilution; 5-hour also made claims under Michigan law for trademark infringement, indirect trademark infringement, and unfair competition. Vitamin Energy was insured by Evanston. In a declaratory judgment action, the district court decided Evanston had no duty to defend. The Third Circuit vacated. Pennsylvania law imposes on insurers a broad duty to defend lawsuits brought against those they insure. An insured’s burden to establish its insurer’s duty to defend is light, and Vitamin Energy has carried it. The policy excludes coverage for Advertising Injury, defined as an injury “arising out of oral or written publication of material that libels or slanders.” While some allegations of the complaint involve disparagement, others do not. An underlying complaint need only contain at least one allegation that falls within the scope of the policy’s coverage for the duty to defend to be triggered. The duty to defend is broader than the duty to indemnify. Similarly, exclusions for suits based on “Intellectual Property,” “Incorrect Description,” “Failure to Conform,” and “Knowing” actions do not defeat the duty to defend. View "Vitamin Energy LLC v. Evanston Insurance Co" on Justia Law

After Midwest failed to meet its sales quota for two or more consecutive quarters, Exactech terminated its Agency Agreement with Midwest. The Agreement contained a non-compete provision entitling Midwest to Restricted Period Compensation (RPC) after termination. Midwest filed suit seeking, among other things, a declaratory judgment as to the amount of RPC.The Eighth Circuit reversed the district court's judgment, concluding that the district court did not apply the plain and ordinary meaning of Paragraph 5.D.ii as required by Minnesota law. Furthermore, nothing in the remainder of the Agreement contradicts the plain meaning of Paragraph 5.D.ii. There is no claim of unilateral or mutual mistake and the court remanded for further proceedings. View "Midwest Medical Solutions, LLC v. Exactech U.S., Inc." on Justia Law

Long and the Piercys operated a Tennessee quarry. Their agreement was silent as to whether their division of “profit” would be based on gross profit after payment of a royalty or net profit after payment of the royalty plus other costs. Based on the division of labor and respective contributions, Long believed that the four individuals should receive equal shares of the gross profit. When Long complained, the Piercys padlocked him off the property and threatened to call the sheriff, then stopped paying Long. A state court chancellor found that Long was entitled to the difference between what the Piercys had paid him and what Long should have received ($151,670.87) but rejected Long’s claim for lost anticipated profits, declining to find that the Piercys breached the partnership agreement but assessing costs against the Piercys.The Piercys sought Chapter 7 bankruptcy relief. Long initiated adversary proceedings, seeking a declaration that the judgment was nondischargeable under 11 U.S.C. 523(a)(4) for debts incurred by embezzlement, or through defalcation while acting in a fiduciary capacity. The Sixth Circuit reversed the bankruptcy court and district court. Long’s state-court judgment may be declared nondischargeable if Long can produce evidence of wrongful intent. The state-court judgment is unclear as to the basis for its relief and does not preclude a finding of fraud. Under the Tennessee Revised Uniform Partnership Act, partners owe each other fiduciary duties. View "Long v. Piercy" on Justia Law

Eugene Taszarek, Marlys Taszarek, Trina Schilling, Steven Taszarek, and Michael Taszarek (“Taszareks”) appealed a judgment finding Lakeview Excavating, Inc., was not the alter ego of Brian Welken. Welken was Lakeview Excavating’s president and sole shareholder. While working on certain county projects, Lakeview Excavating’s employees took fieldstones from a nearby property owned by the Taszareks to use for the roads. The Taszareks sued Lakeview Excavating and Welken for intentional trespass, conversion of property, and unjust enrichment. The claims of trespass and conversion were tried to a jury. The jury returned a verdict in the Taszareks’ favor, finding Lakeview Excavating was the alter ego of Welken and holding both parties liable for damages. The North Dakota Supreme Court reversed and remanded for a new trial, concluding the district court inadequately instructed the jury on the alter ego doctrine. After a bench trial, the district court found Lakeview Excavating was the alter ego of Welken and ordered the Taszareks could recover damages from either Welken or Lakeview Excavating. The Supreme Court reversed again, concluding the court’s findings relating to piercing Lakeview Excavating’s corporate veil were inadequate to permit appellate review. On remand, the court held an evidentiary hearing and found Lakeview Excavating was not the alter ego of Welken. The Taszareks argue the district court exceeded the scope of remand by holding an evidentiary hearing instead of specifying findings of fact based on evidence already in the record. Finding no reversible error in last of the district court's alter ego findings, the Supreme Court affirmed. View "Taszarek, et al. v. Lakeview Excavating, et al." on Justia Law

A Virginia resident filed an action in Pennsylvania against a Virginia corporation, alleging injuries in Virginia and Ohio. The plaintiff asserted that Pennsylvania courts had general personal jurisdiction over the case based exclusively upon the foreign corporation’s registration to do business in the Pennsylvania. The Pennsylvania Supreme Court agreed with the trial court that Pennsylvania's statutory scheme violated due process to the extent that it allowed for general jurisdiction over foreign corporations, absent affiliations within the state that were so continuous and systematic as to render the foreign corporation essentially at home in Pennsylvania. The Court further agreed that compliance with Pennsylvania’s mandatory registration requirement did not constitute voluntary consent to general personal jurisdiction. Accordingly, the Supreme Court affirmed the trial court’s order, which sustained the foreign corporation’s preliminary objections and dismissed the action with prejudice for lack of personal jurisdiction. View "Mallory v. Norfolk Southern Railway" on Justia Law

The First Circuit reversed the judgment of the district court dismissing Plaintiffs' securities fraud class action alleging that Carbonite, Inc. and certain current and former officers misled investors by touting a new product that they knew did not work, holding that the complaint sufficiently pleaded a claim.Plaintiffs, the Construction Industry and Laborers' Joint Pension Trust and other holders of Carbonite's common stock, brought this complaint seeking recovery under sections 10(b) and 20(a) of the Securities Exchange Act. Defendants filed a motion to dismiss, which the district court allowed. The First Circuit reversed, holding that the complaint sufficiently pled that Defendants' statements were material misrepresentations made with scienter. View "Construction Industry & Laborers Joint Pension Trust v. Carbonite, Inc." on Justia Law

Fintech, a seller of software that processes alcohol-sales invoices within 24 hours, filed suit against its competitor, iControl, alleging misappropriation of trade secrets. After the jury found in favor of Fintech, iControl sought a new trial on liability and judgment as a matter of law on damages. Fintech then sought a permanent injunction broadly prohibiting iControl from using either company's software. The district court denied all motions and both parties appealed.The Eleventh Circuit concluded that the district court correctly denied iControl's new trial motion on liability where there is no "absolute absence of evidence" to set aside the jury's findings; erred in denying iControl's judgment as a matter of law motion on damages because Fintech did not deduct marginal costs in calculating lost profits; and correctly refused Fintech's requested injunction, which sweeps too broadly. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. The court noted that, on remand, the district court should require an accounting of marginal costs to enable a proper lost-profits calculation. View "Financial Information Technologies, LLC v. iControl Systems, USA, LLC" on Justia Law

General Motors was a Delaware corporation engaged in the sale of motor vehicles in Pennsylvania, and subject to Pennsylvania’s corporate income tax. GM contested the calculation of its 2001 Tax Year corporate income tax, after filing a report of change in its federal taxable income in March 2010. In February 2012, GM timely filed a petition for refund with the Department of Revenue’s (“Department”) Board of Appeals. It claimed that the cap on the net loss carryover (NLC) resulted in a “progressive effective tax rate” which violated the Uniformity Clause of the Pennsylvania Constitution. It explained that “a taxpayer conducting business on a larger scale in Pennsylvania pays a higher effective tax rate than a similarly situated taxpayer conducting business on a smaller scale.” In Nextel Communications of the Mid-Atlantic, Inc. v. Commonwealth, Department of Revenue, 171 A.3d 682 (Pa. 2017), the Pennsylvania Supreme Court held that the NLC deduction applicable to corporate income tax for the tax year ending December 31, 2007 (“2007 Tax Year”), violated the Uniformity Clause. Here, the Court applied Nextel and considered GM's constitutional challenges to the NLC provisions applicable to corporate income tax in the tax year ending December 31, 2001 (“2001 Tax Year”). The Supreme Court agreed with the Commonwealth Court that Nextel applied retroactively to this case, however, it reversed the Commonwealth Court to the extent it remedied the violation of the Uniformity Clause by severing the $2 million NLC deduction cap, which would have resulted in an unlimited NLC deduction. Instead, the Supreme Court severed the NLC deduction provision in its entirety, resulting in no NLC deduction for the 2001 Tax Year. The Supreme Court affirmed the Commonwealth Court’s order to the extent it directed the Department to recalculate GM’s corporate income tax without capping the NLC deduction and issue a refund for the 2001 Tax Year, which the Court concluded was required to remedy the due process violation of GM’s rights pursuant to McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Department of Business Regulation of Florida, 496 U.S. 18 (1990). View "General Motors Corp. v. Pennsylvania" on Justia Law

This appeal arose from a dispute over a Stock Purchase Agreement (“SPA”) formed between Valley Joist BD Holdings, LLC (“VJ Holdings”) and EBSCO, Industries Inc. (“EBSCO”). In December 2017, EBSCO sold all of its stock in Valley Joist, Inc. to VJ Holdings. After closing, VJ Holdings discovered structural defects in one of the buildings acquired as part of the transaction. In July 2018, VJ Holdings sought indemnification from EBSCO through the procedure outlined in the SPA. Two years after receiving no response to the notice, VJ Holdings filed suit in the Superior Court for breach of contract and fraud in the inducement. The Superior Court granted EBSCO’s motion to dismiss the fraud claim for failure to plead sufficient facts to satisfy Superior Court Civil Rule 9(b). The court also dismissed the breach of contract claim as barred under the SPA’s one-year contractual statute of limitations. VJ Holdings appealed: (1) challenging whether it pled sufficient facts to show pre-closing knowledge of fraud; and (2) challenged whether the Superior Court properly relied on a bootstrapping doctrine to dismiss the fraud claim. The Delaware Supreme Court reversed, finding that the allegations in the complaint, when viewed in the light most favorable to the non-moving party, lead to a reasonable inference that EBSCO knew of the structural defects in the building at the time of closing the SPA, contrary to its representation in the SPA that the building was in good operating condition and repair. As for the bootstrapping argument, the Supreme Court determined the Superior Court did not rely on a bootstrapping doctrine to dismiss the fraud claim. View "Valley Joist BD Holdings, LLC v. EBSCO Industries, Inc." on Justia Law

In November 2021, 5he Occupational Safety and Health Administration (OSHA), the federal agency tasked with assuring a safe and healthful workplace, issued an Emergency Rule on COVID-19 Vaccination and Testing, 86 Fed. Reg. 61402. The rule does not require anyone to be vaccinated but allows covered employers—employers with 100 or more employees—to determine for themselves how best to minimize the risk of contracting COVID-19 in their workplaces. Employers may require unvaccinated workers to wear a mask on the job and test for COVID-19 weekly; they can require workers to do their jobs exclusively from home. Workers who work exclusively outdoors are exempt. The next day, the Fifth Circuit stayed the rule pending judicial review; it renewed that decision in an opinion issued on November 12. Under 28 U.S.C. 2112(a)(3), petitions challenging the rule, filed in Circuits across the nation, were consolidated into the Sixth Circuit, which dissolved the stay issued by the Fifth Circuit. The language of its enabling act plainly authorizes OSHA to act on its charge “to assure safe and healthful working conditions for the nation’s workforce and to preserve the nation’s human resources.” OSHA’s issuance of the rule is not a transformative expansion of its regulatory power, The factors regarding irreparable injury weigh in favor of the government and the public interest. View "In re: MCP No. 165, Occupational Safety and Health Admin., Interim Final Rule: COVID19 Vaccination and Testing, 86 Fed. Reg. 61402" on Justia Law