Justia Business Law Opinion Summaries

The New Jersey Coalition of Automotive Retailers (NJCAR), a trade association representing franchised new car and truck retailers in New Jersey, sued Ford Motor Company. NJCAR alleged that Ford's Lincoln Commitment Program (LCP) violated the Franchise Practices Act (FPA) by creating price differentials among franchisees. NJCAR is not a franchisee itself but represents franchisee members, including Lincoln dealerships.The trial court granted summary judgment in favor of Ford, ruling that NJCAR lacked statutory standing to sue under the FPA because the statute limits the right to sue to franchisees. NJCAR appealed, arguing that it had associational standing to represent its members. The Appellate Division reversed the trial court's decision, holding that NJCAR had associational standing and that New Jersey's liberal standing doctrine did not preclude NJCAR from bringing the suit.The Supreme Court of New Jersey reviewed the case and reversed the Appellate Division's decision. The Court held that the FPA explicitly limits the right to bring a lawsuit to franchisees, as indicated by the statute's language stating that "any franchisee may bring an action against its franchisor." The Court emphasized that the Legislature's intent was clear in restricting the right to sue to franchisees only, and NJCAR, not being a franchisee, lacked statutory standing to bring the suit under the FPA. The Court did not address whether NJCAR would have associational standing under a different cause of action, limiting its holding solely to the FPA. View "New Jersey Coalition of Automotive Retailers, Inc. v. Ford Motor Company" on Justia Law

A stockholder of Amazon.com, Inc. sent a letter to the company demanding to inspect its books and records under Section 220 of the Delaware General Corporation Law. The stockholder aimed to investigate potential wrongdoing and mismanagement by Amazon, believing the company engaged in anticompetitive activities in the U.S. and Europe. When the stockholder and Amazon could not agree on certain conditions for producing the records, the stockholder filed an action in the Court of Chancery.A Magistrate in Chancery conducted a one-day trial and concluded that the stockholder did not meet its burden to prove a "credible basis" for inferring possible wrongdoing by Amazon. The stockholder took exceptions to the final report. A Vice Chancellor adopted the final report's conclusion but did not reach its credible basis analysis, instead finding the scope of the stockholder's stated purpose to be "facially improper" and not "lucid."On appeal, the Supreme Court of the State of Delaware found that the Vice Chancellor erred in interpreting the scope of the stockholder's purpose and was required to engage with the evidence presented. The court determined that the evidence, including a complaint filed by the Federal Trade Commission against Amazon for alleged antitrust violations that largely survived a motion to dismiss, established a credible basis from which a court could infer possible wrongdoing by Amazon. The Supreme Court reversed the judgment of the Court of Chancery and remanded for further proceedings to determine the scope and conditions of production consistent with its decision. View "Roberta Ann K.W. Wong Leung Revocable Trust v. Amazon.com, Inc." on Justia Law

The case involves a challenge to the U.S. Securities and Exchange Commission's (SEC) 2023 Funding Order, which amended the funding structure for the Consolidated Audit Trail (CAT). The CAT was established to create a single electronic system for gathering and maintaining data on stock trades. Initially, the SEC estimated the cost of building and operating the CAT to be significantly lower than the actual costs incurred. The 2023 Funding Order allowed self-regulatory organizations (SROs) to pass all CAT costs to their broker-dealer members, a shift from the original plan that required both SROs and broker-dealers to share the costs.The American Securities Association and Citadel Securities, LLC challenged the 2023 Funding Order, arguing that it was arbitrary and capricious. They contended that the SEC failed to justify the decision to allow SROs to pass all CAT costs to broker-dealers and did not update its economic analysis to reflect the actual costs of the CAT, which had significantly increased since the original estimates.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court found that the SEC's 2023 Funding Order was internally inconsistent and represented an unexplained policy change from previous rules that required both SROs and broker-dealers to share CAT costs. The court also determined that the SEC failed to consider the effects of allowing SROs to pass all CAT costs to broker-dealers, creating a potential free-rider problem. Additionally, the court held that the SEC's reliance on outdated economic analysis was unreasonable given the significant increase in CAT costs.The Eleventh Circuit vacated the 2023 Funding Order, stayed its decision for sixty days to allow the SEC to address the issues, and remanded the matter to the SEC for further proceedings consistent with the court's opinion. View "American Securities Association v. Securities and Exchange Commission" on Justia Law

Keith Berman, the appellant, pleaded guilty to securities fraud, wire fraud, and obstruction of proceedings related to a scheme to fraudulently increase the share price of his company, Decision Diagnostics Corp. (DECN). Berman issued false press releases claiming DECN had developed a blood test for coronavirus, which led to a significant increase in the company's stock price. The Securities and Exchange Commission (SEC) investigated and suspended trading of DECN's stock, revealing that Berman's claims were false. Despite this, Berman continued to issue misleading statements and used aliases to discredit the SEC's investigation.The United States District Court for the District of Columbia sentenced Berman to 84 months' imprisonment. The court calculated the loss caused by Berman's fraud using the modified rescissory method, determining a loss amount of $27.8 million. This calculation was based on the difference in DECN's stock price before and after the fraud was disclosed, multiplied by the number of outstanding shares. The court also applied enhancements for sophisticated means and substantial financial hardship to five or more individuals, resulting in a Guidelines range of 168 to 210 months, but ultimately imposed a downward variance.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. Berman challenged the district court's calculation of the loss amount, arguing that the fraud was disclosed earlier and that the loss was not solely attributable to his fraudulent statements. The appellate court found that the district court did not commit clear error in determining the disclosure date or in its loss causation analysis. The court also upheld the enhancements for sophisticated means and substantial financial hardship, finding sufficient evidence to support these determinations. Consequently, the appellate court affirmed the district court's judgment. View "United States v. Berman" on Justia Law

Safehouse, a Pennsylvania nonprofit corporation, was established in 2018 to address opioid abuse in Philadelphia by providing overdose prevention services, including supervised illegal drug use. Safehouse argues that its activities are motivated by a religious belief in the value of human life and that government intervention substantially burdens its religious exercise.The United States District Court for the Eastern District of Pennsylvania initially determined that Safehouse’s proposed activities did not violate 21 U.S.C. § 856(a)(2). However, the Third Circuit Court of Appeals reversed this decision, holding that Safehouse’s activities would indeed violate the statute. On remand, the District Court dismissed Safehouse’s Religious Freedom Restoration Act (RFRA) and Free Exercise counterclaims, reasoning that non-religious entities are not protected by these provisions. Safehouse appealed this dismissal.The United States Court of Appeals for the Third Circuit reviewed the case and held that the District Court erred in its interpretation. The Third Circuit determined that RFRA and the Free Exercise Clause extend protections to non-natural persons, including non-religious entities like Safehouse. The court emphasized that RFRA’s plain text and Free Exercise doctrine protect any “person” exercising religion, which includes corporations and associations. The court reversed the District Court’s dismissal of Safehouse’s RFRA and Free Exercise counterclaims and remanded the case for further consideration of whether Safehouse has plausibly pleaded these claims. The appeal by José Benitez, President of Safehouse, was dismissed due to lack of appellate standing. View "United States v. Safehouse" on Justia Law

Barbie Jean Schwinn and Deborah Schwinn Bailey filed a lawsuit against Robert Schwinn, TJ Schwinn, and Terry Ann Palazzo to wind up and terminate the Ignaz Schwinn Family Partnership Co. The district court found that the appellants wrongfully dissociated from the partnership, there were no grounds to terminate or wind up the partnership, and the appellants could no longer participate in the management of the partnership. The court granted the appellants a lien against the partnership’s assets for their interests, to be satisfied when the partnership eventually wound up.The district court held a bench trial and dismissed the appellants' claims for breach of contract, breach of fiduciary duty, and breach of the duty of good faith and fair dealing. The court also dismissed the appellants' claims to dissolve and wind up the partnership, finding it was a partnership for a definite term or particular undertaking under Illinois law. The court determined the appellants' dissociation was wrongful and that they were not entitled to payment for their interests until the completion of the undertaking. The court denied the appellees' other counterclaims.The Wyoming Supreme Court reviewed the case and found that the partnership was an at-will partnership, not one for a particular undertaking. The court held that the appellants' dissociation was not wrongful and that their withdrawal triggered the dissolution and winding up of the partnership under Section 801(1) of the Revised Uniform Partnership Act (RUPA). The court reversed the district court's decision and remanded the case for further proceedings to determine if the partnership agreement varied the RUPA's default rules and whether winding up was required under Section 801(5)(iii) due to a deadlock in management. The court also instructed the district court to determine if judicial supervision of the winding up was warranted. View "Schwinn v. Schwinn" on Justia Law

Kevin Rowe filed a lawsuit against his ex-wife, Dione Rowe, alleging tortious interference with a business relationship. Dione, with the help of her daughters, sent a letter to the Tribal Land Enterprise (TLE) making disparaging allegations against Kevin, who leased Tribal-owned land from the TLE. The letter requested the TLE to cancel Kevin’s leases and lease the land to her daughters instead. The TLE rescinded Kevin’s leases at their next board meeting, leading Kevin to file the lawsuit.The Circuit Court of the Sixth Judicial Circuit in Tripp County, South Dakota, denied Dione’s motion for summary judgment, which argued that her letter was an absolutely privileged communication under SDCL 20-11-5(2). The court concluded that the TLE meeting was a quasi-judicial proceeding but held that the privilege did not apply because the TLE did not follow its own procedures, including providing notice to Kevin.The Supreme Court of the State of South Dakota reviewed the case and reversed the circuit court’s decision. The Supreme Court held that the absolute privilege under SDCL 20-11-5(2) applies to claims of tortious interference with a business relationship. The court found that the TLE board meeting was an official proceeding authorized by law and that Dione’s letter had a logical relation to the TLE’s proceedings. The court also determined that the lack of notice to Kevin did not negate the privilege. Additionally, the court concluded that Dione did not waive the privilege by failing to plead it in her answer, as the issue was tried by implied consent during the summary judgment proceedings. The Supreme Court directed the lower court to enter summary judgment in favor of Dione. View "Rowe v. Rowe" on Justia Law

Golden View Ready-Mix, LLC (Golden View) supplied concrete to Grangaard Construction, Inc. (Grangaard) for a bridge project. Golden View alleged that Grangaard failed to pay for the concrete, breached the implied obligation of good faith and fair dealing, and committed fraud. A jury found in favor of Golden View on the breach of contract and good faith claims, awarding damages and punitive damages, but found no liability for fraud. Grangaard appealed the punitive damages award and the decision to submit the fraud issue to the jury.The Circuit Court of the First Judicial Circuit, McCook County, South Dakota, presided over the case. Grangaard moved for partial summary judgment on the fraud claim, arguing there was no independent tort duty outside the contract. The court denied this motion, allowing the fraud claim to proceed. During the trial, the court permitted the jury to consider punitive damages based on the breach of the implied obligation of good faith, despite Grangaard's objections.The Supreme Court of the State of South Dakota reviewed the case. The court determined that punitive damages are only recoverable for breaches of obligations not arising from a contract, as per SDCL 21-3-2. The court found that the implied obligation of good faith arises from the contract itself and does not constitute an independent tort that could support punitive damages. Consequently, the court vacated the punitive damages award. However, the court affirmed the lower court's judgment in all other respects, concluding that the error regarding punitive damages did not affect the jury's decision on the breach of contract and good faith claims. View "Goldenview Ready-Mix, LLC v. Grangaard Construction, Inc." on Justia Law

The Nelson Estate claimed an interest in a coin shop and alleged conversion of its property. Dr. Earl Nelson had provided funds for the business, resulting in a 50% ownership interest, which was confirmed by William Tinkcom. After Dr. Nelson's death in 2013, Tinkcom continued to operate the business and assured Nelson's heirs of their 50% interest. Tinkcom died in 2022, and the business was sold to Eddie Welch without including the Nelson Estate in the final agreement. The Nelson Estate sued the Tinkcom Estate, Welch, and Mere Coin Company, LLC, for breach of contract, unjust enrichment, and other claims, including conversion of valuable coins and collectibles.The Circuit Court of the Second Judicial Circuit in Minnehaha County, South Dakota, granted the defendants' motion for judgment on the pleadings, concluding that the statute of limitations barred all claims. The Nelson Estate argued that the statute of limitations had not expired and that equitable estoppel or fraudulent concealment should prevent the statute of limitations defense.The Supreme Court of South Dakota reviewed the case and affirmed the circuit court's determination that the first six business interest claims accrued upon Dr. Nelson's death in 2013. However, the court reversed the dismissal of these claims because the circuit court did not address the Nelson Estate's defenses of equitable estoppel and fraudulent concealment. The court also reversed the dismissal of the tortious interference and civil conspiracy claims, as these claims arose from the 2022 sale of the business. Lastly, the court reversed the dismissal of the conversion claim, noting that the record did not establish when the conversion occurred or when the Nelson Estate became aware of it. The case was remanded for further proceedings. View "Nelson v. Tinkcom" on Justia Law

A wholesale food supplier, Vista Food Exchange, Inc. ("Vista"), sued Comercial De Alimentos Sanchez S De R L De C.V. ("Sanchez") for breach of contract, alleging that Sanchez failed to pay for over $750,000 worth of meat products. Vista claimed that Sanchez was required to make payments to Vista's headquarters in New York, but Sanchez contended it had paid the invoices in cash to Vista's salesman, Eduardo Andujo Rascón, in Tijuana, Mexico. Sanchez supported its claim with declarations and documents, including an affidavit from Rascón stating he received the cash payments.The United States District Court for the Southern District of New York granted summary judgment in favor of Sanchez, dismissing Vista's breach-of-contract claim. The court found that Sanchez provided unrefuted evidence of cash payments to Rascón, fulfilling its contractual obligations. It also ruled that even if paying Rascón in cash breached the contract, Vista could not show that its damages were proximately caused by the breach because Rascón's theft of the money was unforeseeable. The court dismissed Vista's other claims for breach of implied contract, promissory estoppel, and unjust enrichment, citing New York law that forecloses such claims when an enforceable contract exists.On appeal, the United States Court of Appeals for the Second Circuit found that genuine disputes of material fact existed regarding Sanchez's claimed performance, the modification of the contract, and the foreseeability of damages. The appellate court vacated the district court's judgment dismissing Vista's claims for breach of contract and unjust enrichment and remanded the case for trial on those claims. The appellate court affirmed the dismissal of Vista's claims for implied contract and promissory estoppel. View "Vista Food Exchange, Inc. v. Comercial de Alimentos Sanchez" on Justia Law