Justia Business Law Opinion Summaries
The Weinstein Co. Holdings, LLC v. Spyglass Media Group, LLC.
Cohen entered into a work-for-hire agreement with SLP, a special purpose entity formed by TWC to make the film, Silver Linings Playbook. Cohen was to receive $250,000 in fixed initial compensation and contingent future compensation of roughly 5% of the movie’s net profits. The movie was released to critical acclaim in 2012. TWC purports to own all the rights pertaining to the movie, including the Cohen Agreement.In 2017, following a flood of sexual misconduct allegations against its co-founder, Harvey Weinstein, TWC filed for Chapter 11 bankruptcy. The bankruptcy court approved TWC’s Asset Purchase Agreement with Spyglass, 11 U.S.C. 363. Spyglass sought a declaratory judgment that the Cohen Agreement and had been sold to Spyglass. If the Cohen Agreement were an executory contract, assumed and assigned under section 365, Spyglass would be responsible for approximately $400,000 in previously unpaid contingent compensation. If Spyglass instead purchased the Cohen Agreement as a non-executory contract, Spyglass would be responsible only for obligations on a go-forward basis. Other writers, producers, and actors with similar works-made-for-hire contracts made similar arguments.The bankruptcy court granted Spyglass summary judgment. The district court and Third Circuit affirmed. Cohen’s remaining obligations under the Agreement are not material and the parties did not clearly avoid New York’s substantial performance rule; the Cohen Agreement is not an executory contract. View "The Weinstein Co. Holdings, LLC v. Spyglass Media Group, LLC." on Justia Law
The Weinstein Co. Holdings, LLC v. Y Movie, LLC
In March 2018, following sexual misconduct allegations against TWC’s co-founder Harvey Weinstein, TWC sought bankruptcy protection. TWC and Spyglass signed the Asset Purchase Agreement (APA). The sale closed in July 2018. Spyglass paid $287 million. Spyglass agreed to assume all liabilities associated with the Purchased Assets, including some “Contracts.” The APA identifies “Assumed Contracts,” as those Contracts that Spyglass would designate in writing, by November 2018.In May 2018, TWC filed an Assumed Contracts Schedule, with a disclaimer that the inclusion of a contract did not constitute an admission that such contract is executory or unexpired. A June 2018 Contract Notice, listed eight Investment Agreements as “non-executory contracts that are being removed from the Assumed Contracts Schedule.” The Investment Agreements, between TWC and Investors, had provided funding for TWC films in exchange for shares of future profits. Spyglass’s November 2018 Contract Notice listed nine Investment Agreements as “Excluded Contracts,”In January 2019, the Investors requested payments from Spyglass--their asserted share of a film’s profits. The Bankruptcy Court rejected the Investors’ claim that Spyglass bought all the Investment Agreements under the APA. The district court and Third Circuit affirmed. The Investment Agreements are not “Purchased Assets” and the associated obligations are not “Assumed Liabilities.” The Investment Agreements are not executory contracts under the Bankruptcy Code. View "The Weinstein Co. Holdings, LLC v. Y Movie, LLC" on Justia Law
Hayes & Boone, LLP v. NFTD, LLC
In this case involving the scope of the attorney-immunity defense, the Supreme Court held that attorney immunity applies in all adversarial contexts in which an attorney has a duty to zealously represent a client, including in a business-transactional context, but only when the claim against the attorney is based on the type of conduct attorney immunity protects.At issue was whether the attorney-immunity defense applies to a non-client's claims that are based on an attorney's conduct performed outside of the context of litigation. The court of appeals reversed the trial court's summary judgment in this case, concluding that attorney immunity does not extend beyond the litigation context and should not be extended to a business transaction. The Supreme Court reversed, holding (1) attorney immunity provides a defense to a non-client's claims based on an attorney's conduct that constitutes the provision of legal services involving the unique office of an attorney and the conduct that the attorney engages in to fulfill the attorney's duties in representing the client within an adversarial context in which the client and the non-client do not share the same interests; and (2) attorney immunity applies to claims based on conduct the attorney performed in a non-litigation context so long as the conduct qualifies as this "kind" of conduct. View "Hayes & Boone, LLP v. NFTD, LLC" on Justia Law
GXP Capital v. Argonaut Manufacturing Services, et al
GXP Capital, LLC filed two lawsuits against defendants in different federal courts. GXP alleged defendants violated non-disclosure agreements by using confidential information to buy key assets at bargain prices from GXP’s parent company. Those cases were dismissed for lack of personal and subject matter jurisdiction. GXP then filed a third suit in Delaware Superior Court, which stayed the case on forum non conveniens grounds to allow GXP to file the same case in California state court - a forum the court decided had a greater connection to the dispute and was more convenient for the parties. On appeal GXP argued: (1) the Superior Court did not apply the correct forum non conveniens analysis when Delaware was not the first-filed action, the prior-filed lawsuits have been dismissed, and no litigation was pending in another forum; and (2) defendants waived any inconvenience objections in Delaware under the forum selection clause in their non-disclosure agreements. The Delaware Supreme Court affirmed, finding the trial court properly exercised its discretion in this case’s procedural posture to stay the Delaware case in lieu of dismissal when another forum with jurisdiction existed and that forum was the more convenient forum to resolve the dispute. “And certain of the defendants’ consent to non-exclusive jurisdiction in California did not waive their right to object to venue in other jurisdictions, including Delaware.” View "GXP Capital v. Argonaut Manufacturing Services, et al" on Justia Law
Kruger, et al. v. Goossen
Sally Goossen appealed a trial court judgment determining Thomas Kruger’s and Goossen’s ownership interests in North Dakota Safety Professionals, LLC (“NDSP”). Goossen argued the district court erred in finding that she owned 45 percent of NDSP, and that certain expenses were business expenses for NDSP and were not draws Kruger made from NDSP’s account for his personal benefit. Concluding the district court’s findings were not clearly erroneous, the North Dakota Supreme Court affirmed. View "Kruger, et al. v. Goossen" on Justia Law
Posted in:
Business Law, North Dakota Supreme Court
West Bend Mutual Insurance Co. v. Krishna Schaumburg Tan, Inc.
Sekura purchased a membership from Krishna that gave her access to L.A. Tan’s salons. Her membership required Sekura to provide Krishna with her fingerprints. Sekura filed a class-action lawsuit against Krishna, alleging that Krishna violated the Biometric Information Privacy Act: because it “systematically and automatically collected, used, stored, and disclosed their [customers’] biometric identifiers or biometric information without first obtaining the written release required by 740 ILCS 14/15(b)(3) … systematically disclosed ... biometric identifiers and biometric information to SunLync, an out-of-state … vendor and … does not provide a publicly available retention schedule or guidelines for permanently destroying its customers’ biometric identifiers and biometric information as specified by the [Act].” The complaint also alleged negligence and unjust enrichment. Krishna tendered Sekura’s lawsuit to West Bend, its insurer.West Bend sought a declaratory judgment that it did not owe a duty to defend Krishna against Sekura’s lawsuit. The trial court entered a judgment for Krishna. The appellate court and Illinois Supreme Court affirmed after construing the policy terms “personal injury or advertising injury,” “publication” of material, and violation of Sekura’s “right of privacy” to conclude that the allegations in Sekura’s complaint fall within or potentially within West Bend’s policies’ coverage for personal injury or advertising injury. A “violation of statutes” exclusion in the policies does not apply to the Act. View "West Bend Mutual Insurance Co. v. Krishna Schaumburg Tan, Inc." on Justia Law
Irving Firemen’s Relief & Retirement Fund v. Uber Technologies, Inc.
After Uber’s founding in 2009, its valuation soared, with some investors assigning a valuation as high as $68 billion by mid-2016. Between June 2014 and May 2016, Kalanick, Uber’s founder, and Uber completed four preferred stock offerings, raising more than $10 billion in additional capital through limited partnerships and other entities. Irving Firemen’s Relief & Retirement Fund acquired Uber securities on February 16, 2016. In 2017, several alleged corporate scandals surfaced. By early 2018, investors estimated a nearly 30% decline in Uber’s valuation.
Irving filed a putative class action against Uber and Kalanick alleging securities fraud under California Corporations Code sections 25400(d) and 25500. The Ninth Circuit affirmed the dismissal of the complaint, upholding the use of the federal standard for loss causation rather than the “less-rigid state law standard.” Irving did not state a claim because it did not adequately allege that Uber and Kalanick’s alleged fraudulent misstatements and omissions caused its alleged losses. Even assuming actionable misstatements by Uber and Kalanick and that news articles, a lawsuit, and government investigations revealed the truth to the market, Irving did not adequately and with particularity allege that these revelations caused the resulting drop in Uber’s valuation. View "Irving Firemen’s Relief & Retirement Fund v. Uber Technologies, Inc." on Justia Law
Shepard v. Employers Mutual Casualty Co.
The Eighth Circuit affirmed the district court's dismissal of a complaint brought by plaintiff against Employers Mutual and Defendant Kelley, asserting a claim for breach of fiduciary duty. Plaintiff was a minority shareholder of EMC, a spin-off from Employers Mutual. Defendant Kelley was the CEO and director of both EMCI and Employers Mutual. Plaintiff alleges that Employers Mutual structured EMCI as a shell company, preventing it from becoming a valuable company or acting independently from Employers Mutual. Plaintiff alleged in the complaint that, in the years leading up to the squeeze-out merger initiated by Employers to purchase EMCI's remaining shares, defendants breached fiduciary duties owed to him as a minority shareholder of EMCI.The court concluded that plaintiff's claim did not arise in the context of a contractual relationship; his alleged injury arose only from his status as a shareholder of EMCI; and this was insufficient under Iowa law to plausibly plead a special duty arising out of a contractual relationship. Furthermore, plaintiff did not adequately plead that his injury arose from a special duty. The court also concluded that plaintiff did not allege that his voting rights were ever affected by Employers Mutual and Kelley's alleged mismanagement. Even if this were Iowa law, plaintiff would not meet this exception.Accordingly, because plaintiff's claim is derivative in nature, he must satisfy federal and Iowa requirements for a filing a derivative action, which he has failed to do so. In this case, the complaint did not state with particularity plaintiff's efforts to enforce minority shareholder rights in the years leading up to the squeeze out. Furthermore, the complaint did not allege that he petitioned the directors or other shareholders in writing, or that 90 days have expired since delivery of the demand and EMCI rejected his request, or irreparable injury would result by waiting for the expiration of the ninety days. View "Shepard v. Employers Mutual Casualty Co." on Justia Law
Academy of Allergy & Asthma in Primary Care v. Quest Diagnostics, Inc.
AAAPC and UAS filed suit against Quest for conspiring to force them out of the market of providing allergy and asthma testing. The district court dismissed plaintiffs' claims under Federal Rule of Civil Procedure 12(b)(6).The Fifth Circuit concluded that plaintiffs' claims alleging that Quest violated sections 1 and 2 of the Sherman Act and the Texas antitrust law are not time-barred. The court explained that plaintiffs' allegations about Phadia and Quest's continued meetings with providers and payors do not restart the statute of limitations; plaintiffs' allegations regarding the June 2015 policy change does not suffice to restart the statute of limitations; but plaintiffs have sufficiently alleged that Phadia and Quest were involved in the alleged conspiracy and that the allegation regarding Phadia's May 2014 email reset the statute of limitations. Therefore, the court reversed the district court's dismissal as to the state and federal antitrust claims. The court also reversed the dismissal of plaintiffs' misappropriation of trade secrets claim, concluding that plaintiffs have sufficiently pled they could not have discovered their misappropriation injury using reasonable diligence. Moreover, nothing in the complaint forecloses their potential rejoinder to the statute of limitations defense. The court affirmed the district court's dismissal of the civil conspiracy and tortious interference claims. Finally, the court affirmed the district court's denial of plaintiffs' request for leave to amend their complaint. View "Academy of Allergy & Asthma in Primary Care v. Quest Diagnostics, Inc." on Justia Law
Barkalow v. Clark
The Supreme Court affirmed in part and reversed in part the judgment of the district court decreeing dissolution of a limited liability company (LLC), holding that, for the most part, the district court properly adjudicated the parties' rights but erred in ordering dissolution of the LLC.Plaintiffs filed suit seeking an order expelling three individuals as members of the LLC, an order dissolving the LLC, an order appointing a receiver for the LLC, and damages for breach of contract, breach of fiduciary duty, economic duress, and civil conspiracy. After a nonjury trial, the district court adjudicated the parties' rights and granted the request to dissolve the LLC based on the impracticability of continuing business. The Supreme Court reversed in part, holding that judicial dissolution should not have been ordered under Iowa Code 489.701(d)(2). View "Barkalow v. Clark" on Justia Law
Posted in:
Business Law, Iowa Supreme Court