Justia Business Law Opinion Summaries

The case involves a dispute over the decision by the directors, officers, and stockholders of Tripadvisor, Inc. and Liberty TripAdvisor Holdings, Inc. to change their corporate domiciles from Delaware to Nevada. Plaintiffs, who are stockholders, argue that the Conversions would provide non-ratable benefits to the Defendants, particularly in the form of reduced liability exposure, and thus should be reviewed under the entire fairness standard. Defendants argue that the business judgment rule applies.The Court of Chancery denied Defendants' motion to dismiss, holding that Plaintiffs had adequately alleged that Defendants would receive a non-ratable benefit from the Conversions, thus triggering entire fairness review. The court found that the Conversions could provide a material benefit to the Defendants by reducing their litigation risk and that the Complaint supported a reasonable inference that the Conversions were not entirely fair.On appeal, the Supreme Court of Delaware reversed the Court of Chancery's decision. The Supreme Court held that the business judgment rule, not the entire fairness standard, applies to the Conversions. The Court reasoned that the alleged benefits of reduced liability exposure under Nevada law were too speculative and not material enough to constitute a non-ratable benefit. The Court emphasized the importance of temporality in determining materiality, noting that the absence of any existing or threatened litigation weighed heavily against finding a material, non-ratable benefit. The Court also highlighted the principles of comity and the policy of allowing directors flexibility in determining an entity's state of incorporation. View "Maffei v. Palkon" on Justia Law

Aquarian Foundation, Inc., a non-profit religious organization, alleged that Bruce Lowndes infringed on its copyrights by uploading spiritual teachings of its late founder, Keith Milton Rhinehart, to various websites. Lowndes claimed he had a license from Rhinehart, granted in 1985, to use the materials. Rhinehart passed away in 1999, bequeathing his estate, including the copyrights, to Aquarian.The United States District Court for the Western District of Washington granted partial summary judgment, confirming that Rhinehart's copyrights were properly transferred to Aquarian via his will. After a bench trial, the court ruled against Aquarian on its claims of copyright infringement, trademark infringement, and false designation of origin. The court found that Rhinehart created the works as his own, not as works for hire, and that he had validly licensed them to Lowndes. The court also determined that Lowndes did not breach the licensing agreement and that Aquarian could not terminate the license under 17 U.S.C. § 203(a). The court denied attorneys’ fees to both parties.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s findings that Rhinehart’s works were not created as works for hire, that he validly licensed the works to Lowndes, and that Lowndes did not breach the licensing agreement. The court also affirmed the decision not to award Lowndes attorneys’ fees under the Lanham Act. However, the Ninth Circuit reversed the district court’s determination regarding the termination of the license, holding that Aquarian’s termination letter in May 2021 was effective. The case was remanded for further proceedings to address any infringement that may have occurred after the license termination, as well as the denial of injunctive relief and attorneys’ fees under the Copyright Act. View "AQUARIAN FOUNDATION, INC. V. LOWNDES" on Justia Law

Shanda Games Limited, a video game company registered in the Cayman Islands, issued proxy materials as part of a freeze-out merger. The lead plaintiff, David Monk, alleged that these materials were materially misleading, causing him to accept the merger price instead of exercising his appraisal rights. The United States District Court for the Southern District of New York dismissed Monk’s claims, stating he failed to properly allege loss causation.The district court found that Monk had adequately pleaded that Shanda made two material misstatements but ruled that Monk had failed to plead reliance because the market in ADS was not efficient after the merger announcement. The court also held that the statements about the merger's fairness were inactionable opinions. Monk's motion for reconsideration was denied in part and granted in part, and his motion to add another lead plaintiff was denied. Monk filed a second amended complaint, which was again dismissed for failure to state a claim.The United States Court of Appeals for the Second Circuit reviewed the case and held that the district court erred in dismissing Monk’s claims. The appellate court concluded that Monk adequately alleged material misstatements, including the preparation of financial projections, the projections themselves, and the fairness of the merger. The court also found that Monk adequately pleaded scienter, reliance, and loss causation. The court affirmed in part, vacated in part, and remanded the case for further proceedings. View "In re Shanda Games Ltd. Securities Litigation" on Justia Law

Two brothers, Jim and Charles, manage two LLCs, JHD Properties, LLC, and Berry Hill Properties, LLC, which were established by their father as part of his estate plan. Each brother, along with two other siblings, holds a 25% equity interest in the LLCs through individual trusts. The LLCs own approximately sixty-eight acres of undeveloped land in Wake County, North Carolina. The operating agreements of the LLCs require unanimous agreement between the two managers for any binding action. Since 2018, Jim and Charles have been unable to agree on the use or sale of the property, leading to a managerial deadlock.The plaintiffs, James H.Q. Davis Trust and William R.Q. Davis Trust, filed an action seeking judicial dissolution of the LLCs, arguing that it had become impracticable to conduct the business of the LLCs due to the deadlock. The Business Court granted the motion to intervene by the Charles B.Q. Davis Trust and later denied the Charles Trust’s motion to dismiss. Both parties filed cross-motions for summary judgment. The Business Court granted summary judgment in favor of the plaintiffs, concluding that the deadlock made it impracticable to conduct the LLCs' business in conformance with the operating agreements.The Supreme Court of North Carolina reviewed the case and affirmed the Business Court’s decision. The Court held that judicial dissolution was appropriate because the managerial deadlock prevented the LLCs from conducting any economically useful activity and there was no mechanism in the operating agreements to break the deadlock. The Court concluded that it was not practicable for the managers to operate the LLCs in accordance with the operating agreements, thus affirming the grant of summary judgment for the plaintiffs. View "Davis Trust v. JHD Properties, LLC" on Justia Law

Christine Berger and Brian Repnow were in a decade-long relationship but never married. During their relationship, they accumulated various properties and businesses. In August 2021, Berger filed a lawsuit seeking partition, conversion, promissory estoppel, and unjust enrichment, requesting an equitable division of their accumulated real and personal property or monetary damages. Repnow claimed sole ownership of the properties and requested denial of Berger's claims.The District Court of Mercer, South Central Judicial District, held a two-day bench trial in October 2023. The court granted Berger's partition claim for the Expansion Drive property, awarding her sole ownership, and determined that the other properties and vehicles were solely owned by Repnow. The court also granted Berger's unjust enrichment claim, awarding her $64,000 for her contributions to Repnow's properties, and denied the claims of conversion and promissory estoppel. The court awarded the Dream Girls Boutique business to Repnow and Powerhouse Nutrition to Berger.The North Dakota Supreme Court reviewed the case. The court affirmed the district court's finding that the parties intended to share ownership of the Expansion Drive property and the award of Powerhouse Nutrition to Berger. However, it reversed the decision to award 100% of the Expansion Drive property to Berger, stating that the district court should have considered the parties' respective ownership interests and made an equitable division. The court also found that the district court failed to complete the unjust enrichment analysis and adequately explain the $64,000 award.The North Dakota Supreme Court remanded the case for the district court to determine the parties' respective ownership interests in the Expansion Drive property and make an award consistent with those interests. The court also instructed the district court to complete the unjust enrichment analysis and provide a clear explanation for the $64,000 award if necessary. View "Berger v. Repnow" on Justia Law

Charles Youree, Jr. filed a lawsuit against two business entities, Recovery House of East Tennessee, LLC and RHT Holdings, LLC, seeking to hold them liable for a judgment he previously obtained against another entity, Recovery Solutions Network, LLC (RSN), by piercing the corporate veil. When the defendants did not respond, a default judgment was entered against them. The defendants moved to vacate the default judgment, arguing that the complaint did not plead the necessary elements for piercing the corporate veil and that their failure to respond was due to excusable neglect, though they later withdrew the excusable neglect argument. The trial court denied the motion to vacate, finding that the complaint stated a claim under the Allen factors.The Court of Appeals reversed the trial court's decision, holding that the correct standard for piercing the corporate veil was the three-element test from Continental Bankers Life Insurance Co. of the South v. Bank of Alamo, rather than the Allen factors. The appellate court found that the complaint failed to plead the necessary elements under the Continental Bankers standard and remanded the case to the trial court for further proceedings.The Supreme Court of Tennessee reviewed the case and affirmed the Court of Appeals' decision. The court held that the Continental Bankers elements are the correct framework for piercing the corporate veil in all cases, whether involving a parent-subsidiary relationship or a corporation-shareholder relationship. The court found that the plaintiff's complaint did not sufficiently allege the elements required under the Continental Bankers standard, specifically the elements of control used to commit fraud or wrong and causation of injury. Consequently, the trial court erred in denying the motion to vacate the default judgment. The case was remanded to the trial court for further proceedings consistent with this opinion. View "Youree v. Recovery House of East Tennessee, LLC" on Justia Law

In 2015, Jesus Rodriguez-Morelos began offering Certified Nursing Assistant (CNA) classes, falsely claiming they were affiliated with the nonprofit organization United with Migrants. He charged students for these classes, which were not state-approved, and used the nonprofit's name and tax-exempt document without authorization. Complaints about the classes led to an investigation by the Colorado Department of Regulatory Agencies (DORA), revealing that Rodriguez-Morelos was unlawfully receiving money for the unapproved classes.Rodriguez-Morelos was charged with several crimes, including identity theft under section 18-5-902(1)(a), C.R.S. (2024). A jury convicted him on all charges. On appeal, the Colorado Court of Appeals affirmed the theft and criminal impersonation convictions but vacated the identity theft conviction. The court concluded that the identity theft statute's definition of "personal identifying information" pertains to individuals, not organizations, and thus did not apply to Rodriguez-Morelos's use of the nonprofit's name and document.The Supreme Court of Colorado reviewed the case and affirmed the Court of Appeals' decision. The court held that the identity theft statute's reference to "personal identifying information" applies only to information concerning single, identified human beings, not organizations. Therefore, Rodriguez-Morelos's actions did not constitute identity theft under the statute. View "People v. Rodriguez-Morelos" on Justia Law

A borrower misrepresented his authority to act on behalf of two corporations he intended to acquire, providing false documents to a lender. Despite having documents contradicting the borrower's claims, the lender proceeded with a $7 million loan, including a confession-of-judgment affidavit naming the corporations as additional borrowers. When the borrower defaulted, the lender sought a confessed judgment against all borrowers, including the corporations, whose true officers were unaware of the transaction until served with notice of the judgment.The Superior Court of Delaware conducted a hearing and entered judgment in favor of the lender, finding that the borrower had apparent authority to bind the corporations. The court focused on the borrower's conduct and representations, concluding that they created the impression of authority sufficient to warrant the entry of a confessed judgment against the corporations.The Supreme Court of Delaware reviewed the case and found that the Superior Court's formulation of the test for apparent authority was flawed. The Supreme Court emphasized that apparent authority must be based on the principal's manifestations, not solely on the agent's conduct. The evidence did not support a finding that the corporations acted in a way that created a reasonable belief in the lender that the borrower was authorized to bind them. Consequently, the Supreme Court reversed and vacated the Superior Court's judgment, concluding that the borrower lacked apparent authority and that the corporations did not effectively waive their due process rights. View "Caribbean Sun Airlines Inc. v. Halevi Enterprises LLC" on Justia Law

The case involves the certification process for Surgical Technologists and Surgical Assistants, who assist surgeons in the operating room. The Association of Surgical Technologists (AST) represents Technologists, and the Association of Surgical Assistants (ASA) represents Assistants. The National Board of Surgical Technology and Surgical Assisting (NBSTSA) certifies both professions. To maintain certification, professionals must either log continuing education credits or retake a certification exam. NBSTSA has only authorized AST to provide continuing education services, and ASA sought to become an authorized provider but was denied.ASA sued NBSTSA and AST in the United States District Court for the District of Colorado, alleging antitrust violations and tortious business interference. The district court dismissed ASA’s complaint, finding that ASA failed to establish a relevant market, monopoly power, a plausible conspiracy, and antitrust injuries.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court affirmed the district court’s dismissal, agreeing that ASA did not define the relevant market with reference to reasonable interchangeability and cross-elasticity of demand. The court noted that ASA’s proposed market definition was too narrow and did not consider competing certifications or the option to recertify by examination. Additionally, the court found that ASA failed to allege a plausible conspiracy between NBSTSA and AST, as the allegations were conclusory and lacked specific factual support. The court also concluded that ASA did not demonstrate a cognizable antitrust injury, as the alleged harm was derivative and did not stem from a competition-reducing aspect of the defendants' behavior. View "Association of Surgical Assistants v. National Board of Surgical Technology" on Justia Law

Oracle Corporation acquired NetSuite Inc. in 2016. Following the acquisition, Oracle stockholders filed a derivative suit against Oracle directors and others, alleging that Lawrence Ellison, a co-founder and substantial equity holder in both companies, forced Oracle to overpay for NetSuite. After the Court of Chancery denied the defendants’ motion to dismiss, the Oracle board formed a special litigation committee (SLC) to review the plaintiffs’ derivative claims. The SLC investigated and tried to settle the suit but eventually returned the case to the plaintiffs to pursue. The parties litigated over five years, and the Court of Chancery held a ten-day trial, ultimately entering judgment for the remaining defendants.The Court of Chancery found that the special committee negotiated the NetSuite transaction untainted by Ellison’s or Oracle management’s influence. The court concluded that Ellison did not exercise general control over Oracle or specific control over the transaction. The court also found that neither Ellison nor Catz withheld material information or misled the Oracle board and special committee.On appeal, the stockholders contended that the court erred by allowing the SLC to withhold its interview memos, applying business judgment review to a transaction involving an alleged controlling stockholder, employing the wrong legal standard when evaluating whether Ellison misled the special committee, and finding that Ellison’s alleged undisclosed future operational plans were immaterial.The Supreme Court of Delaware affirmed the Court of Chancery’s judgment. The court held that the SLC did not waive work product protection during mediation and that the plaintiffs did not demonstrate substantial need or undue hardship for the interview memos. The court also affirmed the application of business judgment review, finding that Ellison did not exercise actual control over Oracle or the transaction. Finally, the court agreed that Ellison’s undisclosed post-closing plans were immaterial to the special committee’s evaluation and negotiation of the transaction. View "In re Oracle Corporation Derivative Litigation" on Justia Law