Justia Business Law Opinion Summaries

In October 2018, a Boeing 737 MAX airliner crashed in the sea near Indonesia, killing everyone on board. In March 2019, a second 737 MAX crashed in Ethiopia, again killing everyone on board. Within days of the second crash, all 737 MAX airliners around the world were grounded. The FAA kept the planes grounded until November 2020, when it was satisfied that serious problems with the planes’ flight control systems had been corrected. The Pension Plan, a shareholder of the Boeing Company, filed a derivative suit on behalf of Boeing under the Securities Exchange Act of 1934, 15 U.S.C. 78n(a)(1), alleging that Boeing officers and board members made materially false and misleading public statements about the development and operation of the 737 MAX in Boeing’s 2017, 2018, and 2019 proxy materials.The district court dismissed the suit without addressing the merits, applying a Boeing bylaw that gives the company the right to insist that any derivative actions be filed in the Delaware Court of Chancery. The Seventh Circuit reversed. Because the federal Exchange Act gives federal courts exclusive jurisdiction over actions under it, applying the bylaw to this case would mean that the derivative action could not be heard in any forum. That result would be contrary to Delaware corporation law, which respects the non-waiver provision in Section 29(a) of the federal Exchange Act, 15 U.S.C. 78cc(a). View "Seafarers Pension Plan v. Bradway" on Justia Law

Robert, David, and Troy Taylor were partners in a commercial fire prevention business based in Alaska. Troy later formed his own business that directly competed with the partnership. In January 2015, Robert, David, and Troy signed an eight-paragraph agreement (“the Agreement”) that settled all potential legal claims relating to Troy’s competing business. The Agreement provided that Robert and David would buy Troy’s interest in the partnership. In exchange, Troy agreed to pay Robert and David $30,000 each and not work in the fire prevention industry in Alaska and Nevada. In March 2018, Robert and David brought this action in Idaho alleging, among other things, that Troy had breached the Agreement by working for a competing fire prevention business in Nevada. Troy counterclaimed, asserting Robert and David had breached the Agreement. Robert and David voluntarily dismissed some claims and the district court dismissed the rest. In addition, the district court granted summary judgment in Troy’s favor on his breach of contract counterclaim. Robert and David appealed, challenging the district court’s rulings that: (1) the noncompete provision in the Agreement was unenforceable; (2) the Agreement was severable and enforceable without the noncompete provision; and (3) they could not assert an affirmative defense of excusable nonperformance based on their allegation that Troy materially breached the Agreement. After review, the Idaho Supreme Court found the district court only erred in finding the noncompete clause was severable from the Agreement as a matter of law. The Court affirmed in all other respects. View "Taylor v. Taylor" on Justia Law

The 1949 Federal Property and Administrative Services Act is intended to facilitate the “economical and efficient” purchase of goods and services on behalf of the federal government, 40 U.S.C. 101. In November 2021, the Safer Federal Workforce Task Force, under the supposed auspices of the Act, issued a “Guidance” mandating that employees of federal contractors in “covered contract[s]” with the federal government become fully vaccinated against COVID-19. Ohio, Kentucky, and Tennessee and Ohio sheriffs’ offices sued, alleging that the Property Act does not authorize the mandate, that the mandate violates other federal statutes, and that its intrusion upon traditional state prerogatives raises federalism and Tenth Amendment concerns.The district court enjoined enforcement of the mandate throughout the three states and denied the federal government’s request to stay the injunction pending appeal. The Sixth Circuit denied relief. The government has established none of the showings required to obtain a stay. The government is unlikely to succeed on claims that the plaintiffs lack standing and the plaintiffs likely have a cause of action under the Administrative Procedure Act. The court noted the plaintiff’s concerns about disruptions to the supply chain if workers leave their jobs rather than receiving vaccinations and also stated: Given that expansive scope of the Guidance, the interpretive trouble is not figuring out who’s “covered”; the difficult issue is understanding who, based on the Guidance’s definition of “covered,” could possibly not be covered. View "Commonwealth of Kentucky v. Biden" on Justia Law

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