Justia Business Law Opinion Summaries

Plaintiff XMission, L.C. appealed a district court's dismissal of its claims against Fluent, LLC for lack of personal jurisdiction over Fluent in Utah. Fluent was a Delaware limited liability company with its principal place of business in New York. It described its service as digital marketing; its business model was apparently based on supplying consumer data to businesses. XMission was a Utah limited liability company with its principal place of business in Salt Lake City. As an internet service provider (ISP), it used servers and other hardware that it owned and operated in Utah to provide internet access for its commercial and residential customers. It also provided email hosting and other internet-related services. Any email sent to a domain hosted by XMission would arrive on XMission’s email servers in Utah. XMission’s complaint against Fluent was based on more than 10,000 emails sent from 2015 to early 2018 to more than 1,100 XMission customers in Utah through its servers, allegedly in violation of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act). The emails at issue instructed recipients to follow links that offered to rewards. By clicking the link, the recipient is taken to a Fluent-controlled data-gathering domain that prompts the recipient to enter personal information such as name, age and date of birth, gender, email address, social media activity, zip code, and street address. Fluent apparently collects and aggregates the consumer information and sells this personal data to others to assist them in developing targeted marketing campaigns. The record does not disclose whether the email recipients actually obtain any rewards from the named companies or whether Fluent is compensated in any way by those companies for these emails. After review, the Tenth Circuit remained unpersuaded the offending emails created personal jurisdiction over Fluent in Utah, and thus affirmed the district court's dismissal. View "XMission, L.C. v. Fluent, LLC" on Justia Law

The Fifth Circuit affirmed the district court's dismissal of Golden Spread and Westport's tort claims against Emerson. The claims arose after Emerson installed a new control system for Golden Spread and the control system's software had been programmed incorrectly.The court held that the economic loss rule, which prevents recovery in tort for purely economic damage unaccompanied by injury to persons or property, is applicable in this case. The court reasoned that the Texas Supreme Court would conclude that the risk suffered here is better addressed in contract than in tort. In this case, the parties are sophisticated, commercial actors that actually did negotiate over the allocation of risk. Furthermore, the parties themselves were in the best position to understand and allocate the risks of their transaction ahead of time to resolve any ambiguities in the application of that rule to their circumstances. View "Golden Spread Electric Cooperative v. Emerson Process Management Power & Water Solutions" on Justia Law

The IRS conducted a civil audit of Peter Hermes, Kevin Desilet, Samantha Murphy, and John Murphy (collectively, the “Taxpayers”) to verify their tax liabilities for their medical- marijuana dispensary, Standing Akimbo, LLC. The IRS was investigating whether the Taxpayers had taken improper deductions for business expenses arising from a “trade or business” that “consists of trafficking in controlled substances.” Claiming to fear criminal prosecution, the Taxpayers declined to provide the audit information to the IRS. This left the IRS to seek the information elsewhere—it issued four summonses for plant reports, gross-sales reports and license information to the Colorado Department of Revenue’s Marijuana Enforcement Division (the “Enforcement Division”), which is the state entity responsible for regulating licensed marijuana sales. In Colorado federal district court, the Taxpayers filed a petition to quash the summonses. The government moved to dismiss the petition and to enforce the summonses. The district court granted the motion to dismiss and ordered the summonses enforced. After review, the Tenth Circuit concluded the Taxpayers failed to overcome the IRS' showing of good faith, and failed to establish that enforcing the summonses would constitute an abuse of process. View "Standing Akimbo, LLC v. United States" on Justia Law

Shareholders of Goldman filed a class action alleging that Goldman and several of its executives committed securities fraud by misrepresenting Goldman's freedom from, or ability to combat, conflicts of interest in its business practices. The district court certified a shareholder class, but the Second Circuit vacated the order in 2018. On remand, the district court certified the class once more.The court affirmed the district court's order on remand, holding that the district court correctly applied the inflation-maintenance theory. The court explained that the inflation-maintenance theory did not require proof of fraud-induced inflation, and that the district court applied the correct standard in concluding that Goldman's share price was inflated. The court also held that the district court did not abuse its discretion by holding that Goldman failed to rebut the Basic presumption by a preponderance of the evidence. View "Arkansas Teacher Retirement System v. Goldman Sachs Group, Inc." on Justia Law

Travelers Property Casualty Company of America (“Travelers”) filed suit against SRM Group, Inc. (“SRM”), seeking to recover unpaid premiums due under a workers’ compensation insurance policy. In response, SRM asserted counterclaims against Travelers for breach of contract, breach of duty of good faith and fair dealing, and attorney fees based on Travelers’ audit of SRM’s employee risk classifications and subsequent refusal to reclassify those employees, which resulted in a substantial retroactive increase in the premium. A jury awarded Travelers damages based on SRM's failure to pay some of the alleged increased premium due under the policy. However, the jury found that Travelers had also breached the contract and acted in bad faith in conducting the audit and failing to reclassify certain SRM employees. The issue this case presented for the Georgia Supreme Court's review centered on whether a counterclaimant asserting an independent compulsory counterclaim could seek attorney fees and litigation expenses under Georgia case law. The Supreme Court overruled Byers v. McGuire Properties, Inc, 679 SE2d 1 (2009), and Sponsler v. Sponsler, 699 SE2d 22 (2010). "Thus, a plaintiff-in-counterclaim asserting an independent claim may seek, along with that claim, attorney fees and litigation expenses under OCGA 13-6-11, regardless of whether the independent claim is permissive or compulsory." In this case, the Court reversed that part of the Court of Appeals' opinion that followed Byers. View "SRM Group, Inc. v. Travelers Property Cas. Co. of America" on Justia Law

In this dispute over the amount of franchise tax owed by a taxpayer the Supreme Court reversed in part the judgment of the court of appeals reversing in part the trial court's judgment for the taxpayer, holding that, with respect to the taxpayer's inclusion of certain costs in its "cost of goods sold" (COGS) subtraction, the calculation method accepted by the trial court was improper, and the taxpayer was not entitled to include the costs in calculating its COGS subtraction.The Comptroller concluded that Gulf Copper and Manufacturing Corporation paid an insufficient amount of franchise taxes for the 2009 year. At issue was whether Gulf Copper could exclude certain payments from its revenue under Texas Tax Code 171.1011(g)(3) and include certain costs in its COGS subtraction under Texas Tax Code 171.1012. Gulf Copper paid additional taxes and sued to recover the disputed amount. The trial court rendered judgment in favor of Gulf Copper. The court of appeals reversed in part. The Supreme Court reversed in part, holding (1) the Comptroller incorrectly disallowed the revenue exclusion; (2) with regard to the COGS subtraction, the calculation method accepted by the trial court was improper; and (3) the taxpayer was not entitled to include costs under subsection 171.1012(i) in calculating its COGS subtraction. View "Hegar v. Gulf Copper & Manufacturing Corp." on Justia Law

The Supreme Court reversed the decision of the court of appeals affirming the judgment of the trial court concluding that Tex. Tax Code 171.1012 permitted a movie theater to subtract exhibition costs as cost of goods sold, holding that film exhibitions are not tangible personal property that is sold, and therefore, the theater was not entitled to include exhibition-related costs in its cost of goods sold.The Comptroller disallowed the movie theater's subtraction of exhibition costs in calculating its franchise tax liability for 2008 and 2009. The theater paid the additional franchise taxes requested by the Comptroller and sued to recover the disputed amount, arguing that its exhibition costs were property subtracted as cost of goods sold (COGS). The trial court concluded that the theater's film exhibitions were tangible personal property and thus goods for sale in the ordinary course of the theater's business under section 171.1012. The court of appeals affirmed. The Supreme Court reversed, holding that section 171.1012 did not permit the movie theater to subtract is exhibition costs as COGS because no tangible personal property was transferred through the film exhibitions. View "Hegar v. American Multi-Cinema, Inc." on Justia Law

The Supreme Court affirmed the judgment of the court of appeals affirming the Texas Comptroller's audit of Sunstate Equipment, a heavy construction equipment renal company, on the grounds that Sunstate was not entitled to subtract certain delivery and pick-up costs as cost of goods sold (COGS) under Tex. Tax Code 171.1012, holding that Sunstate was not entitled to the subtraction it claimed under either section 171.1012(k-1) nor section 171.1012(i).After the Comptroller assessed deficiencies, penalties and interest totaling $140,495 Sunstate brought suit for a refund. The district court ordered a full refund of the amount paid, including interest. The court of appeals reversed, concluding that Sunstate was not entitled to subtract costs under section 171.1012(k-1) and that section 171.1012(i) did not independently authorize the cost subtractions. The Supreme Court affirmed, holding that neither statutory provision authorized Sunstate to subtract its delivery and pick-up costs as COGS. View "Sunstate Equipment Co. v. Hegar" on Justia Law

The Second Circuit reversed the district court's dismissal of plaintiffs' Sherman Act, RICO Act, and common-law claims against defendants for lack of Article III standing. Plaintiffs are a group of investment funds and defendants are a collection of financial institutions. Plaintiffs' claims stemmed from a scheme to fix the benchmark interest rates used to price financial derivatives in the Yen currency market.The court held that plaintiffs alleged an injury in fact sufficient for Article III standing, because plaintiffs plausibly alleged that defendants' conduct caused them to suffer economic injury. In this case, plaintiffs alleged that they entered into financial agreements on unfavorable terms because defendants manipulated benchmark rates in their own favor. Accordingly, the court remanded for further proceedings. View "Sonterra Capital Master Fund Ltd. v. UBS AG" on Justia Law

The plaintiffs are shareholders in mutual funds. JPMIM is paid a fee for managing the Funds’ securities portfolio and researching potential investments. The plaintiffs sued under the Investment Company Act (ICA), 15 U.S.C. 80a-1, which allows mutual fund shareholders to bring a derivative suit against their fund’s investment adviser on behalf of their fund. The plaintiffs claimed that JPMIM charged excessive fees in violation of section 36(b), which imposes a fiduciary duty on advisers with respect to compensation for services.The Sixth Circuit affirmed summary judgment in favor of JPMIM. Under section 36(b), a shareholder must prove that the challenged fee “is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arm’s length bargaining.” The district court considered the relevant factors in making its determination: the nature, extent, and quality of the services provided by the adviser to the shareholders; the profitability of the mutual fund to the adviser; “fallout” benefits, such as indirect profits to the adviser; economies of scale achieved by the adviser as a result of growth in assets under the fund’s management and whether savings generated from the economies of scale are shared with shareholders; comparative fee structures used by other similar funds; and the level of expertise, conscientiousness, independence, and information with which the board acts. View "Campbell Family Trust v. J.P. Morgan Investment Management, Inc." on Justia Law