Justia Business Law Opinion Summaries

A dispute arose after a member of a Nebraska nonprofit corporation, which operates a residential building, was elected to the board of directors by lifetime leaseholders and subsequently removed by a vote of the other board members pursuant to a provision in the corporation’s bylaws. The removed director filed a declaratory judgment action, naming as defendants the “Board of Directors,” the individual directors who voted for her removal, and her replacement, but did not name the corporation itself. She argued her removal violated state nonprofit law because, in her view, leaseholders were “members” under the statute, and directors elected by members could not be removed in this manner.The District Court for Douglas County considered cross-motions for summary judgment. It concluded that the corporation had no members as defined by the Nebraska Nonprofit Corporation Act, based on the corporation’s articles, and found the removal provision in the bylaws valid. The district court granted summary judgment in favor of the defendants. The removed director then appealed.The Nebraska Supreme Court determined that it could not address the substantive legal questions because the nonprofit corporation was an indispensable party to the declaratory judgment action. The court explained that a declaratory judgment determining the rightful composition of a corporation’s board necessarily affects the corporation’s interests, and such relief cannot be granted without the corporation’s participation. The court further held that naming the board of directors was not a substitute for naming the corporation itself, as the board is not a legal entity capable of being sued. Consequently, the Nebraska Supreme Court vacated the district court’s judgment and remanded the case with directions to dismiss it without prejudice due to lack of subject matter jurisdiction for failure to join an indispensable party. View "Powers v. Board of Directors of Elmwood Tower" on Justia Law

A family dispute over ownership of a South Dakota ranch led to extensive litigation between a corporation (HRI), a partnership (HRP), and individual family members, including Bret Healy. HRI, owned by three brothers in equal shares, petitioned for court-supervised dissolution after the board and a majority of shareholders voted in favor. Bret, representing HRP, filed a motion to dismiss the petition, asserting that HRP owned a majority of HRI’s stock and that the required shareholder approval for dissolution was lacking. This assertion contradicted prior factual findings in earlier related cases, which consistently determined that ownership claims advanced by Bret or HRP had been previously resolved against them.The Circuit Court of the First Judicial Circuit, Brule County, South Dakota, issued an order to show cause regarding possible violations of SDCL 15-6-11(b) (the South Dakota rule analogous to Rule 11), focusing on whether Bret and his attorney, Volesky, submitted unsupported or false filings for improper purposes. After briefing and a hearing, the circuit court found that Bret violated SDCL 15-6-11(b)(1) by acting with improper purpose, and that Volesky violated multiple subsections. The court imposed monetary sanctions of $240,000 against Bret and $10,000 against Volesky, and reported Volesky to the disciplinary board.On appeal, the Supreme Court of South Dakota affirmed the finding that Bret’s conduct was sanctionable under SDCL 15-6-11(c), concluding that his repeated litigation over ownership, despite numerous adverse rulings, was for improper purposes. However, the Supreme Court vacated the monetary sanction against Bret and remanded for a new hearing. The court held that, in determining sanctions, a trial court must consider the party’s ability to pay and whether non-monetary sanctions or a combination would be appropriate. The affirmation of sanctionable conduct was thus upheld, but the amount and type of sanction require further consideration. View "Dissolution Of Healy Ranch, Inc." on Justia Law

An environmental remediation company and an oil corporation entered into a Master Services Contract in 2008, which included a Texas choice-of-law and venue provision and an indemnification clause requiring the remediation company to defend and indemnify the oil corporation for claims arising from violations of applicable laws. In 2012, it was discovered that the remediation company’s then-president, along with subcontractors, had engaged in fraudulent overbilling for work performed for the oil corporation. Upon discovery, ownership of the remediation company changed hands, and litigation ensued in Louisiana state court. The remediation company’s new owner alleged that the oil corporation’s employee was complicit in the fraud, making the corporation vicariously liable.The oil corporation then filed suit in the United States District Court for the Southern District of Texas seeking a declaratory judgment that the remediation company had a duty to defend and indemnify it in the Louisiana litigation, and also sought attorney’s fees as damages for breach of contract. The district court granted summary judgment for the oil corporation, holding that Texas law applied, the remediation company owed both a duty to defend and to indemnify, and awarding attorney’s fees for both the Texas and Louisiana lawsuits.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s rulings de novo regarding summary judgment and attorney’s fees. The appellate court held that Texas law governed under the contract’s choice-of-law clause since Louisiana did not have a more significant relationship or materially greater interest, and applying Texas law did not contravene Louisiana public policy. The indemnity provision was not void as against public policy or for illegality. The court affirmed the duty to defend and to indemnify, but vacated the judgment to the extent it would require indemnification for punitive and exemplary damages, and remanded for modification. It also vacated attorney’s fees awarded for the underlying Louisiana litigation, affirming only those fees related to the declaratory judgment action. View "Anadarko v. Alternative Environmental Solutions" on Justia Law

In 2025, the Delaware General Assembly amended the Delaware General Corporation Law to add new “safe harbor” provisions for transactions involving a corporation and its controlling stockholder. These amendments, enacted as Senate Bill 21, allowed certain transactions to avoid equitable relief or damages if approved either by a committee of disinterested directors or by a majority of disinterested stockholders, and applied these changes retroactively to acts and transactions occurring before their adoption. Shortly after enactment, a stockholder of a Delaware corporation brought a derivative action alleging that the corporation’s CEO and majority stockholder breached their fiduciary duties by causing the company to overpay for an asset. The plaintiff also challenged the constitutionality of SB 21, arguing that it impermissibly deprived the Delaware Court of Chancery of its equity jurisdiction and retroactively extinguished accrued or vested causes of action.The Court of Chancery, recognizing the importance and novelty of the constitutional issues, certified two questions of law to the Delaware Supreme Court: whether the safe harbor provisions unconstitutionally divested the Court of Chancery of its equity jurisdiction, and whether applying them to past transactions violated due process by eliminating vested claims.The Supreme Court of Delaware reviewed the certified questions de novo. It held that the statutory amendments did not violate Article IV, § 10 of the Delaware Constitution because they did not remove the Court of Chancery’s ability to hear equitable claims, but instead established substantive standards for when relief may be granted. The Court also ruled that retroactive application of the safe harbor provisions under Section 3 of SB 21 did not violate Article I, § 9, since the changes did not extinguish a vested property right or accrued cause of action, but merely altered the applicable standard of review. The Court answered both certified questions in the negative, upholding the constitutionality of the challenged amendments. View "Rutledge v. Clearway Energy Group LLC" on Justia Law

Two ethanol producers, one based in Nebraska and the other in Illinois, became involved in a dispute centering on the calculation of a benchmark price for ethanol sales contracts. The Nebraska-based company alleged that its Illinois counterpart intentionally manipulated the Chicago Benchmark Price for ethanol by strategically timing large deliveries and engaging in below-market sales at a key terminal. This alleged conduct, according to the Nebraska company, reduced the value of its own sales contracts, which were referenced to the benchmark, and allowed the Illinois company to profit through derivative contracts that increased in value as the benchmark price declined.The lawsuit was filed in the U.S. District Court for the Central District of Illinois, with the Nebraska company asserting a claim under Nebraska law for tortious interference with contract, specifically relying on § 766A of the Restatement (Second) of Torts. The federal district court granted the Illinois company’s motion to dismiss, holding that Nebraska courts had not recognized § 766A as a viable theory of liability. On appeal, the U.S. Court of Appeals for the Seventh Circuit vacated that dismissal, directing the district court to predict whether the Nebraska Supreme Court would recognize such a cause of action or to certify the question to the Nebraska Supreme Court.The Nebraska Supreme Court accepted the certified question and, after reviewing its own precedent and the common-law origins of § 766A, concluded that this theory of liability was not recognized in English common law nor compelled by the Nebraska Constitution. The court further determined that the policy arguments for adopting § 766A were not so compelling as to warrant judicial innovation in this area and that such decisions are best left to the Legislature. The Nebraska Supreme Court held that it would not recognize § 766A as a valid basis for tort liability in Nebraska. View "Green Plains Trade Group v. Archer Daniels Midland Co." on Justia Law

The case centers on a dispute involving a pharmaceutical company founded by the plaintiff, who also served as its CEO. The plaintiff obtained investment from a Canadian entity controlled by one of the defendants, who later became a director. The company entered into a profitable licensing agreement for a drug, and the plaintiff claims he was personally entitled to 30% of the profits based on an oral agreement. The investor and his affiliates, however, allege that the plaintiff wrongfully diverted corporate assets by taking this share. After disagreements arose, the investor replaced himself and another director on the board with officers from his own affiliates, who began investigating the alleged diversion. In response, the plaintiff initiated litigation, asserting that the investigation was a breach of fiduciary duty and that the investor and his affiliates acted in bad faith for their own benefit.Previously, the Court of Chancery of the State of Delaware was asked to consider several claims, including breach of fiduciary duty, civil conspiracy, and tortious interference against the investor, his affiliates, and the two new directors. The investor’s affiliate moved to dismiss for lack of personal jurisdiction, and the court found it had no jurisdiction over the affiliate. The court also examined whether it had jurisdiction over the investor for claims other than those related to his service as a director, finding it did not because the complaint failed to state a viable claim against him in that capacity.In the present decision, the Court of Chancery held that it lacked personal jurisdiction over the investor’s affiliate and over the investor in his non-director capacities, dismissing those claims without prejudice. The court further dismissed with prejudice the breach of fiduciary duty and conspiracy claims against the directors and the investor in his director capacity, finding no viable claims were stated. However, the court allowed the plaintiff’s claim for a declaratory judgment regarding his right to the profits from the drug to proceed against the company, provided an amended complaint is filed naming the company as a proper defendant. View "MacLaughlan v. Einheiber" on Justia Law

A long-time authorized equipment dealer, operating under two dealer sales agreements with a manufacturer, received notice in September 2024 that its agreements would be terminated in ninety days. The manufacturer cited alleged false and misleading statements, including altered business records, as grounds for termination under the agreements. The dealer responded by challenging the termination in court, invoking North Dakota statutes that regulate equipment dealer terminations and asserting that the filing of its action triggered an automatic stay against termination during litigation.The District Court of Morton County was asked by the manufacturer to dissolve or modify the automatic stay, arguing that the statutory stay only applied to certain products and not to the bulk of equipment covered by the agreements. The manufacturer presented evidence and legislative history to support its position. However, the district court denied the motion, holding that the statute mandates a procedural automatic stay upon the filing of the dealer’s action, and that the court lacked authority to dissolve or modify the stay at this stage. The court deferred any determination of which products were covered by which statute to later proceedings. The manufacturer then sought appellate review, but the district court did not rule on its request for certification under N.D.R.Civ.P. 54(b) due to the pending appeal.The Supreme Court of the State of North Dakota reviewed whether it had jurisdiction over the appeal. The court concluded that, although the automatic stay functioned as a statutory temporary injunction making the order appealable under N.D.C.C. § 28-27-02(3), the absence of Rule 54(b) certification rendered the order not appealable at this stage. The Supreme Court dismissed the appeal and, finding no extraordinary circumstances or public interest, declined to exercise its supervisory jurisdiction. View "Bobcat of Mandan v. Doosan Bobcat North America" on Justia Law

The case concerns a dispute between two companies involved in the production and sale of coiled tubing for the oil and gas industry. One company, having acquired assets and documents from a predecessor, developed a coiled tubing product and obtained several patents (the ’256, ’074, and ’075 patents) covering aspects of this technology. The predecessor’s documents disclosed a product with overlapping technical specifications compared to at least some claims of these patents. During the patent application process, the company submitted a related public reference to the Patent and Trademark Office (Chitwood), but did not disclose the predecessor’s internal documents (the CYMAX Documents) that contained additional details. Internal discussions reflected uncertainty among inventors and counsel about the relevance and necessity of disclosing these documents.After disputes arose in the marketplace over alleged patent infringement, the manufacturer of a competing product initiated litigation in the United States District Court for the Southern District of Texas, seeking a declaration of non-infringement. The patent holder counterclaimed for infringement and, as the case proceeded, the competitor amended its claims to include allegations of inequitable conduct (fraud on the Patent Office by withholding material information) and Walker Process fraud (antitrust liability for enforcing a patent obtained by fraud). The district court granted summary judgment to the competitor on the inequitable conduct claim, finding clear evidence of intent to deceive and materiality, and granted summary judgment to the patent holder on the Walker Process fraud claim, finding insufficient evidence of market power.On appeal, the United States Court of Appeals for the Federal Circuit vacated both summary judgment rulings. The appellate court held that genuine disputes of material fact precluded summary judgment on both inequitable conduct and Walker Process fraud. The court remanded for further proceedings, allowing both claims to proceed, and affirmed the denial of summary judgment for the patent holder on inequitable conduct. View "GLOBAL TUBING LLC v. TENARIS COILED TUBES LLC " on Justia Law

Four brothers who had previously formed a diamond partnership later entered into an oral agreement in 1995 with a fifth brother to create a separate real estate partnership. The agreement was never reduced to writing, consistent with family custom. Over several years, the brothers jointly acquired and managed a large portfolio of California real estate. Tensions arose after the original real estate owner repaid a loan that was a condition for his partnership interest. One brother, who controlled the partnership’s entities, began excluding the others and denied the existence of any partnership, asserting sole ownership over the assets.The litigation began in 2003 when the excluded brother sued his siblings and related entities for his partnership share and damages. Two other brothers, who initially disclaimed the partnership under alleged economic coercion, later filed cross-complaints for their shares in both the diamond and real estate partnerships. The case saw multiple prior appeals and writ proceedings. After the trial court initially granted summary adjudication against the main plaintiff on most claims, the California Court of Appeal reversed, allowing contract, fiduciary duty, and fraud claims to proceed. Further cross-complaints were filed by the brothers, which survived demurrer on statute of limitations grounds.In 2024, after a lengthy jury trial, the Superior Court of Los Angeles County entered judgment in favor of the three plaintiff brothers, awarding declaratory relief, partnership shares, compensatory and punitive damages, and prejudgment interest totaling about $6.85 billion against the controlling brother and the partnership entities. On appeal, the California Court of Appeal, Second Appellate District, Division One, rejected most challenges to the trial court’s evidentiary rulings and instructions, but held the court erred in admitting an undisclosed expert opinion concerning lost investment profits. The appellate court conditionally affirmed the judgment, ordering a reduction of the economic damages awards relating to the real estate partnership by amounts attributable to this opinion, unless the plaintiffs opt for a new trial on those damages and related punitive damages. The judgments were otherwise affirmed. View "Jogani v. Jogani" on Justia Law

A group of wholesale businesses that purchased Clear Eyes Redness Relief eye drops from a manufacturer alleged that the manufacturer sold the product at unlawfully lower prices to their larger competitors, specifically Costco and Sam’s Club. The manufacturer provided these large buyers with discounts and customer rebates not offered to the wholesalers, resulting in a significant price advantage for Costco and Sam’s Club. The wholesalers claimed that this conduct made it impossible for them to compete effectively and sought relief under the Robinson-Patman Act, as well as California’s Unfair Practices Act and Unfair Competition Law.The case was tried in the United States District Court for the Central District of California. The jury found in favor of the wholesalers on their federal claims and awarded damages, except for one wholesaler that was not found to be in direct competition with Costco. The district court also found in favor of the California-based wholesalers on the state claims, entered judgment for the wholesalers, awarded damages, and issued a permanent injunction against the manufacturer. The court also awarded attorney’s fees but reduced the requested amount based on the size of the plaintiffs’ law firm rather than prevailing market rates.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s judgment in favor of the wholesalers on all substantive issues. The appellate court held that the district court properly instructed the jury, correctly included customer rebates in the price discrimination calculation, and appropriately issued a permanent injunction. However, the Ninth Circuit vacated the district court’s award of attorney’s fees, holding that a law firm's size alone cannot determine the market rate for a lodestar calculation. The case was remanded for recalculation of attorney’s fees consistent with prevailing market rates. View "LA International Corp. v. Prestige Brands Holdings, Inc." on Justia Law