Justia Business Law Opinion Summaries

Endure Industries, Inc., a seller of disposable medical supplies, sought to participate as a supplier in Vizient’s group purchasing organization (GPO), which negotiates bulk purchasing contracts for healthcare providers. Vizient is the largest GPO in the United States, serving a majority of general acute care centers and academic medical centers. After Vizient rejected Endure’s bid to supply medical tape in favor of another supplier, Endure filed an antitrust suit against Vizient and related entities, alleging monopolization and anticompetitive conduct in two proposed markets for disposable medical supplies.The United States District Court for the Northern District of Texas granted summary judgment to Vizient, finding that Endure failed to define a legally sufficient relevant market under antitrust law. The district court reasoned that Endure’s expert’s market definitions—(1) the sale of disposable medical supplies through GPOs to acute care centers, and (2) sales to Vizient member hospitals—excluded significant alternative sources of supply. Specifically, evidence showed that many hospitals purchase substantial amounts of supplies outside GPO contracts, demonstrating that reasonable substitutes exist and undermining Endure’s theory of market foreclosure.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed only the issue of market definition. The Fifth Circuit held that Endure did not raise a genuine dispute of material fact regarding its proposed markets, as its definitions failed to account for all commodities reasonably interchangeable by consumers. The court found that significant hospital purchasing occurs outside GPOs and that Vizient members are not “locked in” to buying exclusively through Vizient. The Fifth Circuit affirmed the district court’s summary judgment in favor of Vizient, concluding that neither of Endure’s proposed antitrust markets was legally sufficient. View "Endure Industries v. Vizient" on Justia Law

Iron Triangle, LLC significantly increased its presence in the Malheur National Forest after winning a 2013 competitive bidding process by the U.S. Forest Service, securing an exclusive ten-year stewardship contract and right of first refusal on 70% of federal timberland. Iron Triangle also regularly won bids for the remaining 30% of timber sales. In 2020, it entered a contract with Malheur Lumber Company to supply pine sawlogs and provide logging services. Plaintiffs—loggers, landowners, and a competing sawmill—claimed that Iron Triangle and other defendants used anticompetitive tactics to monopolize and restrain trade across four related product markets in the region.The United States District Court for the District of Oregon dismissed the antitrust claims with prejudice, finding that plaintiffs failed to allege monopoly power, anticompetitive conduct, or antitrust injury in any of the identified markets. The court also held that federal regulations governing government contracting and timber sales precluded findings of monopoly power. Plaintiffs amended their complaint twice, but each time, the district court found the allegations insufficient and eventually denied further leave to amend.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. While disagreeing that federal regulations categorically preclude monopoly power, the appellate court held that plaintiffs failed to plausibly plead monopoly or monopsony power, anticompetitive conduct, or antitrust injury in any market. The court also found plaintiffs did not sufficiently allege an illegal tying arrangement under Section 1 of the Sherman Act, as logging services and sawlogs were not distinct products and there was no coercion. The Ninth Circuit further affirmed denial of leave to amend, concluding additional amendments would be futile. View "MALHEUR FOREST FAIRNESS COALITION V. IRON TRIANGLE, LLC" on Justia Law

Johnson & Johnson acquired Auris Health, a medical robotics company, in a transaction where Auris’s shareholders could earn up to $2.35 billion in additional payments if certain regulatory and sales milestones were met for Auris’s surgical devices. These milestones required Johnson & Johnson to use “commercially reasonable efforts,” defined by the contract as efforts comparable to those used for its own priority devices. All regulatory milestones were expressly conditioned on achieving specific FDA “510(k) premarket notification” approvals. After none of the milestones were met, Fortis Advisors, representing Auris’s former shareholders, sued, alleging that Johnson & Johnson failed to meet its efforts obligations and fraudulently induced Auris into accepting a contingent payment for one milestone by misrepresenting its likelihood.The Delaware Court of Chancery held a trial and found largely in Fortis’s favor. The court ruled that Johnson & Johnson breached the contract by not applying the required level of effort to Auris’s iPlatform system and acted with the intent to avoid earnout payments. For the first milestone, the court relied on the implied covenant of good faith and fair dealing to require Johnson & Johnson to pursue an alternate FDA pathway when the original 510(k) process became unavailable. The court also found that Johnson & Johnson fraudulently induced Auris to accept a contingent payment for the Monarch lung ablation milestone by portraying its achievement as almost certain, despite knowing of a recent patient death and an ongoing FDA investigation.On appeal, the Supreme Court of Delaware agreed with Johnson & Johnson regarding the implied covenant, holding that the merger agreement did not contain a contractual gap and that the risk of an unavailable 510(k) pathway was foreseeable and allocated by the contract. The court reversed the Chancery’s ruling that Johnson & Johnson was required to pursue an alternative regulatory pathway for the first milestone and vacated the related damages. The Supreme Court otherwise affirmed the findings on breach of contract for the remaining milestones, upheld the damages calculation for those, and affirmed the fraud finding and the conclusion that the contract did not bar extra-contractual fraud claims. The case was remanded for recalculation of damages consistent with this opinion. View "Johnson & Johnson v. Fortis Advisors LLC" on Justia Law

Several senior financial advisors resigned from a national investment advisory firm’s Des Moines branch to join a competitor that was opening a new local office. After their departure, nearly all remaining advisors at the branch also resigned en masse and joined the competitor, which offered substantial incentives. The resignations occurred despite restrictive covenants in the former advisors’ employment contracts, which limited their ability to solicit clients, disclose confidential information, and recruit other employees. The competitor and the departing advisors soon began servicing many of their former clients, resulting in a substantial loss of business for their previous employer.Following these events, the original firm filed suit in the United States District Court for the Southern District of Iowa, alleging breach of contract, tortious interference, and theft of trade secrets. The district court initially denied a temporary restraining order but later granted a broad preliminary injunction. This injunction prohibited the former advisors from servicing or soliciting covered clients, using confidential information, or recruiting employees, and it barred the competitor from using confidential information or interfering with employment agreements. The defendants sought a stay but were denied by both the district court and the appellate court.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the preliminary injunction. The appellate court determined that the record did not show a likelihood of irreparable harm that could not be compensated by money damages, as required for preliminary injunctive relief. The court found that the alleged financial harms were calculable and that the claimed destruction of the Des Moines branch had already occurred, rendering injunctive relief ineffective for preventing future harm. The Eighth Circuit therefore vacated the preliminary injunction and remanded the case for further proceedings. View "Choreo, LLC v. Lors" on Justia Law

A privately held Nebraska S corporation had two classes of stock: Class A voting shares and Class B nonvoting shares. In 2023, the corporation sold substantially all its assets to a third party in a transaction structured as a disposition of assets, with proceeds distributed to all shareholders. The board unanimously approved the transaction, and the majority of both classes of shares voted in favor, except for some Class A and Class B shareholders, who opposed or abstained. Following closing, Class B shareholders received their cash proceeds but subsequently notified the corporation of their intent to assert appraisal rights, seeking a higher payment per share.The District Court for Sarpy County was presented with cross-motions for partial summary judgment regarding whether Class B nonvoting shareholders were entitled to appraisal rights under Nebraska’s Model Business Corporation Act (NMBCA) following the asset sale. The district court found that the relevant statute (§ 21-2,172(a)(3)) limited appraisal rights for a disposition of assets to shareholders “entitled to vote on the disposition,” and therefore determined that Class B shareholders lacked such rights. The court granted summary judgment in favor of the corporation and related parties, dismissed certain third-party defendants, and certified the judgment for immediate appeal pursuant to Neb. Rev. Stat. § 25-1315(1).On appeal, the Nebraska Supreme Court reviewed the district court’s grant of summary judgment de novo and its certification for abuse of discretion. The court held that only Class A voting shareholders were entitled to appraisal rights in connection with the disposition of assets, as the statute unambiguously limited such rights to voting shareholders. The court also found no express grant of appraisal rights to Class B shareholders in the articles of incorporation. The Supreme Court affirmed the district court’s judgment. View "Streck, Inc. v. Ryan" on Justia Law

Seagate Technology LLC, a California-based manufacturer of hard disk drives, and two of its foreign subsidiaries (in Thailand and Singapore) brought antitrust claims against NHK Spring Co., Ltd., a Japanese supplier of suspension assemblies—critical hard drive components. NHK pleaded guilty in a separate federal criminal proceeding to conspiring with competitors to fix the prices of these suspension assemblies, which were sold both in the United States and abroad. The majority of the price-fixed assemblies purchased by Seagate’s foreign entities occurred outside the United States, with only finished hard drives being imported into the country.The United States District Court for the Northern District of California initially found that the Sherman Act did not apply to Seagate’s claims related to suspension assemblies purchased abroad, ruling that these were “wholly foreign transactions” outside the reach of U.S. antitrust law. The court also determined that the Foreign Trade Antitrust Improvements Act (FTAIA) import commerce exclusion did not apply since the assemblies themselves were not directly imported into the United States, and that Seagate could not show the necessary domestic effect giving rise to its foreign injury. The district court granted NHK’s motion for partial summary judgment in full and denied Seagate leave to amend its complaint for indirect purchaser claims.The United States Court of Appeals for the Ninth Circuit vacated the district court’s summary judgment order. The appellate court held that while the import commerce exclusion did not apply, Seagate alleged a viable theory under the FTAIA’s domestic effects exception: NHK’s price-fixing in the United States led to higher prices domestically, which then directly caused Seagate’s foreign entities to pay inflated prices abroad. The Ninth Circuit remanded the case for the district court to determine whether Seagate had presented sufficient evidence of proximate cause to survive summary judgment. View "SEAGATE TECHNOLOGY LLC V. NHK SPRING CO., LTD." on Justia Law

AliveCor, a medical-technology company, developed a software feature called SmartRhythm to detect atrial fibrillation (Afib) using the Apple Watch. SmartRhythm depended on heart rate data generated by Apple’s original Workout Mode algorithm, known as HRPO. In 2018, Apple updated its Watch operating system and replaced HRPO with a new algorithm, HRNN, which improved exercise monitoring. Apple shared HRNN data with third-party developers but stopped sharing HRPO data, making SmartRhythm ineffective and leading AliveCor to discontinue the feature. Around the same time, Apple launched its own heart rhythm analysis feature, Irregular Rhythm Notification (IRN), using a different algorithm and shared that data as well. AliveCor alleged that Apple’s conduct intentionally disabled competing software features, thereby monopolizing the market for heart rhythm analysis apps on the Apple Watch.The United States District Court for the Northern District of California granted summary judgment for Apple, finding that Apple’s changes constituted a lawful product improvement under Allied Orthopedic Appliances, Inc. v. Tyco Health Care Group LP. The court held that the update to the Workout Mode was a genuine product improvement and that the associated incompatibility with SmartRhythm was not separate anticompetitive conduct.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the judgment, but on different grounds. The Ninth Circuit held that Apple’s refusal to continue sharing HRPO data with third-party developers constituted a “refusal to deal,” which under antitrust law does not impose a duty to share with competitors unless specific exceptions apply. The court found that AliveCor had not shown that an exception, such as the Aspen Skiing exception or the essential-facilities doctrine, applied. Therefore, AliveCor’s Section 2 Sherman Act claims failed as a matter of law, and summary judgment for Apple was affirmed. View "ALIVECOR, INC. V. APPLE INC." on Justia Law

Three individuals enrolled in a six-month, residential substance abuse rehabilitation program operated by a nonprofit organization in California. During their participation, they performed full-time work in the organization’s warehouses and thrift stores, which the nonprofit termed “work therapy.” In exchange, they received room, board, limited gratuities, and rehabilitation services, but no formal wages. The organization controlled their work schedules and prohibited outside employment. The participants asserted that they often worked over 40 hours weekly and performed tasks similar to paid employees. They disputed the nonprofit’s claim that work therapy was primarily rehabilitative, alleging instead that the arrangement benefitted the nonprofit by reducing costs and replacing paid staff.The Superior Court of the City and County of San Francisco reviewed cross-motions for summary adjudication focused on whether the plaintiffs were employees entitled to minimum wage and overtime under California law. The trial court ruled that the wage laws did not apply because the participants were volunteers, not employees, emphasizing that a key threshold for employee status was an express or implied agreement for compensation. Because the plaintiffs voluntarily participated without such an agreement, the court granted summary judgment in favor of the nonprofit and entered judgment accordingly.The Court of Appeal of the State of California, First Appellate District, Division Five, reviewed the case de novo. The appellate court held that although volunteers for nonprofit organizations may fall outside wage law coverage, the trial court erred by applying an overly narrow standard focused solely on the existence of an agreement for compensation. Instead, the Court of Appeal established a two-part test: nonprofits must show (1) that individuals freely agreed to volunteer for personal benefit rather than compensation, and (2) that the use of volunteer labor is not a subterfuge to evade wage laws. The appellate court vacated the judgment and remanded for further proceedings under this standard. View "Spilman v. The Salvation Army" on Justia Law

A Christian ministry in Washington State, organized as a private nonprofit, operates various social service programs such as shelters, health clinics, and meal services, with a central mission to spread the Gospel. The organization requires all employees to adhere to its religious beliefs and practices, including those regarding marriage and sexuality. When hiring for non-ministerial positions (such as IT technician and operations assistant), it screens applicants for agreement with its religious tenets and only hires co-religionists. Anticipating the need to fill numerous non-ministerial roles, the ministry faced applicants who disagreed with its faith-based requirements.After the Washington Supreme Court’s decision in Woods v. Seattle’s Union Gospel Mission, which interpreted the Washington Law Against Discrimination (WLAD) exemption for religious organizations as limited to ministerial positions, the ministry filed a pre-enforcement federal action against the Washington State Attorney General and Human Rights Commission. The Eastern District of Washington initially dismissed the case for lack of standing, but the Ninth Circuit reversed and remanded, finding the ministry had standing. On remand, the district court granted a preliminary injunction, holding the ministry was likely to succeed on its First Amendment claim and enjoining the State from enforcing WLAD against it for hiring only co-religionists in non-ministerial positions. The State appealed.Reviewing the case, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s preliminary injunction. The court held that the church autonomy doctrine, rooted in the First Amendment’s Religion Clauses, protects religious organizations’ decisions to hire co-religionists for non-ministerial roles when those decisions are based on sincerely held religious beliefs. The holding does not extend to discrimination on other grounds and is limited to religious organizations. The Ninth Circuit found all preliminary injunction factors favored the ministry and affirmed the injunction. View "UNION GOSPEL MISSION OF YAKIMA WASHINGTON V. BROWN" on Justia Law

A hospital district alleged that a medical device manufacturer used its dominant market share in tip-location systems (TLS) for catheters to manipulate the market for peripherally inserted central catheters (PICCs). Bard, the manufacturer, sells PICCs with a proprietary stylet that is necessary to integrate with Bard’s TLS. The hospital claimed this arrangement effectively forced hospitals to buy Bard’s PICCs to use the TLS, resulting in higher prices, and brought suit under the Sherman Act and Clayton Act for unlawful tying and monopolization. The hospital sought class certification for clinics and hospitals that had purchased Bard PICCs.Initially, the United States District Court for the District of Utah granted Bard’s motion for judgment on the pleadings regarding the tying claim, holding that the hospital lacked antitrust standing since it purchased only the tied product (PICCs) and not the tying product (TLS). The court concluded the hospital did not show it was compelled to buy Bard’s PICCs as a result of owning Bard’s TLS. The court allowed the monopolization claim to proceed, but later denied class certification, finding the proposed class did not meet certification requirements. After the Tenth Circuit denied interlocutory review of the class certification denial, the hospital voluntarily dismissed its remaining claim to facilitate an appeal from final judgment.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the dismissal of the tying claim, holding that the hospital was not an efficient enforcer of the antitrust laws and therefore lacked antitrust standing. The court found that purchasers of the tying product or competitors are generally better positioned to challenge tying arrangements. The Tenth Circuit also dismissed the appeal from denial of class certification, ruling it lacked jurisdiction under circuit and Supreme Court precedent when the underlying claim was voluntarily dismissed. View "North Brevard County Hospital District v. C.R. Bard, Inc." on Justia Law