Justia Business Law Opinion Summaries

The case involves a dispute between two parties who entered into a partnership agreement that specified the financial conditions under which the appellant would receive a distribution upon the sale of the partnership’s principal asset. The agreement set a net-sale-price threshold above which the appellant would receive a distribution, and it directed the general partner to calculate that net sale price by deducting certain categories of costs from the gross sales price. The general partner determined that the deductions reduced the net sale price below the minimum threshold for a distribution. The appellant challenged several of these deductions, particularly the costs incurred to defease the interest payments on the mortgage.The Court of Chancery of the State of Delaware reviewed the case and held that the deduction for the costs to defease the interest payments on the mortgage was proper under the partnership agreement. The court concluded that this deduction was outcome determinative and entered judgment in favor of the partnership. The court also noted that the general partner acted in good faith in calculating the net sale price, which eliminated any breach of contract claim.The Supreme Court of the State of Delaware reviewed the case and affirmed the Court of Chancery’s judgment. The Supreme Court held that the plain language of the partnership agreement and the formula used permitted the challenged deduction for defeasance costs. The court did not reach the effect or correctness of the Court of Chancery’s alternative holding regarding the general partner’s good faith. The Supreme Court concluded that the defeasance costs were properly deducted, which reduced the net resale price below the threshold required for the appellant to receive a distribution. View "Exit Strategy, LLC v. Festival Retail Fund BH, L.P." on Justia Law

The New Jersey Staffing Alliance, the American Staffing Association, and the New Jersey Business and Industry Association sought to enjoin a New Jersey law designed to protect temporary workers. The law, known as the Temporary Workers’ Bill of Rights, mandates recordkeeping, disclosure requirements, and state certification procedures for staffing firms. It also imposes joint and several liability on clients hiring temporary workers and requires staffing firms to pay temporary workers wages equivalent to those of permanent employees performing similar work.The United States District Court for the District of New Jersey denied the preliminary injunction, concluding that the Staffing Associations were unlikely to succeed on the merits of their claims. The court found that the law did not discriminate against out-of-state businesses, as it imposed the same burdens on both in-state and out-of-state firms. The court also rejected the void-for-vagueness claim, reasoning that the law provided sufficient guidance on its requirements. Additionally, the court determined that the law was a reasonable exercise of New Jersey’s police power, as it was rationally related to the legitimate state interest of protecting temporary workers.The United States Court of Appeals for the Third Circuit affirmed the District Court’s decision. The Third Circuit agreed that the Staffing Associations failed to show a likelihood of success on their claims. The court held that the law did not violate the dormant Commerce Clause, as it did not favor in-state businesses over out-of-state competitors. The court also found that the law was not unconstitutionally vague, as it provided adequate notice of its requirements. Finally, the court upheld the law as a permissible exercise of state police power, as it was rationally related to the goal of protecting temporary workers. View "New Jersey Staffing Alliance v. Fais" on Justia Law

Hedge funds Walleye Opportunities Master Fund Ltd. and Walleye Manager Opportunities LLC sued large shareholders of Intelsat S.A., alleging that the shareholders engaged in insider trading by using material non-public information obtained from a meeting between Intelsat and the Federal Communications Commission (FCC). The plaintiffs claimed that the shareholders sold Intelsat stock during an after-hours block sale based on this information, which was not disclosed to the public.The United States District Court for the Northern District of California dismissed the complaint, finding that Walleye failed to adequately plead that the defendants possessed material non-public information and acted with scienter. The court also held that Walleye had statutory standing under Section 20A of the Securities Exchange Act, which requires that plaintiff-buyers trade contemporaneously with defendant-sellers. Walleye amended the complaint, but the district court dismissed the second amended complaint on similar grounds.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The Ninth Circuit held that Walleye had Article III standing to sue because it sufficiently pleaded both injury and causation by alleging that it bought Intelsat stock at a price inflated due to the defendants’ failure to disclose material information. The court also held that Walleye had statutory standing under Section 20A, even though it traded on the public market and did not buy the Intelsat shares sold during the after-hours block trade.However, the Ninth Circuit concluded that Walleye failed to adequately plead that the defendants possessed material non-public information. The court found that Walleye did not specifically allege how Silver Lake, BC Partners, or David McGlade learned of the FCC meeting or what material non-public information they possessed. The court also held that the alleged information was not material, as it did not significantly alter the total mix of information available to the public. The judgment of the district court was affirmed. View "WALLEYE OPPORTUNITIES MASTER FUND LTD. V. SILVER LAKE GROUP, L.L.C." on Justia Law

Camden Systems, LLC appealed a judgment favoring 409 North Camden, LLC and its members after the trial court granted summary judgment for the defendants. Camden Systems sought declarations that certain actions taken by 409 North Camden's members, including distributions to members, were invalid due to defective notice of a 2021 meeting and sought the return of distributed funds. 409 North Camden argued that a 2022 meeting ratified the prior actions, curing any defects. The trial court agreed and granted summary judgment for 409 North Camden.The Superior Court of Los Angeles County initially reviewed the case. Camden Systems filed a complaint alleging breach of fiduciary duty, breach of contract, and declaratory relief. The court sustained multiple demurrers to the complaint, leading Camden Systems to file a third amended complaint. The member defendants moved for summary judgment, arguing that the 2022 ratification cured any defects in the 2021 meeting notice and that Camden Systems lacked standing to challenge actions taken before it became a member in 2020. The trial court granted the motion, finding the ratification valid and Camden Systems without standing for earlier actions.The California Court of Appeal, Second Appellate District, Division Seven, reviewed the case. The court held that the 2022 ratification of the 2021 actions was valid under the California Revised Uniform Limited Liability Company Act, which allows limited liability companies to ratify actions similarly to natural persons. The court also found that Camden Systems lacked standing to challenge distributions made before it became a member and that the indemnification resolution was valid under the operating agreement. The court affirmed the trial court's judgment, concluding that Camden Systems was not entitled to the declarations it sought. View "Camden Systems v. 409 North Camden" on Justia Law

Davidson Oil Company entered into a fixed-price requirements contract with the City of Albuquerque to supply all of the city's fuel needs for a year. Shortly after the contract was signed, fuel market prices dropped significantly. The city requested a price reduction, which Davidson Oil refused, citing potential losses due to hedge contracts it had entered into to protect against market fluctuations. The city then terminated the contract using a termination for convenience clause, prompting Davidson Oil to sue for breach of contract.The United States District Court for the District of New Mexico granted summary judgment in favor of Davidson Oil, awarding damages for the value of the hedge contracts. The court found that while the city did not breach the explicit terms of the contract, it violated an implied covenant by terminating the contract in bad faith to secure a better bargain elsewhere.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The Tenth Circuit held that the City of Albuquerque breached the contract by exercising the termination for convenience clause solely to obtain a better deal from another supplier. The court emphasized that such an action violated the implied covenant of good faith and fair dealing inherent in the contract. The court also upheld the district court's award of damages, including the hedge contract losses, as incidental damages under the Uniform Commercial Code, finding them to be commercially reasonable and directly resulting from the breach. View "Davidson Oil Company v. City of Albuquerque" on Justia Law

The case involves a dispute over the control of a nonprofit corporation, which was dissolved by the State due to the executive director’s failure to pay taxes and fees and renew corporate registration. Despite the dissolution, the directors and members continued the corporation’s activities, unaware of the loss of corporate status. When the issue was discovered, some individuals filed paperwork to incorporate a new entity with the same name, offices, and bank account. A national affiliate proposed elections to resolve the leadership, but the new incorporators denied affiliation with the old corporation. Elections were held, and new directors were chosen, leading to litigation over who had authority to act on behalf of the new corporation.The Superior Court of Alaska, Third Judicial District, Anchorage, ruled that the new corporation was essentially the same entity as the old one, with the same members. The court concluded that the disputed election was valid and that the newly elected individuals had authority to act on behalf of the corporation. The court ousted the individuals who had filed the incorporation paperwork and awarded attorney’s fees to the prevailing parties but exempted individual litigants from liability for these fees.The Alaska Supreme Court largely affirmed the Superior Court’s rulings but vacated and remanded the dismissal of one third-party claim for a more detailed explanation. The court also vacated and remanded the Superior Court’s decision to excuse individual litigants from liability for attorney’s fees, finding the reason for this ruling invalid. The main holding was that the new corporation was the same entity as the old one, and the election of new directors was valid, giving them authority to act on behalf of the corporation. View "Aiken v. Alaska Addiction Professionals Association" on Justia Law

The case involves a failed business relationship between Mike Jones, Jeremy Sligar, and Sligar's business, Overtime Garage, LLC. Jones claimed they formed a joint venture in 2011 to buy and sell used vehicles, which Sligar disputed. The relationship deteriorated, and Sligar terminated the venture in 2016. Jones filed a complaint in 2016 seeking a declaratory judgment, dissolution of the joint venture, and other relief. Sligar counterclaimed for similar relief. During the litigation, Safaris Unlimited, LLC, bought Jones's interest in the case at a sheriff's sale and settled the case by dismissing Jones's claims against Sligar.The District Court of the Fifth Judicial District, Twin Falls County, denied Jones's motion to set aside the judgment in the first case (Sligar I) and granted summary judgment to Sligar in the second case (Sligar II), finding that Jones's claims were barred by res judicata. The court also awarded attorney fees to Sligar and Safaris, finding Jones's motion to set aside the judgment was frivolous and untimely. Jones appealed these decisions, arguing the consolidation of small claims actions with Sligar I was improper and that his Rule 60(b) motion was timely.The Supreme Court of Idaho affirmed the district court's decisions. It held that the consolidation of the small claims actions with Sligar I was proper, as the small claims were related to the disputed property in Sligar I. The court also found that Jones did not file his Rule 60(b) motion within a reasonable time, as he delayed over five months without a valid reason. Additionally, the court upheld the summary judgment in Sligar II, agreeing that Jones's claims were barred by res judicata. The court awarded attorney fees to Sligar for the appeal in Sligar I but not in Sligar II, as Sligar did not prevail on its cross-appeal. View "Jones v. Sligar" on Justia Law

Yorktown Systems Group Inc. and Threat Tec LLC, both defense contractors, entered into a mentor-protégé relationship under the Small Business Administration’s program to jointly pursue government contracts. They formed a joint venture (JV) and were awarded a $165 million contract with the U.S. Army. The JV agreement allocated specific work shares to each company. However, the relationship soured, and Threat Tec attempted to terminate Yorktown’s subcontract, effectively cutting Yorktown out of its share of the contract.The United States District Court for the Northern District of Alabama granted Yorktown a preliminary injunction, preventing Threat Tec from terminating the subcontract and depriving Yorktown of its rights under the JV agreement. The court found that Yorktown had shown a substantial likelihood of success on its breach of contract and breach of fiduciary duty claims and faced irreparable harm. The court noted that Threat Tec’s CEO had made false statements and lacked candor, leading to the belief that Threat Tec’s motives were unethical.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the district court’s decision. The appellate court found no clear error in the district court’s factfindings and concluded that the district court acted within its discretion. The court held that Threat Tec, as the managing member of the JV, owed fiduciary duties of loyalty and care to Yorktown and likely breached those duties by attempting to cut Yorktown out of its contractually specified workshare. The court also agreed that Yorktown faced irreparable harm, including potential damage to its business reputation and the loss of highly skilled employees, which could not be remedied by monetary damages alone. View "Yorktown Systems Group Inc. v. Threat TEC LLC" on Justia Law

In 2006, David and Jill Landrum, along with Michael and Marna Sharpe, purchased land in Madison County to develop a mixed-use project called the Town of Livingston. The project stalled due to the 2008 financial crisis and legal issues. In 2010, Jill and Marna formed Livingston Holdings, LLC, which owned the development properties. Marna contributed more financially than Jill, leading to a disparity in ownership interests. In 2014, Marna sold her interest to B&S Mississippi Holdings, LLC, managed by Michael Bollenbacher. Jill stopped making her required monthly contributions in December 2018.The Madison County Chancery Court disqualified Jill as a derivative plaintiff, realigned Livingston Holdings as a defendant, and dismissed several claims. The court found that Jill did not fairly and adequately represent the interests of the company due to personal interests and economic antagonisms. The court also granted summary judgment in favor of several defendants and denied the Landrums' remaining claims after a bench trial.The Supreme Court of Mississippi reviewed the case and affirmed the lower court's decision to disqualify Jill as a derivative plaintiff and exclude the Landrums' expert witness. The court found that Jill's personal interests and actions, such as failing to make required contributions and attempting to gain control of the company, justified her disqualification. The court also affirmed the dismissal of claims for negligent omission, misstatement of material facts, civil conspiracy, fraud, and fraudulent concealment due to the Landrums' failure to cite legal authority.However, the Supreme Court reversed and remanded the case on the issues of remedies and attorneys' fees under the Second Memorandum of Understanding (MOU) and the alleged breach of fiduciary duty between B&S and Jill. The court found that the chancellor erred in interpreting the Second MOU as providing an exclusive remedy and remanded for further proceedings to determine if Livingston is entitled to additional remedies and attorneys' fees. The court also remanded for factual findings on whether B&S breached its fiduciary duty to Jill regarding property distribution and tax loss allocation. View "Landrum v. Livingston Holdings, LLC" on Justia Law

Petitioners opened brokerage accounts with Stifel, Nicolaus & Company, managed by Coleman Devlin. Dissatisfied with Devlin's performance, they filed for arbitration with the Financial Industry Regulatory Authority (FINRA), alleging negligence, breach of contract, breach of fiduciary duty, negligent supervision, and violations of state and federal securities laws. After nearly two years of hearings, the arbitration panel ruled in favor of Stifel and Devlin without providing a detailed explanation, as the parties did not request an "explained decision."Petitioners moved to vacate the arbitration award in the United States District Court for the District of Maryland, arguing that the arbitration panel manifestly disregarded the law, including federal securities law. The district court denied the motion, stating that the petitioners failed to meet the high standard required to prove manifest disregard of the law. The court noted that the petitioners were essentially rearguing their case from the arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court noted that the Supreme Court's decision in Badgerow v. Walters requires an independent jurisdictional basis beyond the Federal Arbitration Act (FAA) itself for federal courts to have jurisdiction over petitions to vacate arbitration awards. Since the petitioners did not provide such a basis, the Fourth Circuit vacated the district court's judgment and remanded the case with instructions to dismiss the petition for lack of jurisdiction. The court emphasized that claims of manifest disregard of federal law do not confer federal-question jurisdiction. View "Friedler v. Stifel, Nicolaus, & Company, Inc." on Justia Law