Justia Business Law Opinion Summaries

CompoSecure, L.L.C., a manufacturer of metal credit cards, sought to invalidate the Sales Representative Agreement (the “Sales Agreement”) it signed with CardUX, LLC. The Delaware Court of Chancery held in a February 2018 post-trial decision that the Sales Agreement had not been properly approved under CompoSecure’s Amended and Restated Limited Liability Company Agreement, but that CompoSecure had impliedly ratified the Sales Agreement by its conduct. CompoSecure appealed. In a November 2018 opinion, the Delaware Supreme Court agreed with the trial court’s analysis as far as it went, but remanded to the trial court to answer a potentially outcome-determinative question that it had not answered: whether the Sales Agreement was a “Restricted Activity” under the LLC Agreement. If it was a Restricted Activity, the Supreme Court noted that the Sales Agreement would have been void and unenforceable. In its report on remand, the Court of Chancery held that the Sales Agreement was not a Restricted Activity, and thus, the Sales Agreement was not void. The Supreme Court agreed with the Court of Chancery’s conclusions, and affirmed. View "Composecure, L.L.C. v. Cardux, LLC f/k/a Affluent Card, LLC" on Justia Law

Tibet, a holding company, “effectively control[led]” Yunnan, a manufacturer. Tibet attempted to raise capital for Yunnan's operations through an initial public offering (IPO). Zou was an investor in Tibet and the sole director of CT, a wholly-owned subsidiary of Tibet. Tibet’s control of Yunnan flowed through CT. Zou told Downs, a managing director at the investment bank A&S, about the IPO. A&S agreed to serve as Tibet’s placement agent. Zou and downs were neither signatories to Tibet’s IPO registration statement nor named as directors of Tibet but were listed as non-voting board observers chosen by A&S without formal powers or duties. The registration statement explained, “they may nevertheless significantly influence the outcome of matters submitted to the Board.” The registration statement omitted information that Yunnan had defaulted on a loan from the Chinese government months earlier. Before Tibet filed its amended final prospectus, the Chinese government froze Yunnan’s assets. Tibet did not disclose that. The IPO closed, offering three million public shares at $5.50 per share. The Agricultural Bank of China auctioned off Yunnan’s assets, which prompted the NASDAQ to halt trading in Tibet’s stock. Plaintiffs sued Zou, Downs, Tibet, A&S, and others on behalf of a class of stock purchasers under the Securities Act of 1933, 15 U.S.C. 77k(a). The Third Circuit directed the entry of summary judgment in favor of Zou and Downs, holding that a nonvoting board observer affiliated with an issuer’s placement agent is not a “person who, with his consent, is named in the registration statement as being or about to become a director[ ] [or] person performing similar functions,” under section 77k(a). The court noted the registration statement’s description of the defendants, whose functions are not “similar” to those of board directors. View "Obasi Investment Ltd v. Tibet Pharmaceuticals Inc" on Justia Law

The Supreme Court affirmed the judgment of the district court revoking the liquor license held by the Mattheis Company (Company), holding that the district court correctly determined that The Mattheis Company committed a gross violation of Title 12. See Wyo. Stat. Ann. 12-1-101 to 12-10-102.After learning that the Company, which operated a bar in Jackson, Wyoming, the Town of Jackson initiated proceedings to revoke the Company's liquor license. The district court revoked the Company's liquor license following a bench trial. The Supreme Court affirmed, holding (1) liquor-license revocation requires a "gross violation" of Title 12; (2) the district court did not err in concluding that the Company's submission of a false liquor license renewal application was a gross violation of Title 12, notwithstanding the Company's asserted reliance on the advice of counsel; and (3) the district court did not abuse its discretion in revoking the Company's liquor license rather than suspending it. View "Mattheis Co. v. Town of Jackson" on Justia Law

In 2015 the Pittsburgh City Council passed and Mayor William Peduto (collectively, “the City”) signed the Paid Sick Days Act (“PSDA”) and the Safe and Secure Buildings Act (“SSBA”). Plaintiff-appellees (collectively, “Challengers”) filed suit seeking declaratory and injunctive relief, challenging the PSDA’s and SSBA’s validity on the basis that the HRC precluded the City from imposing the burdens those ordinances entailed upon local employers. The Allegheny County Court of Common Pleas considered the challenges to both laws, and found, in separate decisions issued within four days of each other, that both ordinances were ultra vires as impermissible business regulations pursuant to Section 2962(f) of the Home Rule Charter and Optional Plans Law (“the HRC”). The Pennsylvania Supreme Court was asked to consider whether these ordinances ran afoul of the qualified statutory preclusion of local regulations that burden business. The Court held that the PSDA did not exceed those limitations, but that the SSBA did. View "Pa. Rstrnt & Lodging v. City of Pittsburgh" on Justia Law

At the times relevant to this litigation, the appellants, Baer Buick GMC and Grata Chevrolet (“Dealers”), and the appellee, General Motors, LLC, were parties to dealer sales and service agreements, per which Dealers sold and serviced vehicles manufactured by General Motors. Under the contractual terms, Dealers committed to performing repairs required by limited warranties extended by General Motors upon sales with no additional charge to customers (albeit that the projected cost of such repairs was factored into the purchase price for new vehicles). General Motors was then required to reimburse Dealers in accordance with a Service Policies and Procedures Manual (the “SPPM”). Through the SPPM, General Motors agreed to pay dealers at large for labor during warranty work under either of two options, denominated “Option A (Retail Rate) and Option C (CPI-based).” Option C, apparently, was the preferred option among dealers for labor reimbursement. General Motors’ standard reimbursement policy for parts installed in connection with warranty repairs was to pay one hundred and forty percent of the dealers’ costs. Apparently, both labor reimbursement alternatives, Options A and C, were initially made available to all dealers regardless of whether they sought reimbursement for parts under the standard contractual methodology or invoked an alternative rate, presumably under a governing regulatory statute. In 2012, however, General Motors instituted a policy effectively rendering any dealer pursuing an alternative reimbursement methodology for calculating warranty parts reimbursement ineligible for contractually-based Option C reimbursement for labor. Dealers, along with several other franchise dealers, lodged a protest with the State Board of Vehicle Manufacturers, Dealers and Salespersons (the “Board”), claiming that General Motors violated Section 9(a)(3) of the Board of Vehicles Act by contractually changing the manner in which it reimbursed dealers for warranty labor, when Dealers had merely exercised their statutory rights concerning reimbursement for warranty parts. They also challenged General Motors’ ability to impose a surcharge on dealers that elect the statutory retail reimbursement rate for warranty parts but not labor. In response, General Motors contended that nothing in the Act guaranteed dealers the right to participate in Option C, which was purely a matter of contract. After review, the Pennsylvania Supreme Court affirmed the order of the Commonwealth Court as it related to Section 9(a), and reversed as concerned Section 9(b.4)(1)(i). View "General Motors, LLC v. St Brd/Vehicle Manufacturer" on Justia Law

In 2005 Paramount leased a parcel of highway-adjacent property in Bellwood, Illinois, planning to erect a billboard. Paramount never applied for a local permit. When Bellwood enacted a ban on new billboard permits in 2009, Paramount lost the opportunity to build its sign. Paramount later sought to take advantage of an exception to the ban for village-owned property, offering to lease a different parcel of highway-adjacent property directly from Bellwood. Bellwood accepted an offer from Image, one of Paramount’s competitors. Paramount sued Bellwood and Image, alleging First Amendment, equal-protection, due-process, Sherman Act, and state-law violations. The Seventh Circuit affirmed summary judgment in favor of the defendants. Paramount lost its lease while the suit was pending, which mooted its claim for injunctive relief from the sign ban. The claim for damages was time-barred, except for an alleged equal-protection violation. That claim failed because Paramount was not similarly situated to Image; Paramount offered Bellwood $1,140,000 in increasing installments over 40 years while Image offered a lump sum of $800,000. Bellwood and Image are immune from Paramount’s antitrust claims. The court did not consider whether a market-participant exception to that immunity exists because Paramount failed to support its antitrust claims. View "Paramount Media Group, Inc. v. Village of Bellwood" on Justia Law

KCP, the plaintiff, had hoped to act as a middleman in a potential distribution deal for a novel cleaning product and targeted Henkel, a large consumer products company as a potential distributor. KCP and Henkel entered into a non-disclosure agreement (NDA) to aid in the negotiations of a distribution deal. KCP provided Henkel with confidential information about the product. Following a year of exchanging information and engaging in negotiations, the NDA lapsed, and no deal was consummated. KCP asserts that Henkel’s parent company, Henkel KGaA, used confidential information it acquired through the NDA to develop the product on its own and also interfered with the potential distribution deal. The district court granted summary judgment in favor of KGaA. As to a breach of contract claim, the court found that KGaA was not a party to the NDA and could not be liable for its breach. As to a tortious interference claim, the court found that KGaA is the parent company of Henkel, so the parent-subsidiary privilege immunizes it from a tortious interference claim involving its subsidiary; the court found that the narrow “improper motive” exception to that privilege did not apply. The Sixth Circuit affirmed summary judgment in favor of KGaA, KCP has not presented sufficient evidence of any improper motive or means to pierce the parent-subsidiary privilege. View "Knight Capital Partners Corp. v. Henkel AG & Co." on Justia Law

The Ninth Circuit certified the following questions to the California Supreme Court: Does section 16600 of the California Business and Professions Code void a contract by which a business is restrained from engaging in a lawful trade or business with another business? Is a plaintiff required to plead an independently wrongful act in order to state a claim for intentional interference with a contract that can be terminated by a party at any time, or does that requirement apply only to at-will employment contracts? View "Ixchel Pharma, LLC v. Biogen, Inc." on Justia Law

The absence of a judgment in the state court litigation does not mean that plaintiff lacks Article III standing to bring this suit. Enterprise filed suit against several defendants, alleging a claim under the Missouri Uniform Fraudulent Transfer Act. The district court dismissed the complaint without prejudice based on the ground that there was no case or controversy because Enterprise lacked Article III standing.The Eighth Circuit reversed and held that Enterprise has alleged facts sufficient to demonstrate the elements of standing. In this case, Enterprise has sufficiently alleged a present injury in fact, fairly traceable to defendants, as the transferees of the funds. Therefore, the court remanded for further proceedings. View "Enterprise Financial Group Inc. v. Podhorn" on Justia Law

Schaumburg’s 2016 ordinance requires commercial buildings to send fire‐alarm signals directly to the local 911 dispatch center, NWCDS, which has an exclusive arrangement with Tyco. To send signals to NWCDS, local buildings must use Tyco equipment. Schaumburg’s notice of the ordinance referred to connection through Tyco and stated that accounts would be charged $81 per month to rent Tyco’s radio transmitters and for the monitoring service. Tyco pays NWCDS an administrative fee of $23 per month for each account it connects to the NWCDS equipment. Tyco’s competitors filed suit charging violations of constitutional, antitrust, and state tort law. The district court dismissed the case. The Seventh Circuit reversed the dismissal of the Contracts Clause claim against Schaumburg. The complaint alleges a potentially significant impairment, the early cancellation of the competitors’ contracts, and Schaumburg’s self‐interest, $300,000 it stands to gain. The court otherwise affirmed, noting that entities not alleged to have taken legislative action cannot be liable under the Contracts Clause. WIth respect to constitutional claims, the court noted the government’s important interest in fire safety. Rejecting antitrust claims, the court stated that the complaint did not allege a prohibited agreement, as opposed to an independent, legislative decision. View "Alarm Detection Systems, Inc. v. Village of Schaumburg" on Justia Law