Justia Business Law Opinion Summaries

The case involves Capital Advisors, LLC, and Danzig, Ltd., minority shareholders of Cam Group, Inc. (CAMG), who filed a shareholder derivative action against nine CAMG officers and directors. The defendants included Wei Heng Cai (Ricky) and Wei Xuan Luo (Tracy), who were the only ones to proceed to trial. The plaintiffs alleged that Ricky arranged for a $1.85 million unsecured loan at zero-percent interest to a company called Parko Ltd., and Tracy, as CFO, failed to stop the loan. The loan allegedly drained approximately 80% of the cash reserves for the consolidated CAM companies. Ricky later resigned from CAMG to focus on developing business opportunities for another company, National Agricultural Holdings Limited (NAHL), and his own company, Precursor Management Inc. (PMI).The district court granted a motion for judgment as a matter of law in favor of Ricky and Tracy, dismissing all causes of action. The court found that officers and directors of a parent company cannot be held liable for actions taken by a wholly owned subsidiary without piercing the corporate veil. The court also awarded Ricky and Tracy over $2 million in attorney fees and costs.The Supreme Court of Nevada affirmed in part, reversed in part, vacated in part, and remanded the case for further proceedings. The court held that officers and directors of a parent company who allow a wholly owned subsidiary to take action adverse to the parent can be held liable without use of the alter ego doctrine. The court also held that shareholders may file derivative suits against officers and directors of a parent company based on wrongful actions that occurred at a wholly owned subsidiary of a wholly owned subsidiary without asserting alter ego. The court concluded that the district court erred by finding that officers and directors of a parent company cannot be held liable for actions taken by a wholly owned subsidiary without piercing the corporate veil. The court also found that the plaintiffs presented sufficient evidence to defeat a motion for judgment as a matter of law as to some of their causes of action. View "CAPITAL ADVISORS, LLC VS. CAI" on Justia Law

Tri-Plex Technical Services, Ltd., an Illinois corporation that develops, manufactures, distributes, and sells commercial-grade carpet cleaning products, filed a complaint against its competitors, including Jon-Don, LLC, alleging violations of the Illinois Uniform Deceptive Trade Practices Act and the Illinois Consumer Fraud and Deceptive Business Practices Act. The plaintiff claimed that the defendants failed to disclose that their cleaning products contained excessive amounts of phosphorous and volatile organic material, in violation of Illinois environmental laws. The plaintiff argued that this harmed its business because its products complied with Illinois law and the carpet cleaning companies preferred and purchased the defendants’ products because they contained phosphorus and cleaned better, albeit illegally.The circuit court dismissed the plaintiff’s complaint on several grounds, including that the plaintiff failed to allege sufficient facts to state a claim and that the plaintiff lacked standing. The appellate court reversed the judgment of the circuit court and remanded the case for further proceedings.The Supreme Court of the State of Illinois reversed the judgment of the appellate court and affirmed the judgment of the circuit court dismissing the plaintiff’s complaint. The court found that the plaintiff failed to exhaust administrative remedies before bringing its claims under the Deceptive Trade Practices Act. The court also found that the plaintiff failed to plead all the elements of a Consumer Fraud Act claim, as it did not plead that it was the intended recipient of the defendants’ alleged deceptions. The court further held that the plaintiff’s civil conspiracy claim, which rested upon the validity of the Deceptive Trade Practices Act and the Consumer Fraud Act claims, also failed. View "Tri-Plex Technical Services, Ltd. v. Jon-Don, LLC" on Justia Law

The case revolves around a dispute concerning a 2018 merger between FanDuel Ltd. and the U.S. assets of nonparty Paddy Power Betfair plc. The plaintiffs, founders and shareholders of FanDuel, alleged that the defendants, including FanDuel's board of directors and certain shareholders, deliberately undervalued FanDuel's assets during the merger negotiations, resulting in the preferred shareholders receiving all the benefits of the merger while the common shareholders received nothing. The plaintiffs claimed that the defendants breached their fiduciary duties by failing to obtain a fair valuation of the merger consideration and by promoting their own interests at the expense of the common shareholders.The Supreme Court of New York County partially granted and partially denied the defendants' motions to dismiss the complaint. The court held that New York law applied to the plaintiffs' claims because the internal affairs doctrine was inapplicable where the defendants were not current officers, directors, and shareholders at the time of the lawsuit. The court further held that the plaintiffs adequately stated their claims for breach of fiduciary duty under New York law.The Appellate Division reversed the order of the Supreme Court, holding that Scots law applied to the plaintiffs' claims under the internal affairs doctrine. The court stated that the directors of a company generally owe duties only to the company as a whole rather than to the shareholders, except in special factual circumstances not present in this case. Therefore, the court concluded that the plaintiffs failed to state a claim for breach of fiduciary duty under Scots law.The Court of Appeals of New York reversed the order of the Appellate Division, holding that while Scots law applied to the plaintiffs' claims, the plaintiffs' allegations could give rise to a possible inference that special circumstances were present, which could give rise to a cognizable fiduciary duty claim under Scots law. Therefore, the court held that the Appellate Division erroneously granted the defendants' motions to dismiss the first, second, and fourth causes of action. View "Eccles v Shamrock Capital Advisors, LLC" on Justia Law

The case revolves around the University Hospital's decision to award a contract for the design, construction, and operation of an on-site pharmacy to a bidder other than Sumukha LLC. Sumukha challenged the decision, but the hospital's hearing officer denied the protest. Sumukha then appealed to the Appellate Division. While the appeal was pending, Sumukha filed a second protest challenging the decision to change the pharmacy's planned location. When the hospital failed to respond, Sumukha filed a second appeal in the Appellate Division.The Appellate Division dismissed the appeal from Sumukha’s first protest, concluding that University Hospital’s determination was not directly appealable to the Appellate Division. It later dismissed Sumukha’s second appeal. Both dismissals were without prejudice to Sumukha’s right to file an action in the Law Division. The Court granted certification and consolidated the appeals.The Supreme Court of New Jersey found no evidence in University Hospital’s enabling statute that the Legislature intended the Hospital to be a “state administrative agency” under Rule 2:2-3(a)(2). The court held that University Hospital’s decisions and actions may not be directly appealed to the Appellate Division. The court affirmed the dismissal of the appeals, without prejudice to Sumukha’s right to file actions in the Law Division. View "In re Protest of Contract for Retail Pharmacy Design, Construction, Start-Up and Operation, Request for Proposal No. UH-P20-006" on Justia Law

The case revolves around a dispute between Winston Mar and SierraConstellation Partners, LLC (Sierra) and Lawrence Perkins (collectively, Sierra defendants). Mar, who was a partner in Sierra, sought a buyout of his partnership interest. Sierra defendants moved to compel arbitration of Mar's action, based on an arbitration agreement included in Sierra's employee handbook. Mar had refused to sign the arbitration agreement, stating that he would not be bound by it and that Sierra could terminate his employment if it objected. Sierra argued that Mar's continued employment for 19 months after the introduction of the arbitration agreement constituted assent to the agreement.The Superior Court of Los Angeles County denied Sierra defendants' motion to compel arbitration. The court found that Sierra defendants failed to meet their burden to establish the existence of an arbitration agreement because Mar clearly stated that he refused to sign the arbitration agreement and Sierra could terminate his employment if it objected.On appeal, the Court of Appeal of the State of California, Second Appellate District, Division Seven, affirmed the lower court's decision. The appellate court held that while an employee's continued employment can generally be taken as assent to an arbitration agreement, this is not the case when the employee promptly rejects the arbitration agreement and makes clear he or she refuses to be bound by the agreement. In this case, Mar promptly and unequivocally rejected the arbitration agreement, and thus, there was no mutual assent to arbitrate. View "Mar v. Perkins" on Justia Law

The case involves BitGo Holdings, Inc. and Galaxy Digital Holdings Ltd., who entered into a merger agreement. BitGo, a technology company, was required to submit audited financial statements to Galaxy, the acquirer, by a specified date. When BitGo submitted the financial statements, Galaxy claimed they were deficient because they did not apply recently published guidance from the Securities and Exchange Commission’s staff. BitGo disagreed, but submitted a second set of financial statements. Galaxy found fault with the second submission and terminated the merger agreement. BitGo then sued Galaxy for wrongful repudiation and breach of the merger agreement.The Court of Chancery sided with Galaxy and dismissed the complaint. The court found that the financial statements submitted by BitGo did not comply with the requirements of the merger agreement, providing Galaxy with a valid basis to terminate the agreement.On appeal, the Supreme Court of Delaware reversed the decision of the Court of Chancery. The Supreme Court found that the definition of the term “Company 2021 Audited Financial Statements” in the merger agreement was ambiguous. The court concluded that both parties had proffered reasonable interpretations of the merger agreement’s definition. Therefore, the court remanded the case for the consideration of extrinsic evidence to resolve this ambiguity. View "BitGo Holdings, Inc. v. Galaxy Digital Holdings Ltd., et al." on Justia Law

The case revolves around a tort action brought by the widow of a deceased worker against various entities, including the employer, Oklahoma Gas and Electric Company, and others involved in the construction project where the accident occurred. The widow alleged that these entities failed to provide proper supervision and safety protocols, leading to her husband's death. The employer, BJ's Oilfield Construction, Inc., filed a motion to dismiss a third-party petition filed against it by one of the defendants, SunPower Corporation Systems. The District Court sustained the motion to dismiss, leading to an appeal.In the lower courts, the widow's wrongful death claim was initially dismissed, leading to three separate appeals. The dismissals were based on the defendants identifying themselves with "prime contractor" status. The appellate court reversed the dismissals, stating that the defendants' assertions were unsupported. The cases were remanded back to the District Court.The Supreme Court of the State of Oklahoma reversed the District Court's order dismissing SunPower's third-party petition against BJ's Oilfield. The court held that the exclusive remedy and liability language in the workers' compensation law does not prevent an employer from creating non-employer legal relationships, capacities, or roles. However, these relationships, capacities, or roles cannot create a negligence tort liability for the same physical injury used by a party for a compensable workers' compensation award. The court also held that the language of the workers' compensation law does not prohibit an employer from creating an indemnity agreement holding others harmless for the employer's intentional conduct not subject to exclusive workers' compensation remedies. The case was remanded for additional proceedings. View "KNOX v. OKLAHOMA GAS AND ELECTRIC CO." on Justia Law

During the 2008 financial crisis, Highland Capital Management, L.P., an investment manager, faced numerous redemption requests from investors of the Highland Crusader Fund. The Fund was placed in wind-down, and a dispute arose over the distribution of assets. This led to the adoption of a Joint Plan of Distribution and the appointment of a Redeemer Committee to oversee the wind-down. The Committee accused Highland Capital of breaching its fiduciary duty by purchasing redemption claims of former investors. An arbitration panel ruled in favor of the Committee, ordering Highland Capital to pay approximately $3 million and either transfer or cancel the redemption claims.Before the Committee could obtain a judgment for the award, Highland Capital filed for Chapter 11 bankruptcy. CLO HoldCo, a creditor, filed a claim for approximately $11 million, asserting it had purchased interests in the redemption claims. However, after a settlement agreement between Highland Capital and the Committee led to the cancellation of the redemption claims, CLO HoldCo amended its claim to zero dollars.After the bankruptcy court confirmed Highland Capital's reorganization plan, CLO HoldCo filed a second amended proof of claim, asserting a new theory of recovery. It argued that the cancellation of the redemption claims resulted in a credit for Highland Capital, which it owed to CLO HoldCo. The bankruptcy court denied the motion to ratify the second amended proof of claim, a decision affirmed by the district court.The United States Court of Appeals for the Fifth Circuit affirmed the lower courts' decisions. It held that post-confirmation amendments require a heightened showing of "compelling circumstances," which CLO HoldCo failed to provide. The court found that the bankruptcy court did not abuse its discretion in denying CLO HoldCo's motion to ratify the second amended proof of claim. View "CLO Holdco v. Kirschner" on Justia Law

The case involves New England Auto Max, Inc., and others (the defendants), who are involved in a civil action where they unsuccessfully moved to dismiss the action for exceeding the $50,000 limit. The defendants then petitioned the Supreme Judicial Court for extraordinary relief, which was denied on the grounds that the defendants had an alternate avenue of appellate relief. The defendants appealed this decision.The case was initially heard in the District Court, where the defendants' motion to dismiss the action for exceeding the $50,000 limit was denied. The defendants then petitioned the Supreme Judicial Court for extraordinary relief, which was denied by a single justice on the grounds that the defendants had an alternate avenue of appellate relief. The defendants appealed this decision to the Supreme Judicial Court.The Supreme Judicial Court held that the single justice did not err or abuse his discretion in denying relief to the defendants. However, the court decided to exercise its discretion to address the question of law presented by the defendants. The court held that the defendants had a right to an interlocutory appeal to the Appellate Division of the District Court on the question of law they presented before the court. The court also concluded that the District Court judge erred in holding that the court could not look beyond a plaintiff's initial statement of damages in assessing whether there is a reasonable likelihood that recovery by the plaintiff will exceed $50,000. The case was remanded to the county court for entry of an order vacating the denial of the defendants' motion to dismiss and remanding to the District Court for further proceedings consistent with the court's opinion. View "New England Auto Max, Inc. v. Hanley" on Justia Law

In August 2020, Governor Gavin Newsom and the California Department of Public Health (CDPH) introduced the Blueprint for a Safer Economy, a color-coded, risk-based framework for managing restrictions during the COVID-19 pandemic. The Blueprint included restrictions on business activities, including customer capacity limitations. Plaintiffs, Central California businesses and their owners, filed suit against the Governor and others responsible for creating and enforcing the Blueprint, alleging that its creation and enforcement were unlawful. They claimed that the Governor and CDPH lacked statutory authority to implement the Blueprint, and that broadly interpreting the Emergency Services Act (ESA) and Health and Safety Code section 120140 conferred unfettered discretion on defendants to impose restrictions on businesses, violating the California Constitution’s non-delegation doctrine.The trial court denied plaintiffs' motion for a preliminary injunction seeking to enjoin the enforcement of the Blueprint. On appeal, the court dismissed the appeal as moot because the Governor had rescinded the Blueprint. After this, the parties cross-moved for summary judgment. The trial court granted defendants’ motion and denied plaintiffs’ motion, holding that the Third District Court of Appeal’s decision in Newsom v. Superior Court (Gallagher) had rejected the same challenges to the Governor’s emergency powers that plaintiffs assert. The court entered judgment in defendants’ favor.The Court of Appeal of the State of California Fifth Appellate District affirmed the judgment. The court followed Gallagher and concluded it governs the outcome of this appeal. The court held that the ESA permitted the Governor to amend or make new laws and did not violate the constitutional separation of powers by delegating quasi-legislative power to the Governor in an emergency. The court also found that the ESA contained several safeguards on the exercise of the power, including that the Governor must terminate the state of emergency as soon as possible and that the Legislature may terminate the emergency by passing a concurrent resolution. View "Ghost Golf, Inc. v. Newsom" on Justia Law