Justia Business Law Opinion Summaries

In October 2022, Starship Enterprises of Atlanta, Inc. filed a lawsuit against Gwinnett County, challenging a 2015 county ordinance regulating "Adult Establishments." Starship, which owns two stores in Gwinnett County, had previously filed a similar lawsuit in 2017, which it voluntarily dismissed. The county, however, maintained its counterclaim, and the trial court granted the county a permanent injunction restraining Starship from "regularly making more than 100 sexual devices available for sale" at each of its locations. Starship appealed the decision, but the Court of Appeals affirmed the trial court’s grant of a permanent injunction against Starship.In the second lawsuit, Starship invoked a constitutional amendment that waives sovereign immunity for certain lawsuits, including lawsuits against a county for declaratory judgment and related injunctive relief. The trial court dismissed Starship’s lawsuit, holding that it was barred by sovereign immunity and by res judicata. Starship appealed to the Court of Appeals, which transferred the case to the Supreme Court of Georgia due to the novel constitutional question involved.The Supreme Court of Georgia concluded that although the constitutional waiver of sovereign immunity applied to Starship’s lawsuit, the suit was barred by res judicata. The court found that Starship's lawsuit sought relief from the county's prospective acts of enforcement, which will occur after January 1, 2021, and therefore the county’s sovereign immunity was waived under the constitutional amendment. However, the court also found that the lawsuit was barred by res judicata because the constitutional matters Starship now sought to raise could have been raised in the previous lawsuit. Therefore, the court affirmed the trial court’s order dismissing the lawsuit. View "STARSHIP ENTERPRISES OF ATLANTA, INC. v. GWINNETT COUNTY" on Justia Law

The case involves Scott Johnson, Harlene Hoyt, and Covey Find Kennel, LLC, who challenged the constitutionality of a Kansas statute that allows warrantless inspections of their homestead, where Mr. Johnson operates a business that houses and trains bird dogs. They also claimed that their constitutional right to travel was infringed by a statutory requirement that they make the premises available for inspection within 30 minutes of the arrival of an inspector. The United States District Court for the District of Kansas dismissed their complaint for failure to state a claim.The United States Court of Appeals for the Tenth Circuit affirmed the dismissal of their right-to-travel claim but remanded for further proceedings to determine whether Mr. Johnson’s business is closely regulated and, if so, whether warrantless inspections are reasonable under the Fourth Amendment. The court found that the boarding or training kennel industry was not clearly closely regulated, and the government had not shown that warrantless searches were necessary. The court also held that the regulations did not impose burdens beyond those commonly borne by owners of businesses who travel away from the locations of their businesses, and thus did not violate the plaintiffs' right to travel. View "Johnson v. Smith" on Justia Law

The case involves RSD Leasing, Inc., a Vermont-based corporation that leases trucks to commercial operators. Between 2008 and 2014, RSD purchased forty trucks manufactured by Navistar International Corp. and Navistar, Inc. from a nonparty dealer. These trucks were equipped with an emission-control system known as an exhaust gas recirculation system. RSD alleged that the system caused the trucks to lose power, break down, and damage other engine components. RSD leased the trucks to other entities for four-to-six-year terms and intended to sell them at the end of the lease term. RSD filed a complaint against Navistar alleging violation of the Vermont Consumer Protection Act (VCPA), among other claims.In the U.S. District Court for the District of Vermont, Navistar moved for summary judgment on the VCPA claim, arguing that RSD is not a “consumer” under the VCPA and is therefore barred from recovery. The district court granted summary judgment on the VCPA claim, reasoning that RSD did not qualify as a consumer under the VCPA because it purchased the trucks for resale in the ordinary course of its business. RSD appealed to the Second Circuit, which certified the question of whether RSD qualified as a consumer under the VCPA to the Vermont Supreme Court.The Vermont Supreme Court concluded that RSD is not a consumer under the VCPA. The court found that RSD's intent at the time it purchased the trucks was to lease them out and, after each lease term expired, sell them. The court held that the trucks were purchased for resale in the ordinary course of RSD’s business. Therefore, RSD did not qualify as a consumer under the VCPA. The court answered the certified question from the Second Circuit in the negative. View "RSD Leasing, Inc. v. Navistar International Corporation and Navistar, Inc." on Justia Law

The case involves David Moeller, who was convicted of securities fraud after deceiving an acquaintance into investing $9,500 in a non-existent business. Moeller appealed his conviction, but died during the appeal process. The Court of Appeals, applying the precedent set in State v. Hollister, ruled that Moeller's death did not render his appeal moot and affirmed his conviction and sentence. Moeller's defense counsel petitioned for review, arguing that the court should overrule Hollister and that the panel erred in concluding his conviction was supported by sufficient evidence.The Supreme Court of the State of Kansas affirmed the judgment of the Court of Appeals and the district court. The court held that under the doctrine of stare decisis, it would continue to adhere to Hollister, which establishes that the death of a criminal defendant during the appeal of his or her conviction does not automatically abate the appeal but may render some issues moot. The court found that Hollister was not originally erroneous and that more good than harm would come from adhering to it. The court also held that the State presented sufficient evidence to support Moeller's conviction for securities fraud. The court concluded that Moeller's conduct constituted fraud or deceit and that the transaction between Moeller and the victim involved the sale of a security in the form of an investment contract. View "State v. Moeller" on Justia Law

The case revolves around an alleged business partnership between Elaine Clemens and the late Arthur Emme. Clemens and Emme were intimate partners who never married. Clemens began working at Emme's business, O'Neill Body and Frame, in 1990. They moved in together in 1992 and worked together on several ventures. After Emme's death in 2017, Clemens filed a lawsuit against Curtis Emme, the personal representative of Arthur Emme's estate, claiming that she and Arthur Emme had created a business partnership in 1992. She sought a declaration that a business partnership existed between her and Arthur Emme, with each owning equal interests in the partnership.The district court for Holt County, Nebraska, rejected Clemens' argument that Curtis Emme was judicially estopped from denying the existence of a business partnership between her and Arthur Emme. The court found that Arthur Emme never unequivocally stated in a prior action that Clemens was his business partner and that the courts in that action did not adopt the position that Clemens and Arthur Emme were business partners.The case then proceeded to a jury trial on the existence of a business partnership. The jury found that Clemens failed to meet her burden of proof establishing that a partnership existed. The district court entered judgment in favor of Curtis Emme and against Clemens. Clemens appealed, but the Nebraska Supreme Court affirmed the district court's judgment, finding no error in its rulings. View "Clemens v. Emme" on Justia Law

This case involves a dispute between Blackrock Enterprises, LLC and BB Land, LLC and JB Exploration 1, LLC over a Lease Acquisition Agreement (LAA). Both parties claimed the other had breached the agreement and sought declaratory relief regarding their respective rights and obligations. The trial was bifurcated into two phases. In the first phase, a jury found that both parties had materially breached the LAA, but that Blackrock had committed the first material breach. As a result, the business court concluded that Blackrock could not recover for any subsequent breach committed by Jay-Bee. In the second phase, the business court determined that the parties were engaged in a de facto mining partnership and ordered Blackrock dissociated from the partnership. The court also valued Blackrock’s partnership interest at zero and ordered it to quit-claim its interests in certain leases to Jay-Bee. Blackrock appealed, arguing that the business court committed multiple errors in both phases of the proceedings.The Supreme Court of Appeals of West Virginia found that the business court erred in its construction of the first material breach doctrine and by granting judgment for Jay-Bee on the basis of clearly erroneous findings “deemed” made by operation of West Virginia Rule of Civil Procedure 49(a). The court reversed the final judgment and remanded for a new trial and further proceedings. The court also vacated that portion of the final judgment order finding the parties engaged in a mining partnership. View "Blackrock Enterprises, LLC v. BB Land, LLC" on Justia Law

This case involves a dispute over a merger between Parametric Sound Corporation and VITB Holdings, Inc. (VITBH). A group of shareholders, who later formed PAMTP, LLC, opted out of a class action settlement related to the merger and filed a separate lawsuit. They alleged that the merger diluted their equity interests and that Kenneth Potashner, a member of Parametric's board, had breached his fiduciary duties by misleading shareholders about the financial outlook of the merger. The district court granted judgment to the defendants, finding that PAMTP had failed to plead a direct claim.The district court's decision was based on the Nevada Supreme Court's ruling in a previous related case, Parametric I, which held that the shareholders' claims should be dismissed for failure to plead a direct claim. However, the court granted the shareholders leave to replead certain claims that may have been direct under a Delaware case, Gentile v. Rossette. PAMTP's complaint in the present case was based on this guidance.The Nevada Supreme Court affirmed the district court's decision, finding that PAMTP had indeed failed to plead a direct claim. The court noted that the Delaware Supreme Court had since overruled Gentile, holding that most equity expropriation claims are exclusively derivative. The court also found that PAMTP had not satisfied the "direct harm test" adopted in Parametric I.The court also addressed the district court's award of costs and attorney fees to the defendants. It affirmed the award of costs but reversed the award of pre-complaint costs, finding that the district court had abused its discretion. The court also reversed the district court's denial of attorney fees to the defendants, finding that they were entitled to fees under Nevada Rule of Civil Procedure 68. The case was remanded for the district court to determine the amount of fees to which the defendants were entitled. View "In re Parametric Sound Corp." on Justia Law

Kevin Erikson, an employee of Wilbur-Ellis Company, LLC, left his job to work for a competitor, J.R. Simplot Company. Erikson had signed an employment agreement with Wilbur-Ellis in 2015, which included a non-competition and non-solicitation provision, preventing him from working with or soliciting from Wilbur-Ellis's customers or employees within a 100-mile radius of McCook County for two years after his employment was terminated. The agreement was set to terminate on March 31, 2019. Nearly four years after the termination of the agreement, Erikson resigned from Wilbur-Ellis and began working for Simplot, a competitor located in the restricted region.Wilbur-Ellis filed a lawsuit against Erikson, arguing that he had breached the agreement by violating the non-competition and non-solicitation provisions. The district court granted Wilbur-Ellis's motion for a preliminary injunction, holding that Wilbur-Ellis was likely to succeed on the merits of its breach of contract claim against Erikson. The court concluded that the non-competition and non-solicitation provisions survived the termination of the agreement and remained enforceable against Erikson at the time of his resignation in 2023.On appeal to the United States Court of Appeals for the Eighth Circuit, Erikson argued that the non-competition and non-solicitation provisions were not enforceable against him because the agreement terminated on March 31, 2019, and the provisions did not survive the termination date. The appellate court agreed with Erikson, stating that the provisions did not contain express language sufficient to extend their application beyond the agreement's termination date. Therefore, the provisions expired at the same time as the agreement. The court reversed the district court's decision and vacated the preliminary injunction. View "Wilbur-Ellis Company v. Erikson" on Justia Law

The case revolves around the valuation of shares for estate tax purposes following the death of a shareholder. Michael and Thomas Connelly were the sole shareholders of Crown C Supply, a building supply corporation. They had an agreement that if either brother died, the surviving brother could purchase the deceased's shares. If he declined, the corporation would be required to redeem the shares. To ensure the corporation had enough money for this, it obtained $3.5 million in life insurance on each brother. When Michael died, Thomas chose not to purchase Michael's shares, triggering Crown's obligation to do so. The value of Michael's shares was agreed to be $3 million, which was paid to Michael's estate. The Internal Revenue Service (IRS) audited the return and disagreed with the valuation, insisting that the corporation's redemption obligation did not offset the life-insurance proceeds. The IRS assessed the corporation's total value as $6.86 million and calculated the value of Michael's shares as $5.3 million. Based on this higher valuation, the IRS determined that the estate owed an additional $889,914 in taxes.The District Court granted summary judgment to the Government, holding that the $3 million in life-insurance proceeds must be counted in Crown’s valuation. The Eighth Circuit affirmed this decision.The Supreme Court of the United States affirmed the lower courts' decisions. The Court held that a corporation’s contractual obligation to redeem shares is not necessarily a liability that reduces a corporation’s value for purposes of the federal estate tax. The Court reasoned that a fair-market-value redemption has no effect on any shareholder’s economic interest, and thus, no hypothetical buyer purchasing Michael’s shares would have treated Crown’s obligation to redeem Michael’s shares at fair market value as a factor that reduced the value of those shares. The Court concluded that Crown’s promise to redeem Michael’s shares at fair market value did not reduce the value of those shares. View "Connelly v. United States" on Justia Law

The case involves Truck Insurance Exchange (Truck), the primary insurer for companies that manufactured and sold products containing asbestos. Two of these companies, Kaiser Gypsum Co. and Hanson Permanente Cement (Debtors), filed for Chapter 11 bankruptcy after facing thousands of asbestos-related lawsuits. As part of the bankruptcy process, the Debtors proposed a reorganization plan that created an Asbestos Personal Injury Trust (Trust) to handle all present and future asbestos-related claims. Truck, contractually obligated to defend each covered asbestos personal injury claim and to indemnify the Debtors for up to $500,000 per claim, opposed the Plan, arguing that it exposed them to millions of dollars in fraudulent claims due to different disclosure requirements for insured and uninsured claims.The District Court confirmed the Plan, concluding that Truck had limited standing to object to the Plan because it was “insurance neutral,” meaning it did not increase Truck’s prepetition obligations or impair its contractual rights under its insurance policies. The Fourth Circuit affirmed this decision, agreeing that Truck was not a “party in interest” under §1109(b) of the Bankruptcy Code because the plan was “insurance neutral.”The Supreme Court of the United States reversed the Fourth Circuit's decision, holding that an insurer with financial responsibility for bankruptcy claims is a “party in interest” under §1109(b) of the Bankruptcy Code and may raise and appear and be heard on any issue in a Chapter 11 case. The Court reasoned that §1109(b)’s text, context, and history confirm that an insurer such as Truck with financial responsibility for a bankruptcy claim is a “party in interest” because it may be directly and adversely affected by the reorganization plan. The Court also rejected the “insurance neutrality” doctrine, stating that it conflates the merits of an objection with the threshold party in interest inquiry. The case was remanded for further proceedings consistent with the Supreme Court's opinion. View "Truck Insurance Exchange v. Kaiser Gypsum Co." on Justia Law