Justia Business Law Opinion Summaries

The case involves a dispute between Mary Alice Keyes and Sean Leo Nadeau, who are the owners and agents of MonoCoque Diversified Interests, LLC, and David Weller, who provides aviation consulting services through his company, IntegriTech Advisors, LLC. Weller was discussing a potential employment relationship with MonoCoque. After several discussions and email exchanges outlining the agreed terms, Weller accepted MonoCoque’s offer and began working for them. However, disagreements arose over the terms of Weller's compensation, leading to Weller's resignation. Weller and IntegriTech sued MonoCoque, Keyes, and Nadeau, asserting various fraud claims and a Texas Securities Act claim against all three defendants.The defendants argued that they were shielded from liability by Section 21.223 of the Texas Business Organizations Code because they were acting as agents of the company and there was no evidence that they were seeking a direct personal benefit. The trial court granted the defendants' motion for partial summary judgment on the fraud claims. On appeal, the court of appeals reversed the trial court’s decision, holding that Section 21.223 does not abrogate the common law principle that individuals are directly liable for their own tortious conduct, even if committed in the course and scope of their employment.The Supreme Court of Texas affirmed the judgment of the court of appeals. The court held that Section 21.223 does not limit an individual’s liability under the common law for tortious acts allegedly committed while acting as a corporate officer or agent, even when the individual is also a shareholder or member. The court concluded that the trial court erred in granting summary judgment on the fraud claims against Keyes and Nadeau and remanded the case to the trial court for further proceedings. View "KEYES v. WELLER" on Justia Law

The case revolves around the interpretation of the Sarbanes-Oxley Act of 2002, specifically 18 U.S.C. §1512(c)(2), which imposes criminal liability on anyone who corruptly obstructs, influences, or impedes any official proceeding, or attempts to do so. The petitioner, Joseph Fischer, was charged with violating this provision for his actions during the Capitol breach on January 6, 2021. Fischer moved to dismiss the charge, arguing that the provision only criminalizes attempts to impair the availability or integrity of evidence. The District Court granted his motion, but a divided panel of the D.C. Circuit reversed and remanded for further proceedings.The Supreme Court of the United States held that to prove a violation of §1512(c)(2), the Government must establish that the defendant impaired the availability or integrity for use in an official proceeding of records, documents, objects, or other things used in an official proceeding, or attempted to do so. The Court reasoned that the "otherwise" provision of §1512(c)(2) is limited by the list of specific criminal violations that precede it in (c)(1). The Court also considered the broader context of §1512 in the criminal code and found that an unbounded interpretation of subsection (c)(2) would render superfluous the careful delineation of different types of obstructive conduct in §1512 itself. The Court vacated the judgment of the D.C. Circuit and remanded the case for further proceedings consistent with its opinion. View "Fischer v. United States" on Justia Law

Derek Mesenbring, an employee of Industrial Fumigant Company, LLC (IFC), died after inhaling a toxic dose of methyl bromide at work. His widow, Melissa Mesenbring, sued IFC and its parent company, Rollins, Inc., for wrongful death. Rollins, as IFC's parent company, had some authority over IFC's revenue goals and certain expenditures, and also leased IFC's facility. However, IFC managed its own day-to-day operations, including safety and regulatory departments, and trained its employees on the safe use of fumigants like methyl bromide.The case was initially filed in Illinois state court but was moved to federal court under diversity jurisdiction. Mrs. Mesenbring dismissed IFC from the suit due to workers' compensation benefits she was receiving, leaving Rollins as the sole defendant. Rollins moved for summary judgment, arguing that it was not liable for IFC's acts under Illinois law. The district court granted Rollins' motion, ruling that Rollins did not specifically direct an activity that made the accident foreseeable, nor did it control or participate in IFC's use of and training on methyl bromide, thus foreclosing direct participant liability. Mrs. Mesenbring appealed this decision.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The appellate court agreed that under Illinois law, a parent company is not liable for the acts of its subsidiary unless it specifically directs an activity where injury is foreseeable. The court found that Rollins did not surpass the level of control typical of a parent-subsidiary relationship and did not specifically direct or authorize IFC's use of or training on methyl bromide. Furthermore, there was no evidence that Rollins foresaw that safety would be compromised as a result of its budgetary restrictions over IFC. Therefore, the court concluded that Rollins could not be held liable for IFC's acts under a theory of direct participant liability. View "Mesenbring v. Rollins, Inc." on Justia Law

This case involves a dispute between D&M Roofing and Siding, Inc. (D&M), a roofing company, and Distribution, Inc., the owner of a warehouse. D&M had entered into a contract with Distribution to repair hail damage to the roof of Distribution's warehouse. However, Distribution later decided to use a different contractor for the repairs. D&M sued Distribution for breach of contract and unjust enrichment, claiming damages based on a cancellation fee provision in the contract. The district court found that the contract was enforceable and that Distribution had breached it. However, it also found that D&M was not entitled to any damages because it had not performed any work under the contract.The district court's decision was based on D&M's admission that its breach of contract damages were limited to those under the cancellation fee provision in the contract. The court found that under the clear and unambiguous language of the provision, D&M was only entitled to a cancellation fee of 20 percent of the "work done" by D&M. Since D&M had not performed any work, it was not entitled to the cancellation fee. The court granted summary judgment in favor of Distribution on D&M's unjust enrichment claim, explaining that an enforceable contract displaces such a claim.D&M later filed a second motion for summary judgment, this time alleging lost profits as the measure of damages for the breach of contract claim. The district court construed the motion as a motion to reconsider. The court explained that even though its prior order did not use the word "dismissed," it had disposed of the whole merits of the case and left nothing for the court's further consideration. The court denied D&M's motion and granted a cross-motion by Distribution for summary judgment. D&M appealed, but the appeal was dismissed for lack of jurisdiction because the court had not yet issued a final order or rendered a judgment. View "D& M Roofing & Siding v. Distribution, Inc." on Justia Law

Baylor Scott & White Holdings (BSW), the largest nonprofit health system in Texas, purchased a specialized commercial property insurance policy from Factory Mutual Insurance Co. (FM) to cover its facilities. The policy covered two types of claims—“Property Damage” and “Time Element” claims, which are synonymous with “business interruption” loss. BSW submitted a claim under the policy for its business interruption losses as a result of COVID-19, totaling over $192 million. FM denied the claim, stating that the only coverage under the policy for losses arising from COVID-19 came from the Communicable Disease Response Extension and the Interruption by Communicable Disease Extension, which had already been exhausted.FM moved to dismiss the amended complaint for failure to state a claim. The district court granted FM’s motion to dismiss, finding that BSW had not plausibly alleged “physical loss or damage” under the policy, and that the Contamination Exclusion and Loss of Use Exclusion barred BSW’s recovery under the policy. BSW appealed the district court’s dismissal order.The United States Court of Appeals for the Fifth Circuit affirmed the decision of the district court. The court held that, in the context of COVID-19 commercial-insurance coverage disputes, COVID-19 does not physically harm property. The court found that the alleged uniqueness of the policy’s language did not change this determination. The court also rejected BSW's contention that its complaint was wrongly dismissed because it included specific factual allegations of demonstratable, measurable, and tangible alteration of property caused by COVID-19. The court concluded that, as a matter of law, COVID-19 does not affect property in a “physical” way. View "Baylor Scott & White v. Factory Mutual" on Justia Law

Between 1999 and 2019, Purdue Pharma, owned and controlled by the Sackler family, was at the center of the opioid crisis in the United States. After earning billions from the sale of OxyContin, Purdue faced thousands of lawsuits. In response, the Sacklers withdrew approximately $11 billion from Purdue, leaving the company in a weakened financial state. In 2019, Purdue filed for Chapter 11 bankruptcy. During the bankruptcy process, the Sacklers proposed to return approximately $4.3 billion to Purdue’s bankruptcy estate in exchange for a judicial order releasing the family from all opioid-related claims and preventing victims from bringing such claims against them in the future.The bankruptcy court approved Purdue’s proposed reorganization plan, including its provisions concerning the Sackler discharge. However, the district court vacated that decision, holding that nothing in the law authorizes bankruptcy courts to extinguish claims against third parties like the Sacklers, without the claimants’ consent. A divided panel of the Second Circuit reversed the district court and revived the bankruptcy court’s order approving a modified reorganization plan.The Supreme Court of the United States held that the bankruptcy code does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seek to discharge claims against a nondebtor without the consent of affected claimants. The Court found that the Sacklers sought to pay less than the code ordinarily requires and receive more than it normally permits. The Court reversed the Second Circuit's judgment and remanded the case for further proceedings consistent with its opinion. View "Harrington v. Purdue Pharma L.P." on Justia Law

The case involves the Securities and Exchange Commission (SEC) and investment adviser George Jarkesy, Jr., and his firm, Patriot28, LLC. The SEC initiated an enforcement action for civil penalties against Jarkesy and Patriot28 for alleged violations of the "antifraud provisions" contained in the federal securities laws. The SEC opted to adjudicate the matter in-house. The final order determined that Jarkesy and Patriot28 had committed securities violations and levied a civil penalty of $300,000. Jarkesy and Patriot28 petitioned for judicial review. The Fifth Circuit vacated the order on the ground that adjudicating the matter in-house violated the defendants’ Seventh Amendment right to a jury trial.The Fifth Circuit Court of Appeals ruled that the in-house adjudication by the SEC violated the defendants' Seventh Amendment right to a jury trial. The court applied a two-part test from Granfinanciera, S.A. v. Nordberg, determining that the SEC's antifraud claims were akin to traditional actions at common law, and thus required a jury trial. The court also concluded that the "public rights" exception did not apply, as the claims were not closely intertwined with the bankruptcy process.The Supreme Court of the United States affirmed the Fifth Circuit's decision. The Court held that when the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial. The Court found that the SEC's antifraud provisions replicate common law fraud, and thus implicate the Seventh Amendment. The Court also concluded that the "public rights" exception to Article III jurisdiction did not apply, as the action did not fall within any of the distinctive areas involving governmental prerogatives where a matter may be resolved outside of an Article III court, without a jury. The Court did not reach the remaining constitutional issues and affirmed the ruling of the Fifth Circuit on the Seventh Amendment ground alone. View "SEC v. Jarkesy" on Justia Law

During the early stages of the COVID-19 pandemic, American Screening, LLC, a Louisiana company, promised buyers that it would ship personal protective equipment (PPE) more quickly than it actually did. The Federal Trade Commission (FTC) sued American Screening, alleging that its shipping policies and practices violated the FTC Act and the Mail, Internet, or Telephone Order Merchandise Rule (MITOR). The company's website contained a shipping policy that stated orders would be processed and shipped within 24-48 hours. However, in practice, it took about six weeks for PPE to be shipped after the customer had purchased it.The district court granted the FTC summary judgment and ordered American Screening to return almost $14.7 million to consumers and permanently enjoined it from advertising or selling PPE. American Screening challenged the district court's ordered remedies on appeal.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court rejected American Screening's contention that the court should have considered whether each individual consumer had relied on American Screening's shipping representations and had sustained an injury as a result. The court also disagreed with American Screening's argument that the district court's equitable monetary relief went beyond what was necessary to redress consumers and so amounts to an award of exemplary or punitive damages. The court found that the relief was tailored to ensure that dissatisfied consumers are made whole while also ensuring that American Screening does not have to pay unharmed customers as punishment.Finally, the court rejected American Screening's challenge to the scope of the permanent injunction barring it from advertising or selling PPE. The court agreed with the district court that the egregiousness of American Screening's conduct weighed in favor of the injunction. The court also found that the injunction's effect on American Screening was more modest than its breadth might suggest. View "FTC v. American Screening, LLC" on Justia Law

The case involves the National Association of Manufacturers and Natural Gas Services Group, Incorporated (plaintiffs-appellants) against the United States Securities and Exchange Commission (SEC) and Gary Gensler, in his official capacity as Chair of the SEC (defendants-appellees). The dispute arose after the SEC, in 2020, adopted a rule regulating businesses that provide proxy voting advice to institutional shareholders of public corporations. Two years later, the SEC rescinded this rule. The appellants challenged the rescission in district court, arguing that the SEC arbitrarily and capriciously failed to provide an adequate explanation for its abrupt change in policy. The district court rejected the appellants’ contentions and granted summary judgment in favor of the SEC.The United States Court of Appeals for the Fifth Circuit reversed the district court's decision. The court found that the SEC's explanation for rescinding the 2020 rule was arbitrary and capricious, and therefore unlawful. The court held that the SEC failed to provide an adequate justification for contradicting its prior factual finding that the 2020 Rule did not threaten the timeliness and independence of proxy voting advice. The court also found that the SEC failed to provide a reasonable explanation why these risks were so significant under the 2020 Rule as to justify its rescission. The court vacated the 2022 rescission in part and remanded the case back to the SEC. View "National Association of Manufacturers and Natural Gas Services Group, Inc. v. Securities and Exchange Commission" on Justia Law

The New London Hospital Association, Inc. (NLH), a nonprofit corporation, appealed a decision by the Superior Court dismissing its appeals from denials by the Town of Newport of NLH’s applications for charitable property tax exemptions for tax years 2015, 2017, and 2018. NLH owns a property in Newport where it operates the Newport Health Center (NHC), an outpatient treatment center. NLH applied for a charitable tax exemption for the NHC property, which was denied by the Town. NLH appealed these denials to the superior court. The court ruled that NLH established three of the four factors necessary for the exemption, but not the fourth.The Supreme Court of New Hampshire affirmed the trial court’s rulings that NLH satisfied the second and third factors for charitable exemption. However, it reversed the trial court's ruling that NLH failed to prove that it satisfied the fourth factor, which required NLH to show that “any of [NLH’s] income or profits are used for any purpose other than the purpose for which [NLH] was established.” The court concluded that the practice of referring patients to Dartmouth-Hitchcock Health (DHH) for “appropriate medical care” that NLH cannot provide, does not confer on DHH a “pecuniary . . . benefit” prohibited under the fourth factor. The court also found that NLH was not required to show that the independent contractors to whom it made payments shared NLH’s charitable mission. The case was remanded for further proceedings. View "New London Hospital Association v. Town of Newport" on Justia Law