Justia Business Law Opinion Summaries

A class of individuals and businesses in Northern California, who paid health insurance premiums to certain health plans, sued Sutter Health, a healthcare system operator in the region. They alleged that Sutter abused its market power to charge supracompetitive rates to these health plans, which were then passed on to the class in the form of higher premiums. The case went to trial on claims under California’s Cartwright Act for tying and unreasonable course of conduct. The jury returned a verdict in favor of Sutter.The plaintiffs appealed, arguing that the district court erred by failing to instruct the jury to consider Sutter’s anticompetitive purpose and by excluding evidence of Sutter’s conduct before 2006. The United States Court of Appeals for the Ninth Circuit agreed with the plaintiffs. It held that the district court contravened California law by removing “purpose” from the jury instructions, and that the legal error was not harmless. The court also held that the district court abused its discretion under Federal Rule of Evidence 403 in excluding as minimally relevant all evidence of Sutter’s conduct before 2006. The court concluded that these errors were prejudicial and reversed the district court’s judgment, remanding the case for a new trial. View "SIDIBE V. SUTTER HEALTH" on Justia Law

The case revolves around Lee Hofmann, who controlled multiple businesses, including Games Management and International Supply. Games Management borrowed approximately $2.7 million from Citizens Equity First Credit Union (the Lender), with Hofmann guaranteeing payment. When Games Management defaulted and Hofmann failed to honor his guarantee, the Lender obtained a judgment against Hofmann. In 2013, Hofmann arranged for International Supply to pay the Lender $1.72 million. By 2015, International Supply was in bankruptcy, and a trustee was appointed to distribute its assets to creditors.The bankruptcy court held a trial, during which expert witnesses disagreed on whether International Supply was solvent in 2013. The Trustee's expert testified that it was insolvent under two of three methods of assessing solvency, while the Lender's expert testified that it was solvent under all three methods. The bankruptcy judge concluded that International Supply was insolvent in August 2013 and directed the Lender to pay $1.72 million plus interest to the Trustee. The district court affirmed this decision.The case was then brought before the United States Court of Appeals for the Seventh Circuit. The Lender argued that the only legally permissible approach to defining solvency is the balance-sheet test. However, the court disagreed, stating that the Illinois legislation does not support this view. The court also noted that the Lender had not previously argued for the balance-sheet test to be the exclusive approach, which constituted a forfeiture. The court concluded that the bankruptcy judge was entitled to use multiple methods to determine solvency. The court affirmed the district court's decision, requiring the Lender to pay $1.72 million plus interest to the Trustee. View "Stone v. Citizens Equity First Credit Union" on Justia Law

AsymaDesign, LLC, a company that operated a virtual-reality ride in a shopping mall, entered into a lease with CBL & Associates Management, Inc. Following complaints about noise from the ride, CBL relocated it within the mall, as permitted by the lease. The new location proved unprofitable, leading AsymaDesign to stop paying rent, resulting in eviction and subsequent dissolution under the Illinois Limited Liability Company Act. Nearly four years later, George Asimah, the former owner of the LLC, filed a lawsuit against CBL under 42 U.S.C. §1981 and state contract law, alleging racial discrimination when CBL did not allow the LLC extra time to pay its rent.The district court dismissed the suit on the grounds that Asimah was not the real party in interest, as the lease was held by AsymaDesign, not Asimah personally. An amended complaint added AsymaDesign as an additional plaintiff, but this was also dismissed as untimely. The court ruled that although Illinois law allows a dissolved LLC a "reasonable time" to wind up its business, AsymaDesign had not begun to litigate until almost five years after its dissolution, exceeding the benchmark allowed by Illinois law.In the United States Court of Appeals for the Seventh Circuit, AsymaDesign filed a notice of appeal. However, the notice was signed only by George Asimah, who is not a lawyer and therefore cannot represent AsymaDesign or anyone other than himself. The court ruled that only a member of the court's bar (or a lawyer admitted pro hac vice) can represent another person or entity in litigation. AsymaDesign's sole argument was that anyone may represent an Illinois corporation in federal court, which the court dismissed as misguided. Consequently, the appeal was dismissed. View "Asimah v. CBL & Associates Management, Inc." on Justia Law

The case revolves around CCA of Tennessee, LLC (CCA), a private prison corporation, and its dealings with the New Mexico Taxation and Revenue Department (the Department). CCA housed federal prisoners at the Torrance County Detention Center (the Detention Center) and received payments directly from the United States Marshals Service (Marshals Service). CCA sought a refund of gross receipts taxes it believed it had overpaid, which required the Department to issue a nontaxable transaction certificate (NTTC) to Torrance County (the County), which the County would then execute with CCA. CCA's tax advisor misinformed the Department that the receipts for housing the Marshals Service inmates were not coming directly from the Marshals Service to CCA. Based on this misstatement, the Department issued the NTTC.The administrative hearing officer for the Department concluded that CCA did not in good faith accept the NTTC and was not entitled to the deduction from gross receipts it received for housing federal prisoners. The Court of Appeals disagreed and reversed the hearing officer's decision.The Supreme Court of the State of New Mexico agreed with the hearing officer's conclusion. The court held that under the plain language of Section 7-9-43(A), CCA did not accept the NTTC in good faith and is therefore not entitled to safe harbor protection from the payment of gross receipts tax. The court reversed the decision of the Court of Appeals. View "CCA of Tennessee v. N.M. Tax'n and Revenue Dep't" on Justia Law

In this case, a special purpose acquisition company (SPAC), Hennessy Capital Acquisition Corp. IV, was formed in 2018 with the goal of merging with a private operating company. In 2019, Hennessy completed its initial public offering (IPO), selling units that included shares of common stock and redeemable warrants. In 2020, Hennessy entered into a merger agreement with Canoo Holdings Ltd., an electric vehicle start-up. The merger was approved by Hennessy's stockholders and closed in December 2020.In the months following the merger, Canoo's new board decided to de-emphasize the company's subscription model and engineering services business line. This decision was announced in March 2021, causing Canoo's stock price to drop. The plaintiff, a Canoo stockholder, filed a lawsuit alleging that Hennessy's sponsor and directors breached their fiduciary duties by failing to disclose changes to Canoo's business model prior to the merger.The Court of Chancery of the State of Delaware dismissed the plaintiff's claims. The court found that the plaintiff failed to provide sufficient evidence to support the claim that Hennessy's directors knew or should have known about the changes to Canoo's business model before the merger closed. The court also dismissed the plaintiff's unjust enrichment and aiding and abetting claims, as they were based on the same insufficiently supported allegations. View "In Re Hennessy Capital Acquisition Corp. IV Stockholder Litigation" on Justia Law

The case involves a dispute between limited partners and general partners of MBC Properties, LP and MBC Development, LP, two entities engaged in real estate development, investment, acquisition, and management. The general partners appointed a special litigation committee (SLC) to investigate claims made by one of the limited partners, James W. Miller. The SLC recommended that the partnerships should not pursue any action against the general partner or any other third parties. Miller then filed a demand for arbitration, asserting derivative claims and requesting the arbitrator to determine whether the SLC complied with the Pennsylvania Uniform Limited Partnership Act of 2016 (PULPA).The Court of Common Pleas of Schuylkill County granted a petition to permanently stay the arbitration, concluding that Miller's challenge to the SLC report arose statutorily and not under the partnership agreements. The Superior Court vacated the trial court's order, finding that the underlying derivative claims were within the scope of the arbitration agreements and that the determination required by PULPA is a prerequisite and defense to those claims, rather than a cause of action.The Supreme Court of Pennsylvania reversed the Superior Court's decision, holding that the parties' agreements incorporated the plain language of Section 8694 of PULPA, which mandates court review of a special litigation committee's determination. The court concluded that the dispute over an SLC's determination pursuant to the PULPA is not within the scope of the parties' arbitration agreement. The court remanded the case for proceedings consistent with its opinion. View "MBC Development, LP v. Miller" on Justia Law

The case revolves around the estate of Merle Almer, who passed away in 2016. Almer owned a construction business and a farm, and his will named his daughter, Linda Moe, as the personal representative. The will contained bequests to various individuals, including a life estate in the farm and farming assets to Casey Almer, Merle Almer's grandson. The will also directed the personal representative to use harvested and unharvested grain to pay costs of administration and taxes for the estate. However, at the time of Merle Almer's death, the grain discovered in his grain bins was less than expected, leading to a dispute between the personal representative and Casey Almer.The dispute led to a lawsuit, where the personal representative accused Almer of conversion of grain and other farm assets. Almer counterclaimed with allegations of conversion and breach of fiduciary duty. The counterclaims were dismissed, and a jury found that Almer did not convert property. Almer then filed a petition alleging that the personal representative breached her fiduciary duties. The district court heard testimony and took evidence over five days.The Supreme Court of North Dakota affirmed the district court's decision. The court found that the personal representative did not breach her fiduciary duties while administering the estate. The court also found that the will's abatement provisions were ambiguous due to the will's nonstandard use of the term "specific devise." The court made findings concerning the testator's intent based on testimony from the attorney who prepared the will. The court denied Almer's application for surcharge, granted the personal representative's motion to approve final distribution, and approved approximately $760,000 in attorney’s fees. Almer appealed, challenging the court's interpretation of the will, the court’s findings concerning the personal representative’s conduct during administration, and the court’s approval of attorney’s fees. The Supreme Court affirmed the judgment. View "In re Estate of Almer" on Justia Law

The case revolves around a dispute between Patrick Boyle, a trustee and unit owner of the Ocean Club Condominium (OC Condominium), and the Ocean Club Condominium Association (Association). After a disagreement over the Association's financial management, the Board of Trustees (Board) expelled Boyle. Boyle filed a complaint challenging his removal and sought indemnification for his legal fees and costs based on a provision in the Association's bylaws. The trial court reinstated Boyle as a trustee and held that the bylaws entitled Boyle to counsel fees and costs. Boyle later filed an amended complaint, adding additional claims including for indemnification, and a third amended complaint, bringing a derivative claim on behalf of the Association and alleging that the trustee defendants breached their fiduciary duties.The trial court ruled in Boyle's favor, holding that the bylaws entitled him to counsel fees and costs. The Appellate Division affirmed the trial court's decision but limited the indemnification to the fees and costs Boyle incurred in his action to be reinstated as trustee, not in his derivative action claim.The Supreme Court of New Jersey reversed the Appellate Division's judgment. The court found the indemnification provision in the Association's bylaws to be ambiguous and, therefore, strictly construed it against Boyle, the indemnitee. The court held that the provision did not cover Boyle's first-party claim for attorneys' fees and costs against the Association. The court clarified that while indemnification may apply to first-party claims if that is the clear intent of the parties, any ambiguity will be construed against the indemnitee. The court encouraged parties seeking to permit indemnification of first-party claims to include express language to do so. View "Boyle v. Huff" on Justia Law

The case involves Tammy O’Connor and Michael Stewart (the Sellers) who sold their company, Red River Solutions, LLC, to Atherio, Inc., a company led by Jason Cory, Greg Furst, and Thomas Farb (the Executives). The agreement stipulated that the Sellers would receive nearly half of their compensation upfront, with the rest—around $3.5 million—coming in the form of ownership units and future payments. However, Atherio went bankrupt and the Sellers received none of the promised $3.5 million. The Sellers sued the Executives, alleging fraud under federal securities law, Delaware common law, and the Texas Securities Act.The district court granted summary judgment to the Executives on all claims. The Sellers appealed the decision, arguing that the district court erred in applying the summary-judgment standard to the federal securities law and Delaware common law claims.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision on the extracontractual and Texas Securities Act fraud claims, but reversed the summary judgment grants on the federal securities law and Delaware common law claims. The court found that there was a genuine dispute as to whether the Executives' misrepresentation of Farb's role as CFO was a substantial factor in the Sellers' loss. The case was remanded for further proceedings. View "Cory v. Stewart" on Justia Law

The case revolves around Justin Keener, who operated under the name JMJ Financial. Keener's business model involved purchasing convertible notes from microcap issuers, converting those notes into common stock, and selling that stock in the public market at a profit. This practice, known as "toxic" or "death spiral" financing, can harm microcap companies and existing investors by causing the stock price to drop significantly. Keener made over $7.7 million in profits from this practice. However, he never registered as a dealer with the Securities and Exchange Commission (SEC).The SEC filed a civil enforcement action against Keener, alleging that he operated as an unregistered dealer in violation of the Securities Exchange Act of 1934. The United States District Court for the Southern District of Florida granted summary judgment for the SEC, enjoining Keener from future securities transactions as an unregistered dealer and ordering him to disgorge the profits from his convertible-note business.In the United States Court of Appeals for the Eleventh Circuit, Keener appealed the district court's decision. He argued that he did not violate the Securities Exchange Act because he never effectuated securities orders for customers. He also claimed that the SEC violated his rights to due process and equal protection.The Court of Appeals affirmed the district court's decision. It held that Keener operated as an unregistered dealer in violation of the Securities Exchange Act. The court rejected Keener's argument that he could not have been a dealer because he never effectuated securities orders for customers. It also dismissed Keener's claims that the SEC violated his rights to due process and equal protection. The court upheld the district court's imposition of a permanent injunction and its order for Keener to disgorge his profits. View "Securities and Exchange Commission v. Keener" on Justia Law