Justia Business Law Opinion Summaries

This case involves Vertiv, Inc., Vertiv Capital, Inc., and Gnaritis, Inc., Delaware corporations, who sued Wayne Burt, PTE Ltd., a Singaporean corporation, for defaulting on a loan. Vertiv sought damages and a declaratory judgment. Later, Wayne Burt informed the court that it was in liquidation proceedings in Singapore and moved to vacate the judgments against it. The District Court granted the motion and vacated the judgments, reopening the cases. Wayne Burt then moved to dismiss Vertiv’s claims, either on international comity grounds in deference to the ongoing liquidation proceedings in Singapore, or due to a lack of personal jurisdiction. The District Court granted Wayne Burt’s motion to dismiss, concluding that extending comity to the Singaporean court proceedings was appropriate.On appeal, the United States Court of Appeals for the Third Circuit vacated the District Court's decision and remanded the case. The court clarified the standard to apply when deciding whether to abstain from adjudicating a case in deference to a pending foreign bankruptcy proceeding. The court held that a U.S. civil action is “parallel” to a foreign bankruptcy proceeding when: (1) the foreign bankruptcy proceeding is ongoing in a duly authorized tribunal while the civil action is pending in the U.S. court; and (2) the outcome of the U.S. civil action may affect the debtor’s estate. The court also held that a party seeking the extension of comity must show that (1) “the foreign bankruptcy law shares the U.S. policy of equal distribution of assets,” and (2) “the foreign law mandates the issuance or at least authorizes the request for the stay.” If a party makes a prima facie case for comity, the court should then determine whether extending comity would be prejudicial to U.S. interests. If a U.S. court decides to extend comity to a foreign bankruptcy proceeding, it should ordinarily stay the civil action or dismiss it without prejudice. View "Vertiv Inc. v. Wayne Burt PTE Ltd" on Justia Law

A group of 18 pension and retirement funds and other investors alleged that 10 large banks conspired to rig U.S. Treasury auctions and boycott the emergence of direct, "all-to-all" trading between buy-side investors on the secondary market for Treasuries. The alleged conspiracies violated Section 1 of the Sherman Act. The investors failed to demonstrate that the banks formed an anticompetitive agreement, which is necessary to plead their antitrust claims. The allegations of wrongful information-sharing amounted to inconsequential market chatter and their statistical analyses were not sufficiently focused on the defendant banks. The United States Court of Appeals for the Second Circuit affirmed the district court's dismissal of the lawsuit, agreeing that the investors failed to plausibly allege that the banks engaged in a conspiracy to rig Treasury auctions or to conduct a boycott on the secondary market. View "In re Treasury Securities Auction Antitrust Litigation" on Justia Law

In this case before the United States Court of Appeals For the Second Circuit, two investment firms, held debt securities issued by FriendFinder Networks, Inc., and an affiliate. Several years later, FriendFinder’s founder, through a trust in his own name, unilaterally reduced the securities’ payment terms under the governing Indenture. The investment firms sued, alleging that the Trust Indenture Act (TIA) barred FriendFinder and its founder from changing the payment terms without their consent. The district court dismissed the case, holding that the TIA did not protect this Indenture because the underlying exchange offer was a private placement under the Securities Act of 1933, and the TIA does not apply to private placements. On appeal, the Second Circuit affirmed the district court's decision. The court held that, since the securities were issued through a private offering rather than a public one, the TIA did not apply. Therefore, the no-action clause in the Indenture, which barred the plaintiffs' lawsuit unless certain conditions were met, was not invalidated by the TIA. The court also determined that the plaintiffs' claim did not fall within the payment carve-out from the no-action clause, which allows suit for the enforcement of the right to receive payment of principal or interest on the securities. The court concluded that the plaintiffs' lawsuit was barred by the no-action clause and that the TIA did not invalidate that clause. View "Chatham Capital Holdings, Inc. v. Conru" on Justia Law

In this case, Louisiana Pellets (LAP) built a wood processing facility but encountered financial issues that led to bankruptcy. LAP pursued Chapter 11 bankruptcy and a bankruptcy judge confirmed a Chapter 11 plan along with a liquidating trust agreement. Under the agreement, LAP transferred its remaining assets and causes of actions to the trust. More than a year after the creation of the trust, third parties assigned certain legal claims to the trust that the trustee, Craig Jalbert, pursued in state court. The claims involved misstatements made by Raymond James & Associates in its efforts to raise funds to construct LAP's facility. In response to Jalbert's filing, Raymond James asserted affirmative defenses, citing a pre-bankruptcy indemnity agreement it made with LAP.The United States Court of Appeals for the Fifth Circuit held that Raymond James could not maintain those defenses against the assigned claims. The court reasoned that the express language of the confirmation plan enjoined Raymond James's defensive maneuver. Also, the post-confirmation trust is not the appropriate entity against whom to invoke LAP's indemnity obligation. The court affirmed the bankruptcy court's ruling. View "Raymond James & Assoc v. Jalbert" on Justia Law

In this case from the Supreme Court of Wyoming, LFP Consulting, LLC (LFP), a financial advisory company, sued former employee David Edward Leighton for breach of contract and various torts after his resignation. The key issue was a clause in the parties' contract that selected Minnesota as the forum for disputes (a forum selection clause). LFP had filed the lawsuit in Wyoming and attached a waiver of the forum selection clause. However, the Wyoming chancery court dismissed LFP’s complaint for improper venue, concluding that LFP did not have the right to unilaterally waive the forum selection clause. The Supreme Court of Wyoming disagreed with the lower court, ruling that LFP, as the assignee of the contract, had the right to unilaterally waive the forum selection clause because it was included in the contract for the sole benefit of Ameriprise Financial, the original party to the contract with Leighton. The court also noted that Leighton had no relationship with Minnesota, which further supported the decision to allow LFP to waive the forum selection clause. The court reversed the decision of the chancery court and remanded the case for further proceedings. View "LFP Consulting, LLC v. Leighton" on Justia Law

In this case, the plaintiff, Andre Howell, acting as the treasurer of the Urban League of Rhode Island, Inc., initiated a receivership proceeding for the Urban League. Julie Longtin, the appellant, filed a proof of claim in the receivership proceeding, stating that she was claiming for the amount due to her former company, Antari Properties, LLC. However, the Superior Court denied her proof of claim on the grounds that she lacked standing. Longtin then filed a motion under Rule 60(b) of the Superior Court Rules of Civil Procedure, seeking relief from the order that denied her proof of claim. However, the Superior Court also denied her Rule 60(b) motion.Upon appeal, the Supreme Court of Rhode Island affirmed the order of the Superior Court. The Supreme Court noted that its review of a Rule 60(b) motion is limited to examining the correctness of the order granting or denying the motion, not the correctness of the original judgment. The Court found that Longtin had not demonstrated excusable neglect or pointed to new evidence that would warrant relief under Rule 60(b). The Court also noted that the hearing justice did not abuse his discretion in denying the Rule 60(b) motion. Thus, the denial of Longtin's Rule 60(b) motion by the Superior Court was upheld. View "Howell v. Urban League of Rhode Island, Inc." on Justia Law

In the State of Delaware, a lawsuit was brought by two non-profit organizations against multiple public officials, including tax collectors in Delaware's three counties. The organizations sought increased funding for Delaware’s public schools. The Court of Chancery held that the organizations were entitled to attorneys’ fees and expenses. On appeal, the Supreme Court of Delaware held that the Court of Chancery erred in its application of the "common benefit doctrine" and its expansion of a precedent case, Korn v. New Castle County, beyond taxpayer suits. The Supreme Court affirmed the Chancery Court's award of expenses, but reversed the award of attorneys' fees. The Supreme Court held that the litigation brought by the organizations was to compel the defendant county governments to comply with the law, a benefit that did not warrant an exception to the "American Rule" which states that each party bears its own attorneys' fees, absent certain exceptions. The Court also held that, even if this case were a taxpayer suit, it does not meet the standard set forth in Korn because there was not a quantifiable, non-speculative monetary benefit for all taxpayers. View "In re Delaware Public Schools Litigation" on Justia Law

In the case before the Supreme Court of the State of Delaware, Cantor Fitzgerald, L.P., a global financial services company, appealed a decision by the Court of Chancery. The case involved the company's contractual provisions that allowed it to withhold distributions otherwise owed to a partner who leaves the partnership and then competes with the partnership. The plaintiffs were six former partners who had their distributions, ranging from under $100,000 to over $5 million, withheld after they left Cantor Fitzgerald and joined competing businesses.The lower court held that these "forfeiture for competition" provisions were unenforceable, ruling they were unreasonable restraints on trade. However, the Supreme Court reversed this decision. It ruled that, under Delaware law, courts should enforce such agreements absent unconscionability, bad faith, or other extraordinary circumstances. The court emphasized the importance of freedom of contract, particularly in the context of sophisticated parties entering into a limited partnership agreement. It argued that public policy considerations favored enforcing the agreement, particularly as the parties had voluntarily agreed to the terms. As such, it held that Cantor Fitzgerald was within its rights to withhold the distributions based on the plaintiffs' competitive activities. The case was remanded to the lower court for further proceedings consistent with the Supreme Court's opinion. View "Cantor Fitzgerald, L.P. v. Ainslie" on Justia Law

In 2022, Fox Corporation and Snap Inc. amended their corporate charters to exculpate their officers from damages liability for breaches of the duty of care. The amendments were authorized by recent Delaware legislation. The companies' Class A non-voting common stockholders claimed that these amendments deprived them of their power to sue officers for damages for duty of care violations and, thus, a separate class vote was required to approve the amendments. However, the Supreme Court of the State of Delaware affirmed the Court of Chancery's decision that a separate class vote was not required. The court held that the ability to sue directors or officers for duty of care violations was a general right of the stockholders, not a class-based power stated in the corporate charter. Therefore, it was not a "power, preference, or special right" of the Class A common stock under Section 242(b)(2) of the Delaware General Corporation Law, which requires a separate class stockholder vote to amend a corporate charter if the amendment would adversely affect the powers, preferences, or special rights of the shares of such class. The holding was based on long-standing precedent and the court's interpretation of related sections of the Delaware General Corporation Law. View "In re Fox Corporation/Snap Inc. Section 242 Litigation" on Justia Law

In this case, three chiropractors and their respective business entities sued Wellmark, Iowa’s largest health insurer and claims administrator, alleging that the company violated Iowa antitrust laws through its Administrative Service Agreements with over 400 Iowa employers who self-fund healthcare benefits for their employees. The chiropractors argued that without these agreements, the self-funded employers would compete independently for chiropractic services, resulting in higher profits for chiropractors. The chiropractors filed a motion to certify a class of approximately 1,300 Iowa chiropractors. However, the Supreme Court of Iowa affirmed the district court's decision to deny class certification, concluding that the chiropractors failed to meet the predominance requirement for class certification as they could not prove the threshold issue of antitrust injury on a classwide basis. The court found that proving whether individual chiropractors would be better or worse off without Wellmark’s agreements would require numerous mini-trials, and thus, individual questions predominated over common questions. Additionally, the court applied the doctrine of judicial estoppel to prevent the chiropractors from belatedly reviving a different liability theory that they had previously abandoned to avoid a motion to dismiss. View "Chicoine v. Wellmark, Inc." on Justia Law