Justia Business Law Opinion Summaries

In the case before the Supreme Court of Mississippi, Vince Hardaway brought an action against his employer, Howard Industries, Inc., claiming bad faith denial of his workers’ compensation benefits for temporary partial disability due to carpal tunnel syndrome. Howard Industries had contracted CorVel Enterprise, a third-party claims administrator, to manage workers’ compensation claims. The trial court granted summary judgment in favor of Howard Industries, finding that the company's conduct did not constitute gross negligence or an independent tort.On appeal, the Supreme Court of Mississippi affirmed the trial court's decision. The court found that under Mississippi Code Section 71-3-125(1), Howard Industries was permitted to delegate its duty to administer employee workers’ compensation claims to CorVel. The Court also determined that Hardaway failed to provide sufficient evidence that Howard Industries acted with actual malice or gross negligence in denying his benefits. Therefore, his claims did not survive summary judgment. The court held that any failure to pay benefits by Howard Industries under these circumstances did not amount to gross negligence. View "Hardaway v. Howard Industries, Inc." on Justia Law

The case in question arose from a multi-million-dollar loss suffered by Westlake Chemical Corporation and Axiall Corporation (the respondents) at their chlorine manufacturing plant in Natrium, West Virginia. The loss occurred when 90 tons of liquid chlorine leaked from a rupture in a railroad tanker car that had been recently repaired by third-party contractors. The liquid chlorine vaporized into a cloud or plume that caused corrosion damage to the equipment at the plant. The respondents claimed the damage costs from their insurance companies (the petitioners). However, the insurance companies denied coverage based on three exclusions in the insurance policies relating to corrosion, faulty workmanship, and contamination. The case reached the Supreme Court of Appeals of West Virginia, which was asked to review three orders of the Circuit Court of Marshall County, West Virginia, Business Court Division. The lower court had granted partial summary judgment to the respondents, finding that none of the three exclusions barred the respondents’ coverage claims. The Supreme Court of Appeals of West Virginia concluded that the lower court's orders were not final orders subject to appeal at this stage of the proceedings. This was due to unresolved issues of causation and damages, and because the orders did not conclusively determine the disputed controversy, resolve an important issue completely separate from the merits of the action, or were effectively unreviewable on appeal from a final judgment. Therefore, the court dismissed the appeal, without prejudice. View "NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. v. WESTLAKE CHEMICAL CORPORATION" on Justia Law

Contitech USA, Inc., a division of tire manufacturer Continental AG, contracted with a trucking company, McLaughlin Freight Services, Inc., and its owner, Dan McLaughlin, to deliver rubber between two of its facilities. The fee schedule included a base rate and a higher "rounder" rate, which required pre-approval from Contitech. Over three years, McLaughlin submitted 645 unapproved "rounder" bills to the third-party payments administrator, using fraudulent emails that purported to show pre-approval from Contitech. Contitech discovered the scheme and sued for fraud, unjust enrichment, and breach of contract.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court found that there was sufficient evidence for a reasonable jury to find for Contitech on the fraud and unjust-enrichment counts. The court rejected McLaughlin's argument that Contitech failed to prove proximate cause and damages, noting that under Iowa law, a defrauding defendant cannot claim that its misrepresentations did not cause any damages to the plaintiff. Furthermore, McLaughlin was contractually obligated not to charge rounder rates without pre-approval from Contitech. Thus, a reasonable jury could have found that the difference between the contractual base rate and the actual billed amount was the amount of money McLaughlin received, which in equity and good conscience belonged to Contitech.The court also affirmed the district court's decision to remit Contitech's unjust-enrichment award to $0 and to remit McLaughlin’s damages award to prevent double recovery. The court reasoned that while a party is entitled to proceed on various theories of recovery, it is not entitled to collect multiple awards for the same injury. Furthermore, the court held that the district court did not abuse its discretion in granting pre-judgment interest to Contitech, and that postjudgment interest is mandatory under 28 U.S.C. § 1961 and should be awarded regardless of whether the district court orders it. View "Contitech USA, Inc. v. McLaughlin Freight Services, Inc." on Justia Law

The United States Court of Appeals affirmed a district court's grant of summary judgment in favor of Adroit Medical Systems, Inc., Grazyna Gammons, Kelley Patten, and Gene Gammons. The plaintiff, Scott Gammons, alleged that his father and stepfamily, who controlled the family business, Adroit, were diverting company funds for personal use without accounting for tax consequences. He claimed that after he reported their financial misdeeds to the IRS, they fired him. Scott brought an action under federal and state whistleblower statutes and state common law.The court found that while Scott’s reporting of alleged financial malfeasance to the IRS was protected conduct and may have contributed to his termination, the defendants had clear and convincing evidence that they would have fired Scott due to his attempted hostile takeover of the company, irrespective of his whistleblowing. Scott had obtained an emergency conservatorship over his father, Gene, which he used to control the family business. When the conservatorship was dissolved, the defendants regained control and promptly fired Scott.Scott also brought claims under the Tennessee Public Protection Act (TPPA) and state common law. The court found that Scott failed to show that the defendants’ legitimate reason for terminating him was pretextual. The court also rejected Scott’s state common law claims, holding that the individual defendants were immune from tortious interference claims as they were acting within their corporate capacities and did not personally benefit from Scott’s termination. View "Gammons v. Adroit Medical Systems, Inc." on Justia Law

In a dispute between K&S Staffing Solutions, Inc. (K&S) and The Western Surety Company (Western) and VSS International, Inc. (VSSI), the Court of Appeal of the State of California Third Appellate District upheld the Superior Court of San Joaquin County's decision that K&S was not a “laborer” within the meaning of the mechanics’ lien law and that payment bonds issued for the projects in question were subject to the mechanics' lien law’s requirements.K&S, a staffing company, sued VSSI and Western to recover unpaid amounts for services provided on state projects, arguing it was a “laborer” under the mechanics' lien law and thus entitled to assert a claim against payment bonds for the projects. The court disagreed, interpreting the term “laborer” in the law as a person "acting as an employee" performing labor or bestowing necessary services on a work of improvement, and concluded K&S, as an employer, did not qualify.Furthermore, K&S argued that the payment bonds issued for these state projects were not subject to the mechanics' lien law’s requirements because they were not "payment bonds" within the meaning of the law. However, the court disagreed, ruling that the bond requirements of the mechanics' lien law apply to state projects that require a bond under Public Contract Code section 7103 and other public entity projects that require a bond under section 9550. Consequently, the court affirmed the lower court's attorney fee award to the defendants under section 9564, which mandates attorney fees be awarded to the prevailing party in any action to enforce the liability on a payment bond. View "K & S Staffing Solutions v. The Western Surety Co." on Justia Law

In the case before the Supreme Court of the State of Illinois, the State of Illinois, represented by the Attorney General, alleged that Elite Staffing, Inc., Metro Staff, Inc., and Midway Staffing, Inc. (collectively, the staffing agencies) violated the Illinois Antitrust Act. The agencies, which supplied temporary workers to a company called Colony Display, were claimed to have agreed to fix wages for their employees at below-market rates and agreed not to hire each other's employees. The staffing agencies argued that the Act did not apply to the charged conduct, and the case was sent to the Supreme Court for interlocutory review.The Supreme Court held that the Illinois Antitrust Act does not exempt agreements between competitors to hold down wages and to limit employment opportunities for their employees from antitrust scrutiny. For the purposes of the Act, the court clarified that "service" does not exclude all agreements concerning labor services. It particularly noted that multiemployer agreements concerning wages they will pay their employees and whether they will hire each other's employees may violate the Act unless the agreement arises as part of the bargaining process and the affected employees, through their collective bargaining representatives, have sought to bargain with the multiemployer unit.The court vacated the appellate court’s answer to a question it had formulated and remanded the case for further proceedings. View "State ex rel. Raoul v. Elite Staffing, Inc." on Justia Law

In November 2015, Joseph H. Reeves contracted with Wilson Floor & Wallcovering, Inc. ("Wilson Floor") and its owner, Tom Wilson, to replace the wood flooring in his home. After the work was completed, Reeves found the new flooring to be unlevel and claimed that Wilson Floor and Tom Wilson refused to make further repairs. Reeves filed a complaint against "Tom Wilson" and "Wilson Flooring" in May 2017, alleging negligence, fraudulent suppression, fraudulent inducement, and breach of contract.The Supreme Court of Alabama reviewed the case after the Autauga Circuit Court dismissed Reeves's claims against Wilson Floor due to "lack of service" under Rule 4, Ala. R. Civ. P. Although it was undisputed that Reeves's attempted service on Wilson Floor was ineffective, the Supreme Court of Alabama concluded that Wilson Floor was adequately informed of Reeves's action against it, and hence, the trial court's dismissal of his claims against Wilson Floor was prohibited under Rule 4(i)(2)(C).The Court noted that while Tina Wilson, Tom Wilson's wife, was not Wilson Floor's registered agent, she was one of the company's listed officers and could accept service on its behalf. As Tina had actually received the summons and the complaint, the Court established that Wilson Floor was informed of Reeves's action within time to avoid default. Therefore, the Supreme Court of Alabama reversed the trial court's order dismissing Reeves's action against Wilson Floor and remanded the case for further proceedings. View "Reeves v. Wilson Floor and Wallcovering, Inc." on Justia Law

In 2022, Fox Corporation and Snap Inc. amended their corporate charters to protect their officers from liability for duty of care violations, following recent legislation in Delaware. Class A non-voting common stockholders of both companies filed a lawsuit, claiming that a separate class vote was required for these amendments, as it deprived them of the power to sue officers for damages for duty of care violations. The Court of Chancery of the State of Delaware ruled in favor of Fox and Snap, holding that the ability to sue corporate officers for damages was not a class-based power stated in the charters and thus separate Class A stockholder votes were not required. The Court of Chancery also noted that the amendments did not affect any peculiar attribute of the class of stock, and hence, did not necessitate a separate vote. The Supreme Court of the State of Delaware affirmed this decision, holding that the powers, preferences, or special rights of class shares in Section 242(b)(2) refers to those authorized for a class by Section 151(a) and expressed in the charter as required by Sections 102(a)(4) and 151(a). The ability to sue directors or officers for duty of care violations is an attribute of the Companies’ stock, but not a power, preference, or special right of the Class A common stock under Section 242(b)(2). View "In re Fox Corporation/Snap Inc. Section 242 Litigation" on Justia Law

The case revolves around a dispute between Harvest Group, LLC ("Harvest") and Love’s Travel Stops & Country Stores, Inc. and Musket Corp. (collectively, "Love’s") over a breach-of-contract claim. Harvest, a company that assists businesses in acquiring economic development incentives, entered into a contract with Love’s to help secure incentives for a renewable diesel facility. In return, Harvest would receive a fee of 10% of the value of any incentives it helped Love's secure.A property tax assessment for the project, which significantly reduced the estimated tax burden, was at the center of the dispute. Harvest claimed that this assessment qualified as an incentive under their agreement, and thus they were entitled to a fee. Love’s, however, argued that the assessment was not an incentive as defined by their contract and that it was not the product of Harvest’s efforts, but simply the result of the assessor’s application of Nebraska tax law.The United States Court of Appeals for the Tenth Circuit reversed the lower court's grant of summary judgment to Love’s on the issue of whether the assessment was an incentive/benefit under the Agreement and whether the assessment was the product of Harvest’s efforts. There were genuine disputes of material fact about these issues, meaning they must be decided at trial, not on summary judgment. The court also reversed the lower court on the issues of Harvest’s entitlement to interest and whether Harvest was the prevailing party. The case was sent back to the lower court for further proceedings. View "Harvest Group v. Love's Travel Stops & Country Stores" on Justia Law

In this case, Southwest Airlines filed a suit against Liberty Insurance Underwriters for denial of a claim for reimbursement under its cyber risk insurance policy after a massive computer failure. This computer failure resulted in flight delays and cancellations, causing Southwest to incur over $77 million in losses. Southwest claimed these losses under their insurance policy, but Liberty denied the claim, arguing that the costs incurred by Southwest were discretionary and either not covered under the policy or excluded by certain policy clauses.The United States Court of Appeals for the Fifth Circuit disagreed with the lower court's decision to grant summary judgment for Liberty. The court concluded that the costs incurred by Southwest due to the system failure were not categorically barred from coverage as a matter of law. The court found that Southwest's five categories of costs satisfied the policy's causation standard and were thus "losses" that it "incurred."The court also concluded that the district court erred in finding that the claimed costs were consequential damages excluded from coverage and that the term "third parties" did not apply to Southwest’s customers and did not preclude costs related to Southwest’s payments to its customers.The court reversed the district court's decision and remanded the case back to the lower court for further proceedings consistent with its opinion. View "Southwest Airlines v. Liberty Insurance" on Justia Law