Justia Business Law Opinion Summaries

Occidental Petroleum Corporation acquired Anadarko Petroleum Corporation in 2019, resulting in a trust holding a significant amount of Occidental stock. Wells Fargo, acting as trustee, agreed via email to sell the stock between January 6 and January 10, 2020. However, Wells Fargo failed to execute the sale until March 2020, by which time the stock's value had significantly decreased, causing a loss of over $30 million. Occidental sued Wells Fargo for breach of contract based on the email chain and the Trust Agreement.The United States District Court for the Southern District of Texas granted summary judgment in favor of Occidental, finding that Wells Fargo breached the Trust Agreement by failing to sell the stock as planned. The court also dismissed Wells Fargo’s counterclaim and affirmative defenses and awarded damages and attorney’s fees to Occidental.The United States Court of Appeals for the Fifth Circuit reviewed the case and held that the 2019 email chain did not constitute a contract due to lack of consideration. However, Wells Fargo was judicially estopped from arguing that the Trust Agreement was not a contract, as it had previously asserted that the relationship was contractual to dismiss Occidental’s fiduciary-duty claim. The court affirmed that Wells Fargo breached the Trust Agreement by failing to prudently manage the Trust’s assets.The Fifth Circuit also upheld the district court’s calculation of damages, rejecting Wells Fargo’s argument that reinvestment should have been considered. The court found that reinvestment was speculative and unsupported by the record. Additionally, the court affirmed the dismissal of Wells Fargo’s counterclaim and affirmative defenses, as Wells Fargo failed to show a genuine dispute of material fact. Finally, the court upheld the award of attorney’s fees, finding no basis for segregating fees based on Wells Fargo’s different capacities. The district court’s judgment was affirmed. View "Occidental Petroleum v. Wells Fargo" on Justia Law

The case involves defendants Aghee William Smith II and David Alcorn, who were convicted in the Eastern District of Virginia for their roles in fraudulent schemes that defrauded investors of millions of dollars. The schemes included marketing and selling phony investments in a dental services marketing program and fraudulent spectrum investments. The fraudulent activities primarily targeted elderly victims, resulting in significant financial losses.In the district court, Smith and Alcorn were tried together before a jury in February 2022. They raised three main issues on appeal: a joint constitutional challenge to the district court’s COVID-19 trial protocol under the Public Trial Clause of the Sixth Amendment, Smith’s separate challenge to the admission of videotaped depositions under the Confrontation Clause, and Alcorn’s challenge to the imposition of supervised release conditions.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court rejected Smith and Alcorn’s joint contention that the COVID-19 trial protocol violated their rights under the Public Trial Clause, finding that the protocol did not constitute a partial courtroom closure and was justified by substantial public health reasons. The court also rejected Smith’s Confrontation Clause challenge, concluding that the government had made a good faith effort to secure the witnesses’ presence at trial and that the witnesses were unavailable due to health concerns.However, the court found merit in Alcorn’s challenge regarding the imposition of supervised release conditions. The district court had failed to properly incorporate the standard conditions of supervised release during the oral pronouncement of Alcorn’s sentence, leading to a Rogers error. As a result, the Fourth Circuit vacated Alcorn’s sentences and remanded for resentencing.In summary, the Fourth Circuit affirmed Smith’s convictions and sentences, affirmed Alcorn’s convictions, but vacated Alcorn’s sentences and remanded for resentencing. View "United States v. Smith" on Justia Law

The case involves a dispute between Robert and Stephen Samuelian (the Samuelians) and Life Generations Healthcare, LLC (the Company), which they co-founded along with Thomas Olds, Jr. The Samuelians sold a portion of their interest in the Company, and the new operating agreement included a noncompetition provision. The Samuelians later challenged this provision in arbitration, arguing it was unenforceable under California law.The arbitrator found the noncompetition provision invalid per se under California Business and Professions Code section 16600, as it arose from the sale of a business interest. The arbitrator also ruled that the Samuelians did not owe fiduciary duties to the Company because they were members of a manager-managed limited liability company. The Company argued that the arbitrator had legally erred by applying the per se standard instead of the reasonableness standard. The trial court reviewed the arbitrator’s ruling de novo, found no error, and confirmed the award.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. The court held that the arbitrator had applied the wrong standard under section 16600. The court concluded that noncompetition agreements arising from the partial sale of a business interest should be evaluated under the reasonableness standard, not the per se standard. The court reasoned that a partial sale leaves the seller with some ongoing connection to the business, which could have procompetitive benefits. Therefore, such restraints require further scrutiny to determine their reasonableness.The court reversed the trial court’s judgment confirming the arbitration award and directed the trial court to enter an order denying the Samuelians’ petition to confirm the award and granting the Company’s motion to vacate the entire award, including the portion awarding attorney fees and costs. View "Samuelian v. Life Generations Healthcare, LLC" on Justia Law

The case involves International Petroleum Products and Additives Company (IPAC), a California-based company, which entered into sales and distribution agreements with Black Gold S.A.R.L., a Monaco-based company. Black Gold breached these agreements by using IPAC’s confidential information to develop competing products. IPAC won an arbitration award of over $1 million against Black Gold. However, Black Gold declared bankruptcy in Monaco, complicating IPAC’s efforts to collect the award.The United States District Court for the Northern District of California confirmed the arbitration award and entered judgment against Black Gold. During post-judgment discovery, Black Gold engaged in misconduct, leading the district court to sanction Black Gold and add Lorenzo and Sofia Napoleoni, Black Gold’s owners, as judgment debtors on the grounds that they were Black Gold’s alter egos. Black Gold’s petition for recognition of its Monaco bankruptcy proceedings was initially denied by the bankruptcy court, but this decision was later reversed by the Bankruptcy Appellate Panel (BAP), which mandated recognition of the Monaco proceedings.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the automatic bankruptcy stay under 11 U.S.C. § 1520 did not retroactively apply to the date of the bankruptcy court’s initial denial of Black Gold’s petition. The court also held that the automatic stay did not extend to IPAC’s alter ego claim against the Napoleonis. The court affirmed the district court’s judgment and the award of attorneys’ fees and costs in favor of IPAC, concluding that the alter ego claim was not the property of Black Gold’s estate under California law. View "International Petroleum Products and Additives Co, Inc. v. Black Gold S.A.R.L." on Justia Law

Gasoline consumers alleged that various oil producers colluded with the U.S. government, including then-President Trump, to negotiate with Russia and Saudi Arabia to cut oil production, limit future oil exploration, and end a price war on oil. Plaintiffs claimed this agreement fixed gas prices in violation of Sherman Act § 1, suppressed competition in violation of Sherman Act § 2, and involved anticompetitive mergers in violation of Clayton Act § 7.The United States District Court for the Northern District of California dismissed the case, finding it lacked subject-matter jurisdiction under the political question and act of state doctrines. The court also found that Plaintiffs failed to adequately plead an antitrust conspiracy. Additionally, the court dismissed Defendant Energy Transfer for lack of personal jurisdiction and denied Plaintiffs leave to amend their complaint, as well as requests for additional discovery and oral argument.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The court held that the political question doctrine barred judicial review of the President’s foreign policy decisions, as these decisions are committed to the political branches of government. The court also found no judicially manageable standards to resolve the claims under antitrust laws. Additionally, the act of state doctrine barred the claims because they involved evaluating the petroleum policies of foreign nations. The court further held that Plaintiffs failed to state a plausible antitrust conspiracy claim regarding Defendants’ private conduct. Finally, the court found no abuse of discretion in the district court’s procedural rulings. View "D'Augusta v. American Petroleum Institute" on Justia Law

A business dispute arose between M&M Creative Laminants, Inc. (M&M), a Pennsylvania company, and Cambria Company, LLC (Cambria), a Minnesota company. Cambria manufactures and sells quartz surface products, while M&M sells custom countertops and cabinetry. In 2009, the two companies entered into a business relationship where M&M would purchase finished quartz products from Cambria. In 2017, Cambria terminated the relationship, claiming M&M owed over $180,000 for delivered products. Cambria sued for the unpaid amount, and M&M counterclaimed under the Minnesota Franchise Act, alleging unfair termination practices.The district court granted summary judgment for Cambria on M&M’s counterclaim, ruling that M&M did not pay a franchise fee, a requirement under the Act to qualify as a franchise. The court noted that payments for goods at a bona fide wholesale price are excluded from the definition of a franchise fee. The court of appeals affirmed, agreeing that M&M did not pay a franchise fee and additionally concluded that M&M, being an out-of-state company, was precluded from bringing a claim under the Act.The Minnesota Supreme Court reviewed the case and concluded that the Minnesota Franchise Act does not categorically preclude an out-of-state company from enforcing a claim for unfair practices. However, the court agreed with the lower courts that M&M did not pay a franchise fee. The court found that M&M’s payments to Cambria for finished quartz products were at a bona fide wholesale price and did not include a hidden franchise fee. Therefore, the relationship between M&M and Cambria did not constitute a franchise under the Act. The Supreme Court affirmed the grant of summary judgment for Cambria. View "Cambria Company, LLC vs. M&M Creative Laminants, Inc." on Justia Law

Thomas Petters orchestrated a Ponzi scheme through his company, Petters Company, Inc. (PCI), which collapsed in 2008. Following Petters' arrest and conviction, PCI was placed into receivership, and Douglas Kelley was appointed as the receiver. Kelley later filed for bankruptcy on behalf of PCI and was appointed as the bankruptcy trustee. As trustee, Kelley initiated an adversary proceeding against BMO Harris Bank, alleging that the bank aided and abetted the Ponzi scheme.The bankruptcy court and the district court both ruled that the equitable defense of in pari delicto, which prevents a plaintiff who has participated in wrongdoing from recovering damages, was unavailable due to PCI's receivership status. The case proceeded to trial, and a jury awarded Kelley over $500 million in damages, finding BMO liable for aiding and abetting a breach of fiduciary duty. BMO appealed, challenging the availability of the in pari delicto defense, among other issues.The United States Court of Appeals for the Eighth Circuit reviewed the case and concluded that the doctrine of in pari delicto barred Kelley’s action against BMO. The court reasoned that while a receiver might not be bound by the fraudulent acts of a corporation's officers under Minnesota law, a bankruptcy trustee stands in the shoes of the debtor and is subject to any defenses that could have been raised against the debtor. Since PCI was a wrongdoer, the defense of in pari delicto was available to BMO in the adversary proceeding. The court reversed the district court's judgment and remanded the case with directions to enter judgment in favor of BMO. The cross-appeal was dismissed as moot. View "Kelley v. BMO Harris Bank N.A." on Justia Law

The case involves a dispute over the enforcement of a partnership agreement following the death of a partner. Mary Ann Caruso and her sons, Peter and John, formed a partnership in 1983 to operate Hays Land Company (HLC). After Mary Ann's death, Peter and John continued the business until John's death in 2003. John's wife, Geraldine, became the executrix of his estate. Peter did not exercise the buy-out provision in the partnership agreement after John's death, and he continued to operate HLC with Geraldine, who received 50% of the business proceeds.The Court of Common Pleas of Allegheny County initially granted summary judgment in favor of Sandra, Peter's daughter and executrix of his estate, ruling that the Dead Man’s Act precluded Geraldine from proving the partnership agreement's continued applicability. The Superior Court reversed, finding sufficient evidence that Peter and Geraldine intended to continue the partnership under the original agreement. On remand, the trial court ordered specific performance of the buy-out provision, which the Superior Court affirmed.The Supreme Court of Pennsylvania reviewed the case and concluded that Geraldine could not enforce the partnership agreement because she was neither an original party to the agreement nor a third-party beneficiary. The court found no evidence that Peter and Geraldine explicitly agreed to be bound by the original partnership agreement after John's death. The court emphasized that the formation of a new partnership between Peter and Geraldine did not automatically incorporate the terms of the original agreement. Consequently, the Supreme Court reversed the Superior Court's order, holding that Geraldine could not compel specific performance of the buy-out provision against Sandra. View "In Re: Estate of P. Caruso" on Justia Law

The case involves Plaintiff-Appellant Joel J. Malek, who filed a complaint alleging that Defendants-Appellees, including Leonard Feigenbaum and AXA Equitable Life Insurance Co., engaged in a deceptive marketing scheme to trick him and others into replacing their existing life insurance policies with more expensive and less valuable ones. Malek claimed violations of New York law and the Racketeer Influenced and Corrupt Organizations Act (RICO).The United States District Court for the Eastern District of New York dismissed Malek’s complaint and denied him leave to amend. The court found that Malek’s New York claims were time-barred and that he failed to plead the existence of a RICO enterprise. Malek served a motion for reconsideration on the Defendants but did not file it with the court until after the deadline. The district court subsequently denied the motion for reconsideration.The United States Court of Appeals for the Second Circuit reviewed the case. The Defendants moved to dismiss the appeal, arguing that Malek’s notice of appeal was untimely because he did not file his motion for reconsideration within the required timeframe, thus failing to toll the deadline for filing a notice of appeal. The Second Circuit reiterated its holding in Weitzner v. Cynosure, Inc. that Appellate Rule 4(a)(4)(A) requires timely filing, not just service, of a post-judgment motion to toll the appeal deadline. The court also concluded that under Nutraceutical Corp. v. Lambert, Appellate Rule 4(a)(4)(A) is a mandatory claim-processing rule not subject to equitable tolling.The Second Circuit found that Malek’s notice of appeal was untimely and dismissed the appeal for lack of appellate jurisdiction. The court also determined that Malek’s notice of appeal could not be construed to include the order denying reconsideration. View "Malek v. Feigenbaum" on Justia Law

The United States Chamber of Commerce, Business Roundtable, and the Tennessee Chamber of Commerce and Industry sued the Securities and Exchange Commission (SEC) and its Chairman, alleging that the SEC’s partial rescission of a prior regulation did not comply with the Administrative Procedure Act (APA). The regulation in question involved proxy voting advice businesses (PVABs) and their role in the proxy voting process for public companies. The plaintiffs argued that the SEC’s actions were procedurally and substantively deficient under the APA.The United States District Court for the Middle District of Tennessee granted summary judgment in favor of the SEC. The court found that the SEC’s decision to rescind certain conditions of the 2020 Rule was not arbitrary and capricious. The court also held that the SEC had provided a reasonable explanation for its change in policy and had adequately considered the economic consequences of the rescission as required by the Exchange Act. Additionally, the court determined that the 31-day comment period provided by the SEC was legally permissible under the APA.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo and affirmed the district court’s decision. The Sixth Circuit held that the SEC’s 2022 Rescission was not arbitrary and capricious because the SEC had acknowledged its change in position, provided good reasons for the change, and explained why it believed the new rule struck a better policy balance. The court also found that the SEC had adequately assessed the economic implications of the rescission, relying on data from the 2020 Rule and providing a qualitative analysis of the costs and benefits. Finally, the court concluded that the 31-day comment period was sufficient to provide a meaningful opportunity for public comment, as required by the APA. View "Chamber of Commerce v. Securities and Exchange Commission" on Justia Law