Justia Business Law Opinion Summaries

In this appeal from the orders and opinions entered in December 2019, February 2020, May 2020, and April 2021 by the superior court after the case was designated a mandatory complex business case, the Supreme Court affirmed in part and reversed in part, holding that remand was required as to some issues.Plaintiffs and Defendants entered into an asset purchase agreement under which three software applications for use in the clinical trial process would be sold to Defendants by Plaintiffs in exchange for stock and $2.5 million. After the deal soured Plaintiffs brought this lawsuit asserting claims for, among other things, breach of contract and negligent misrepresentation. The trial court granted Defendants' motions to dismiss as to some claims and then granted summary judgment for Defendants on all remaining claims. The Supreme Court affirmed the trial court as to all issues except for the order granting summary judgment on the issues of breach of portions of the asset purchase agreement, holding that further discovery was required. View "Value Health Solutions, Inc. v. Pharmaceutical Research Associates, Inc." on Justia Law

The Supreme Court reversed the trial court's denial of Defendant's motion to compel arbitration, holding that remand was required for reconsideration in light of this Court's holdings in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694 (Tex. 2023).Lone Star Cleburne Autoplex filed this suit asserting that Alliance Auto Auctions of Dallas conspired with two of Lone Star's employees in order to embezzle money from Lone Star. Alliance moved to compel arbitration based on arbitration clauses contained in authorization agreements between Lone Star and a company Alliance used to verify and authorize car dealerships to buy and sell in the company's auctions. In opposing the motion Lone Star asserted that its claims fell outside the scope of the arbitration agreement. The trial court denied Alliance's motion to compel. The court of appeals affirmed. The Supreme Court reversed, holding that because the court of appeals decided this case without addressing arguments rejected in TotalEnergies, remand was required. View "Alliance Auto Auction of Dallas, Inc. v. Lone Star Cleburne Autoplex, Inc." on Justia Law

The underlying case against Defendants TeamHealth—a group of private equity-owned healthcare entities—was brought under the qui tam provisions of the False Claims Act. Two former TeamHealth employees (together, the “Relators”) alleged that TeamHealth routinely billed for nonexistent doctor examinations and critical care services. The matter was unsealed in 2018 after federal and state governments declined to intervene. The Relators moved forward with their case, which survived dismissal and proceeded through extensive discovery. Movant sought to permissively intervene in this closed matter to challenge the sealing of records. The district court denied Movant’s intervention on three independent grounds.   The Fifth Circuit reversed and remanded. The court explained that although courts are afforded great discretion in deciding intervention pursuant to Federal Rule of Civil Procedure 24(b), the district court’s reasoning was premised on several significant errors. The court explained it has permitted intervention by nonparties who seek only to challenge record-related restrictions. The court concluded that Movant’s claim shares a common question of law with the district court’s decisions related to sealing records: Whether there are compelling reasons for sealing that outweigh the public’s right of access. Thus, the court reversed the district court’s determination that Movant has failed to satisfy the requirements of Rule 24(b)(1).  The court explained that it firmly holds that Movant has satisfied standing and the requirements of Rule 24(b)(1), however, it reiterated the district court’s discretion in ultimately deciding Movant’s motion. View "USA v. Team Finance" on Justia Law

The Securities and Exchange Commission (“SEC”) sued Defendant as well as other individual Defendants and corporate entities for securities violations. Defendant appealed the district court’s order appointing a receiver over all corporations and entities controlled by him. A central dispute between the parties is what test the district court should have applied before imposing a receivership. Defendant argued the district court abused its discretion because it did not apply the standard or make the proper findings under the factors set forth in Netsphere (“Netsphere factors”). The SEC responded that Netsphere is inapplicable and the district court’s findings were sufficient under First Financial.   The Fifth Circuit vacated the district court’s order appointing a receiver. The court granted in part Defendant’s motion for a partial stay pending appeal. The court explained that, as Defendant points out, the district court’s order denying the stay discussed events and actions that took place after the receivership was already in place. Accordingly, the court vacated the appointment of the receiver and remanded so that the district court may consider whether to appoint a new receivership under the Netsphere factors. The court immediately suspended the receiver’s power to sell or dispose of property belonging to receivership entities, including the power to complete sales or disposals of property already approved by the district court. The court explained that the suspension does not apply to activities in furtherance of sales or dispositions of property that have already occurred or been approved by the district court. The court clarified that “activities in furtherance” do not include the completion of the sale of any property. View "SEC v. Barton" on Justia Law

The Supreme Court affirmed in part and reversed in part the decision of the appellate court reversing the judgment of the circuit court granting Defendants' motion to dismiss this case for failure to state a claim upon which relief may be granted, holding that the appellate court erred in finding that Plaintiff's complaint alleged sufficient facts to state a cause of each for counts two and three.Plaintiff, a minority stockholder in a family-owned corporation, brought this action alleging one count of stockholder oppression seeking equitable relief short of dissolution (count one) and compensatory damages for claims of breach of fiduciary duty (count two) and unjust enrichment (count three). The circuit court granted Defendants' motion to dismiss, thereby denying Plaintiff's request for leave to amend the complaint. The appellate court reversed the judgment in its entirety. The Supreme Court affirmed as to count one and reversed as to the remaining counts, holding that Plaintiff's proposed amended complaint set forth sufficient facts to state a claim for stockholder oppression but did not allege sufficient facts to support Plaintiff's direct causes of action for breach of fiduciary duty and unjust enrichment. View "Eastland Food Corp. v. Mekhaya" on Justia Law

In 2019, Matt Dorsey brought an action against his father, Tom Dorsey, seeking formal accounting, dissolution, and winding up of their joint dairy operation, Dorsey Organics, LLC. The district court appointed a Special Master; the Special Master subsequently recommended to the district court that it grant partial summary judgment to Tom on Counts Four (breach of contract) and Five (constructive fraud). Without receiving a definitive ruling from the district court on the recommendations regarding the motions for summary judgment, the case then proceeded to a four-day hearing presided over by the Special Master, which resulted in the Special Master making Proposed Findings of Fact and Conclusions of Law. The district court adopted, with almost no changes, the Special Master’s Proposed Findings of Fact and Conclusions of Law, which relied upon the accounting of Tom's expert and rejected the opinions of Matt's expert. The district court then entered a judgment incorporating, with few changes, the Special Master’s Proposed Findings of Fact and Conclusions of Law. The district court also denied Tom's request for attorney fees. Matt appealed, arguing: (1) the district court failed to properly review the evidence before accepting the findings of the Special Master; (2) questioned whether a court could override the terms of a contract even though the contract’s terms arguably produced an inequitable result; (3) Tom wrongfully dissociated from Dorsey Organics prior to its dissolution and the winding up of its affairs; and (4) challenged whether summary judgment was properly granted on Counts Four and Five of the Third Amended Complaint. The Idaho Supreme Court concluded the district court erred in failing to independently review the record before adopting the Special Master's Proposed Findings of Fact and Conclusions of Law. Accordingly, the Court vacated the district court's conclusions that relied on the Special Master's findings. The case was thus remanded for further proceedings. View "Dorsey v. Dorsey" on Justia Law

The First Circuit affirmed the decision of the district court entering summary judgment in favor of Allstate Insurance Company and dismissing the counterclaims brought by two of Allstate's former agents - James Fougere and Sarah Brody-Isbill - and A Better Insurance Agency, Inc. (ABIA) (collectively, Appellants), holding that there was no error.At issue in the underlying case were spreadsheets that Allstate alleged contained trade secrets misappropriated by Brody-Isbill and Fougere, thus breaching their contracts with Allstate. Allstate filed suit alleging claims for, among other things, breach of contract and trade secrets, violations of the Defend Trade Secrets Act, 28 U.S.C. 1836. Appellants counterclaimed, alleging claims for, inter alia, wrongful interference with contractual relations and violations of Mass. Gen. Laws ch. 93A. The district court granted summary judgment for Allstate and dismissed Appellants' counterclaims. The First Circuit affirmed, holding that the district court (1) did not err in dismissing Appellants' counterclaims; and (2) did not abuse its discretion in granting summary judgment to Allstate on liability for its trade secret and contract claims against Appellants. View "Allstate Insurance Co. v. Fougere" on Justia Law

Hi-Tech Pharmaceuticals, Inc., Jared Wheat, and Stephen Smith appealed the district court’s denial of their request for relief from contempt sanctions. The Federal Trade Commission (FTC) sued them for violations of the Federal Trade Commission Act, alleging they had misrepresented their weight-loss products to consumers. The agency sought equitable monetary remedies and an injunction against future unlawful trade practices. The district court granted injunctive relief and ordered them to pay $16 million in equitable monetary relief. Years later, the district court found that they had violated the injunction, held them in civil contempt, and ordered them to pay an additional $40 million in contempt sanctions. Before the $40 million contempt judgment was collected, the United States Supreme Court decided AMG Capital Management, LLC v. Federal Trade Commission. Invoking Federal Rule of Civil Procedure 60(b), Defendants returned to the district court to request relief from the contempt judgment, arguing that continued enforcement of the judgment was no longer equitable after AMG. The district court denied the motion.   The Eleventh Circuit affirmed. The court held that the district court did not abuse its discretion in denying relief under Rule 60(b)(5). The court explained that because AMG did not address the district court’s inherent authority to sanction contempt, the district court did not abuse its discretion when it denied Defendants’ request for relief under Rule 60(b)(5). Further, the court held that the district court did not abuse its discretion in denying relief under Rule 60(b)(6). The court reasoned that Defendants have failed to show extraordinary circumstances justifying relief under Rule 60(b)(6). View "Federal Trade Commission v. National Urological Group, Inc., et al." on Justia Law

A project labor agreement (PLA) is a collective-bargaining agreement between a project owner, contractors, and unions, setting the terms and conditions of employment for a particular construction project. The terms can include recognizing a union as the workers’ exclusive bargaining representative and paying the workers union wages—even if they are not union members. The plaintiffs claim the project labor agreements violate the First and Fourteenth Amendments, the National Labor Relations Act, and the Sherman Act.The Third Circuit affirmed the dismissal of the claims, citing lack of standing. Concreteness and particularity are two Article III standing requirements but those concrete injuries must also be actual or imminent. The contractor-plaintiffs declared they never have and never will bid on PLA-covered projects, admitting they never experienced and never will experience a compelled association or economic harm. To the extent the contractors’ declarations are a proxy for determining the actuality or imminence of harm to their employees, the contractors indicate they have not and will not bid on PLA-covered projects. The employees did not plead that they did or plan to work on PLA-covered public projects. The mere fact that the contractors claim they are “able and ready” to bid or work on PLA-covered public projects does not cure their failure to bid in the past and admitted refusal to bid. View "Associated Builders & Contractors of Western Pennsylvania v. Community College of Allegheny County" on Justia Law

Ascendium Education Solutions (“Ascendium”) is a Program guarantor that previously charged debt-collection costs to defaulting Program borrowers who entered loan rehabilitation agreements. Ascendium challenged the Department of Education’s Rule, 34 C.F.R. Section 682.410(b)(2)(i), under the Administrative Procedure Act (“APA”), arguing that the Department of Education and its Secretary (collectively, the “Department”) did not have statutory authority to promulgate the Rule because the Rule conflicts with the Act. The district court ruled that Ascendium lacked standing to challenge the Rule as it applies to borrowers who enter repayment agreements. But the district court held that the Rule exceeded the Department’s authority under the Act with respect to borrowers who enter rehabilitation agreements. Both Ascendium and the Department appealed.   The DC Circuit reversed in part and affirmed in part. The court concluded that Ascendium has standing to challenge the entirety of the Rule, that the Rule is consistent with the Act and therefore is lawful, and that the Rule is not arbitrary or capricious. The court explained that the Rule prohibits a guarantor from charging collection costs to a borrower who enters a repayment plan or a rehabilitation agreement during the initial default period: It implicitly deems such costs “unreasonable” under the circumstances. The court concluded that the Rule is consistent with the Act’s requirement that “reasonable” collection costs must be passed on to borrowers. Further, the court explained that the Department’s response to Ascendium’s comment adequately refuted Ascendium’s assumption that the purpose of the Rule should be to incentivize guarantors to enter rehabilitation agreements by allowing them to charge collection costs. View "Ascendium Education Solutions, Inc. v. Miguel Cardona" on Justia Law