Justia Business Law Opinion Summaries

Lavonne S. Mottern died after receiving a contaminated intravenous injection at Princeton Medical Center, operated by Baptist Health System, Inc. (BHS). Donald J. Mottern, as administrator of Lavonne's estate, filed claims against BHS, Meds I.V., LLC (the manufacturer of the injection), and three individuals associated with Meds I.V. The claims against Meds I.V. and the individuals were settled, leaving only the claims against BHS, which included negligence, wantonness, a claim under the Alabama Extended Manufacturer's Liability Doctrine (AEMLD), and a breach of implied warranty under the Uniform Commercial Code (UCC).The Jefferson Circuit Court dismissed all of Mottern's claims against BHS, including the negligence and wantonness claims, which BHS conceded should not have been dismissed. BHS argued that the AEMLD and UCC claims were subject to the Alabama Medical Liability Act (AMLA) and required proof of a breach of the standard of care. The trial court agreed and dismissed these claims, leading to Mottern's appeal.The Supreme Court of Alabama reviewed the case and agreed with BHS that all of Mottern's claims, including those under the AEMLD and UCC, are subject to the AMLA's standard-of-care provisions. The court held that the AMLA applies to all actions for medical injury, regardless of the theory of liability, and requires proof of a breach of the standard of care. The court reversed the trial court's dismissal of the negligence and wantonness claims and remanded the case for further proceedings consistent with its opinion. The main holding is that the AMLA's standard-of-care provisions apply to all claims alleging medical injury, including those under the AEMLD and UCC. View "Mottern v. Baptist Health System, Inc." on Justia Law

The case involves five plaintiffs who own and operate 7-Eleven convenience stores in Massachusetts. They entered into franchise agreements with 7-Eleven, Inc., which provided them with a license to use the 7-Eleven brand and associated business format. In return, the franchisees agreed to operate their stores according to 7-Eleven's standards and pay a franchise fee, which is a percentage of the store's gross profits. The plaintiffs claim they were misclassified as independent contractors rather than employees under Massachusetts law.The United States Court of Appeals for the First Circuit previously reviewed the case and certified a question to the Massachusetts Supreme Judicial Court (SJC) regarding whether the three-prong test for independent contractor status applies to franchise relationships. The SJC concluded that the test does apply but requires a case-specific examination of whether the individual performs any service for the alleged employer. The First Circuit then certified a second question to the SJC, asking whether the plaintiffs perform any service for 7-Eleven under the Massachusetts independent contractor statute, given their contractual obligations and the franchise fee structure.The Massachusetts Supreme Judicial Court held that the plaintiffs do not perform any service for 7-Eleven within the meaning of the independent contractor statute. The court reasoned that the franchisees operate their stores independently and chose to use the 7-Eleven brand for its market benefits. The court emphasized that the franchisees' compliance with 7-Eleven's standards is necessary to maintain the brand's integrity and does not indicate an employment relationship. Therefore, the court answered the certified question in the negative, concluding that the plaintiffs are not employees of 7-Eleven under the Massachusetts independent contractor statute. View "Patel v. 7-Eleven, Inc." on Justia Law

James Donelson, CEO of Long Leaf Trading Group, oversaw a company that provided trade recommendations in the commodities market and earned commissions on executed trades. Despite collecting $1,235,413 in commissions from customers participating in the "Time Means Money" (TMM) program, customers incurred losses totaling $2,376,738. The Commodity Futures Trading Commission (CFTC) investigated and filed a civil enforcement action against Donelson and others, alleging options fraud and other violations of commodities laws.The United States District Court for the Northern District of Illinois granted summary judgment to the CFTC on all but one count against Donelson. The court found that Donelson and Long Leaf made several misrepresentations, including misleading trade history emails, false return rate projections, and omissions about Long Leaf's history of losses. The court also determined that Long Leaf acted as a Commodity Trading Advisor (CTA) and should have registered as such. Donelson was ordered to pay restitution and disgorgement totaling $3,612,151. Donelson appealed the summary judgment.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court affirmed the district court's findings on options fraud, fraud by a CTA, and fraudulent advertising by a CTA, agreeing that Donelson made misleading statements and omissions. The court also upheld the finding that Long Leaf was a CTA and that Donelson was a controlling person of the company. However, the court reversed the summary judgment on the claims related to the failure to register as a CTA and failure to make required disclosures, remanding these issues for further proceedings to determine if Long Leaf was exempt from registration under CFTC regulations. View "Commodity Futures Trading Commission v. Donelson" on Justia Law

Plaintiffs, property developers owning three hotels, alleged that Defendants, rival developers operating the Hollywood Athletic Club, abused the California Environmental Quality Act (CEQA) processes to extort funds in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). Defendants challenged several of Plaintiffs' hotel projects through CEQA objections and lawsuits, which Plaintiffs claimed were baseless and intended to obstruct their developments.The United States District Court for the Central District of California granted summary judgment in favor of Defendants, holding that the Noerr-Pennington doctrine protected Defendants' petitioning activities from statutory liability under the First Amendment. The district court found that Defendants' actions were not objectively baseless and thus did not fall within the sham litigation exception to the Noerr-Pennington doctrine. The case was transferred from Judge Wright to Judge Gutierrez, who reconsidered and reversed the prior denial of summary judgment, concluding that the previous decision was clearly erroneous and would result in manifest injustice.The United States Court of Appeals for the Ninth Circuit affirmed the district court's summary judgment. The court held that the district court did not abuse its discretion in reconsidering the prior judge's ruling. It also agreed that Defendants' CEQA challenges were not objectively baseless, as the actions had some merit and were not brought solely for an improper purpose. The court emphasized that the Noerr-Pennington doctrine provides broad protection to petitioning activities to avoid chilling First Amendment rights. Consequently, the court did not need to address Defendants' additional arguments regarding the applicability of RICO to litigation activities. View "RELEVANT GROUP, LLC V. NOURMAND" on Justia Law

Plaintiffs, a group of preferred stockholders in Cedar Realty Trust, sued Cedar and its directors, alleging that a series of transactions culminating in Cedar's acquisition by Wheeler Properties devalued their preferred shares. Cedar delisted its common stock and paid common stockholders, but the preferred stock remained outstanding and its value dropped significantly. Plaintiffs claimed Cedar and its directors breached contractual and fiduciary duties by structuring the transactions to deprive them of their preferential rights. They also alleged Wheeler tortiously interfered with their contractual rights and aided Cedar's breach of fiduciary duties.The United States District Court for the District of Maryland dismissed the complaint. It found that the transactions did not trigger the preferred stockholders' conversion rights under the Articles Supplementary because Wheeler's stock remained publicly traded. The court also ruled that Maryland law does not recognize an independent cause of action for breach of the implied duty of good faith and fair dealing. Additionally, the court held that the fiduciary duty claims were duplicative of the breach of contract claims, as the rights of preferred stockholders are defined by contract. Consequently, the claims against Wheeler failed because they depended on the existence of underlying breaches of contract and fiduciary duty.The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision. It held that the transactions did not constitute a "Change of Control" under the Articles Supplementary, as Wheeler's stock remained publicly traded. The court also agreed that Maryland law does not support an independent claim for breach of the implied duty of good faith and fair dealing. Furthermore, the court found that the fiduciary duty claims were properly dismissed because the directors' duties to preferred stockholders are limited to the contractual terms. Finally, the claims against Wheeler were dismissed due to the absence of underlying breaches by Cedar and its directors. View "Kim v. Cedar Realty Trust, Inc." on Justia Law

TD Ameritrade offers brokerage services to retail investors, allowing them to trade stocks through its online platform. The company routes customer orders to trading venues for execution. Roderick Ford, representing a group of investors, alleged that TD Ameritrade's order-routing practices violated the company's duty of best execution by prioritizing venues that paid the company the most money rather than those providing the best outcomes for customers. Ford claimed this violated § 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and that CEO Frederic J. Tomczyk was jointly liable under § 20(a) of the Act.A magistrate judge initially recommended denying Ford's motion for class certification due to the predominance of individual questions of economic loss. However, the district court certified a class, believing Ford's expert's algorithm could address these issues. The Eighth Circuit reversed this decision, stating individual inquiries were still necessary. Ford then proposed a new class definition and moved again for certification under Rule 23(b)(3), (b)(2), and (c)(4). The district court certified the class under Rule 23(b)(3) and alternatively under Rule 23(b)(2) and (c)(4).The United States Court of Appeals for the Eighth Circuit reviewed the district court's certification order for abuse of discretion. The court found that Ford's new theory of economic loss, based on commissions paid, did not align with the previous definition of economic loss and still required individualized inquiries. Consequently, the court held that the district court abused its discretion in certifying the class under Rule 23(b)(3). The court also found that the alternative certifications under Rule 23(b)(2) and (c)(4) were improper due to the predominance of individual issues and the lack of cohesiveness among class members. The Eighth Circuit reversed the district court's order and remanded for further proceedings. View "Ford v. TD Ameritrade Holding Corp." on Justia Law

Richard Wade, the former president, CEO, and director of Vertical Computer Systems, Inc., was sued in April 2020 by the company's chief technical officer and several shareholders for breach of fiduciary duty and fraud. Wade's address was initially listed as "3717 Cole Avenue, Apt. 293, Dallas, Texas 75204." After a year, the claims against Wade were severed into a separate action, and the trial court ordered binding arbitration. Wade's attorney later filed a motion to withdraw, listing Wade's address as "3717 Cole Ave., Apt. 277, Dallas, Texas 75204." Notice of the trial was sent to this incorrect address.The trial court scheduled a bench trial for April 19, 2022, and Wade appeared pro se but did not present any evidence. The court ruled in favor of the plaintiffs, awarding them over $21 million. Wade filed a pro se notice of appeal, arguing that he did not receive proper notice of the trial. The Court of Appeals for the Fifth District of Texas affirmed the judgment.The Supreme Court of Texas reviewed the case and found that Wade did not receive proper notice of the trial setting, which violated his due process rights. The court noted that the notice was sent to an incorrect address and that Wade had informed the trial court of this issue. The court held that proceeding to trial without proper notice was reversible error and that Wade was entitled to a new trial. The court reversed the judgment of the Court of Appeals and remanded the case to the trial court for further proceedings. View "Wade v. Vertical Computer Systems, Inc." on Justia Law

Two whistleblowers, John M. Barr and John McPherson, challenged the Securities and Exchange Commission’s (SEC) calculation of their award amounts under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The case involves Life Partners Holdings, Inc., which was found guilty of extensive securities fraud from 1999 to 2013. In 2012, the SEC filed a civil action against Life Partners, resulting in a $38.7 million judgment. Life Partners subsequently filed for Chapter 11 bankruptcy to avoid the appointment of a receiver. The bankruptcy court appointed a Chapter 11 trustee, and a reorganization plan was confirmed in 2016.The SEC posted a Notice of Covered Action in 2015, inviting whistleblowers to apply for awards. Barr and McPherson submitted applications. The SEC’s Claims Review Staff initially recommended denying Barr an award and granting McPherson 23% of the collected sanctions. After objections, the SEC revised its decision, granting Barr 5% and McPherson 20% of the collected amounts. The SEC argued that the bankruptcy proceedings did not qualify as a “covered judicial or administrative action” or a “related action” under the Dodd-Frank Act.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the SEC’s motion to appoint a Chapter 11 trustee did not constitute “bringing an action” under the Dodd-Frank Act. The court found that the ordinary meaning of “action brought” refers to initiating a lawsuit or legal proceedings, which did not apply to the SEC’s involvement in the bankruptcy case. The court also rejected the argument that the SEC’s actions in the bankruptcy case were a continuation of its enforcement strategy. Consequently, the court denied the petitions for review, upholding the SEC’s award calculations. View "Barr v. SEC" on Justia Law

Wack Jills USA, Inc., formerly known as Jack Wills, Inc., assigned all its property and assets to SM Financial Services Corporation in August 2019 as part of an assignment for the benefit of creditors (ABC) proceeding. SM Financial, acting as trustee of the JW ABC Trust, sought court approval for final distributions and to close the case. Home Club Realty Trust, a general unsecured creditor, objected to the motion, citing concerns over the handling of certain assets and compliance with statutory requirements.The Court of Chancery of the State of Delaware reviewed the case. The Assignee failed to comply with several statutory requirements under the Delaware ABC Statute, including not filing an affidavit of inventory within 30 days of the assignment, not seeking the court’s appointment of two appraisers, and not filing annual accountings. The Assignee also unilaterally posted a bond without court approval and retained its affiliated law firm, SM Law, as counsel, which raised concerns about the compensation structure and potential conflicts of interest.The court found that the Assignee’s pervasive non-compliance with the ABC Statute and its conduct in managing the assignment estate constituted sufficient cause for removal. The court denied the motion to approve final distributions and close the case, and removed SM Financial as Assignee pursuant to 10 Del. C. § 7386. The court extended the term of the Trust until further order and prohibited any distributions from the Trust without court approval. The bond remains in place and may be subject to further proceedings. View "In re Wack Jills, Inc." on Justia Law

CSX Transportation, Inc. sued Norfolk Southern Railway Company and Norfolk & Portsmouth Belt Line Railroad Company in 2018, alleging that they conspired to exclude CSX from competing in the international shipping market at the Norfolk International Terminal by imposing an exclusionary switch rate starting in 2010. CSX claimed this rate caused ongoing injury to its business. The key issue was whether the Sherman Act’s four-year statute of limitations barred CSX’s claims or if an exception applied.The United States District Court for the Eastern District of Virginia granted summary judgment to the defendants, finding CSX’s claims time-barred. The court held that the continuing-violation doctrine did not apply because the decision to maintain the switch rate did not constitute a new act causing new injury within the limitations period. The court also found that CSX failed to show specific damages resulting from any acts within the limitations period.The United States Court of Appeals for the Fourth Circuit affirmed the district court’s judgment. The Fourth Circuit agreed that the continuing-violation doctrine did not apply because maintaining the switch rate was not a new act but a continuation of the initial decision. The court also found that CSX did not provide sufficient evidence of new antitrust injury within the limitations period. The court emphasized that for the continuing-violation doctrine to apply, there must be an overt act within the limitations period that causes new injury, which CSX failed to demonstrate. Therefore, the court held that CSX’s claims were time-barred and affirmed the district court’s judgment. View "CSX Transportation, Incorporated v. Norfolk Southern Railway Company" on Justia Law