Justia Business Law Opinion Summaries

Reliant Life Shares, LLC (Reliant or LLC) was a profitable limited liability company owned in equal parts by three members. Two of them, SM and DC, were longtime friends and business partners. After DC stopped working out of the offices of Reliant because of a medical condition, no one at Reliant expected him to return to work, but SM assured CDC he remained a loyal business partner. Before long, however, SM and the third member of Reliant, SG, tried to force out DC, splitting the company’s profits and other revenues 50/50 and paying DC nothing. The LLC sued DC, seeking a declaratory judgment that he was properly removed as a member of the LLC. DC cross-complained against the parties and the LLC, alleging breach of contract, fraud, breach of the duty of loyalty and several other causes of action, seeking damages, an accounting and imposition of a constructive trust over funds obtained through violation of fiduciary duties. The jury awarded DC damages and valued his equity interest. The LLC, SM, SG, and several of their entities appealed. They assert a multitude of arguments for reversal of the judgment.   The Second Appellate District found no merit in any of the claims and affirmed the judgment in full. The court found that the trial court acted well within its discretion when it decided alter ego claims in phase one. Further, the court found no merit in the election of remedies argument, either as it relates to prejudgment interest or anything else. View "Reliant Life Shares, LLC v. Cooper" on Justia Law

The plaintiffs filed suit asserting federal securities claims. The Third Circuit affirmed summary judgment in favor of the defendants The district court subsequently performed a Federal Rule 11 inquiry mandated by the Private Securities Litigation Reform Act of 1995 (PSLRA) and determined that the plaintiffs violated Rule 11 but did not award attorneys’ fees or impose any other sanctions.The Third Circuit held that the plaintiffs violated Rule 11 in bringing their federal securities claims by filing for an improper purpose. The plaintiffs expressly stated that their “strategy was to file these complaints to force a settlement.” In addition, their Unregistered Securities and Misrepresentation Claims lacked factual support in violation of Rule 11(b)(3). The plaintiffs had a reasonable basis for their Rule 10b-5 Securities Fraud Claim. The court vacated in part. The PSLRA creates a presumption in favor of awarding attorneys’ fees when a complaint constitutes a “substantial failure” to comply with Rule 11 but the district court did not err in finding that the Rule 11 violations were not substantial. Nonetheless, the PSLRA makes the imposition of sanctions mandatory after a court determines that a party violated Rule 11, so the court abused its discretion in declining to impose any form of sanctions. View "Scott v. Vantage Corp" on Justia Law

Acuity operates a website that connects people looking to buy or sell homes with a local real estate agent. Acuity’s services are free to home buyers and sellers but realtors pay a fee for referrals. The real-estate broker that employed Lewis, a real estate agent, signed up to receive Acuity’s referrals. The broker required its agents (including Lewis) to pay Acuity’s fee out of their commissions from home sales. Lewis sued, alleging that Acuity makes false claims to home buyers and sellers on its website and that this false advertising violates the Lanham Act, 15 U.S.C. 1125(a)(1)(B).The Sixth Circuit affirmed the dismissal of the suit. The Lanham Act provides a cause of action only for businesses that suffer commercial injuries (such as lost product sales) from the challenged false advertising. The Act does not provide a cause of action for customers who suffer consumer injuries (such as the cost of a defective product) from false advertising. Lewis alleges that type of consumer harm as his injury from Acuity’s allegedly false advertising: He seeks to recover the referral fee (that is, the price) he paid for Acuity’s services. View "Lewis v. Acuity Real Estate Services, LLC" on Justia Law

In 2012, Ogus cofounded the SportTechie website. Bloom volunteered as a writer. Eventually, both quit their other jobs. They formed an LLC with Bloom a 55.5% member, and Ogus a 45.5% member and sole manager. They hired Kaufman. Vintage and Oak View made financial investments. In 2016-2017 Ogus converted SportTechie from an LLC to a Delaware corporation and appointed three directors: Bloom, a Vintage representative, and Bodie, Oak View’s designee. A stockholders agreement gave SportTechie the right to repurchase Ogus’s equity interest if he were terminated. Bloom—SportTechie’s CEO— recommended firing Ogus for poor performance. A quorum of the board authorized the termination of his employment. SportTechie exercised its option to repurchase Ogus’s stock.A chancellor dismissed Ogus's fiduciary duty and fraud claims challenging the stock repurchase and subsequently granted Bodie and Oak View summary judgment on a fraud claim, breach of fiduciary duty claims, an aiding and abetting claim, and a civil conspiracy claim. Those defendants had limited, innocuous roles in the relevant events. Bodie’s decision to sign the consent terminating Ogus is protected by the business judgment rule; there is no evidence of bad faith or self-interest. With no underlying breach of fiduciary duty claim, the aiding and abetting claim against Oak View and the civil conspiracy claim against Oak View and Bodie necessarily fail. As to Bloom and Kaufman, questions of material fact remain, precluding summary judgment on fraud, breach of fiduciary duty, and civil conspiracy claims. View "Ogus v. SportTechie, Inc." on Justia Law

Defendants appealed a judgment and order denying their motion for a new trial after a jury found in favor of plaintiffs on their claims of breach of contract, conversion, deceit, defamation, and unlawful interference with business. The district court quieted title in plaintiff Seven Star Holdings. Defendants argued: (1) the court erred by failing to decide whether a joint venture existed and in quieting title; (2) there was insufficient evidence supporting the jury verdict on the claims of breach of contract, conversion, defamation, and unlawful interference with business; and (3) the verdict violated the law of comparative fault. After review, the North Dakota Supreme Court affirmed, concluding defendants waived their arguments on joint venture, quiet title, breach of contract, and comparative fault; and the court did not abuse its discretion in determining the verdict was not manifestly against the weight of the evidence and rejecting the defendants’ new trial motion. View "Kluver, et al. v. SGJ Holdings, et al." on Justia Law

Two California hardware stores (Craftwood) are part of the Do It Best (DIB) hardware industry cooperative and wholesaler. Generac supplies goods to DIB for purchase by hardware retailers in the cooperative. Generac had an agreement with CMI, an independent sales and marketing representative, for assistance with promotion and marketing. CMI sent out faxes to DIB-member hardware stores advertising deals on Generac products, including three sent to Craftwood.The Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227, forbids using “any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement” except where the recipient gave “prior express invitation or permission.” Generac cited the agreement that Craftwood signed when it joined the DIB cooperative, which refers to the provision of advertising and includes Craftwood’s fax number. Craftwood also opted to purchase advertising materials to send to its customers.The district court granted Generac summary judgment, finding that the contract between Craftwood and DIB evinced an agreement by Craftwood to receive faxes, including from vendors. The Seventh Circuit reversed, finding a material dispute of fact as to consent. The court noted the need to enforce the Act as written, although fax machines are now rare, and the common view that these suits are fueled primarily by plaintiffs’ attorneys looking for large fee awards that often come at the expense of small businesses. View "Craftwood II, Inc. v. Generac Power Systems, Inc." on Justia Law

Maryville College leased a building to Ruby Tuesday, which used it for corporate retreats. In financial trouble years later, Ruby Tuesday decided to sell its interest in the lease. BNA, a real estate developer, and Ruby Tuesday signed an agreement. Ruby Tuesday had previously secured a loan from Goldman Sachs that prevented Ruby Tuesday from selling its interest in the lease without Goldman’s consent. The agreement with BNA stated that Ruby Tuesday “must obtain approval from [Goldman] for the transaction.” Goldman refused to approve. Goldman later acquired the lease, after Ruby Tuesday’s bankruptcy.BNA sued Goldman under Tennessee law for intentional interference with business relations (IIBR). The Sixth Circuit affirmed the dismissal of the suit. To establish a viable IIBR claim, BNA had to adequately plead an existing business relationship with Ruby Tuesday, Goldman’s knowledge of that relationship, Goldman’s intent to cause a breach or termination of the relationship, Goldman’s improper motive or improper means, and damages from the tortious interference. BNA’s pleading did not satisfy the tort’s fourth prong: improper motive or means. The court also noted the lack of an existing business relationship between BNA and Ruby Tuesday. View "BNA Associates LLC v. Goldman Sachs Specialty Lending Group, L.P." on Justia Law

Defendant appealed an order under Corporations Code section 7616 confirming the validity of an election removing the former board of the Lake Lindero Homeowners Association, Inc. (the Association) and electing a new board of directors. Defendant made two contentions: (1) the election was not valid because it contravened the Association’s bylaws and statutory provision governing board recall elections, and (2) section 7616 did not authorize Plaintiffs' action or the trial court’s order validating the recall election.   The Second Appellate District affirmed. The court held that the appeal is not moot: material questions remain regarding the construction of the bylaws and statutes governing the vote required to remove the association’s board of directors. Further, the court explained that the trial court correctly determined the former board was validly recalled under the Association’s bylaws and statutory law. The court explained that the trial court correctly recognized section 7616, subdivision (d) authorizes the court to “direct such other relief as may be just and proper” in connection with confirming the validity of a board election. Here, the complaint alleged Defendant, in his role as CEO and with the sanction of a majority of the former board, was engaged in frustrating the new board’s efforts to fulfill its duties under the Association’s bylaws. Having confirmed the validity of the new board’s election, the statute plainly authorized the trial court to enter an order confirming Defendant had no authority to act on behalf of the Association, as was “just and proper” under the Association’s bylaws. View "Lake Lindero Homeowners Assn., Inc. v. Barone" on Justia Law

In 2017, KP Engineering entered into a contract with Appellee to engineer and build a natural gas processing plant. KP Engineering hired Appellant as a subcontractor. Midway through the project, KP Engineering stopped paying its subcontractors, including Appellant, resulting in $2,329,830.86 in outstanding invoices. Appellee then ended its contract with KP Engineering but asked Appellant to stay on and complete the project. In exchange, Appellee promised that it would pay Appellant any unpaid invoices. Appellee paid nine of eleven outstanding invoices. Several weeks later, and after Appellant had substantially completed work on the project, Appellee informed Appellant that it would not pay the final two invoices.KP Engineering then filed for bankruptcy in 2019. Appellant filed an adversary proceeding against Appellee in KP Engineering’s bankruptcy proceeding, seeking to recover amounts for the unpaid invoices. The bankruptcy court dismissed Appellant's claim.On appeal, the Fifth Circuit affirmed, rejecting Appellant's quantum meruit claim, finding that it was barred by the existence of an express contract that covered the services at issue. The Fifth Circuit also rejected Appelant's unjust enrichment and breach of contract claims. View "Credos Industrial v. Targa Pipeline" on Justia Law

Liposomal bupivacaine is a nonopioid pain medication that Pacira manufactures under the name EXPAREL; it is a local anesthetic administered at the time of surgery to control post-surgical pain. As of 2020, EXPAREL sales represented nearly all of Pacira’s total revenue. Pacira complains that the defendants, the American Society of Anesthesiologists, its journal, its editor, and authors published statements in a variety of forms, conveying their view that EXPAREL is “not superior” to standard analgesics or provides “inferior” pain relief.The Third Circuit affirmed the dismissal of Pacira’s suit for trade libel. Opinion statements are generally nonactionable. A “fair and natural” reading of the statements at issue shows that these are nonactionable subjective expressions. Pacira’s allegations boil down to disagreements about the reliability of the methodology and data underlying the statements; “a scientific conclusion based on nonfraudulent data in an academic publication is not a ‘fact’ that can be proven false through litigation.” Pacira failed to identify any aspect of the Articles, a Continuing Medical Education program, or a Podcast that “bring their conclusions outside the protected realm of scientific opinion.” View "Pacira Biosciences Inc v. American Society of Anesthesiologists Inc" on Justia Law