Justia Business Law Opinion Summaries

The Supreme Court of North Carolina was required to decide whether a trial court can refuse to hear oral testimony during a summary judgment hearing on the mistaken belief that the North Carolina Rules of Civil Procedure prohibit the receipt of such testimony. The plaintiff, a corporation, had sued the defendants for breach of a commercial lease, and the defendants counterclaimed for fraud. During the summary judgment hearing, the trial court declined a request by the defendants to introduce live testimony, asserting that it was not permitted during a summary judgment hearing. The defendants appealed, and the Court of Appeals vacated the trial court's summary judgment order and remanded the case, leading to this appeal.The Supreme Court of North Carolina held that a trial court errs if it fails to exercise its discretion under the misapprehension that it has no such discretion, referring to Rule 43(e) of the North Carolina Rules of Civil Procedure that allows for the introduction of live oral testimony during a summary judgment hearing at the discretion of the trial court. The court found that the trial court was mistaken in its belief that it could not allow oral testimony, and this error warranted vacatur and remand for reconsideration. The Supreme Court thereby modified and affirmed the decision of the Court of Appeals to vacate the trial court's summary judgment order and remand the case. View "D.V. Shah Corp. v. VroomBrands, LLC" on Justia Law

In this case before the Court of Chancery of the State of Delaware, Plaintiff Kevin Brown, a former employee of Court Square Capital Management, L.P., sued the company for withholding his carried interest payments, alleging breach of contract. Court Square Capital Management counterclaimed, alleging that Brown had violated non-compete and confidentiality provisions in the company's LLC agreements. The issues in question were whether Brown's conduct in relation to two investment opportunities, Zodiac and Hayward, violated the non-compete provisions, and whether his conduct concerning certain internal memos breached the confidentiality provisions.The court found that Brown did not violate the non-compete provisions. Although the companies in question could be considered as "investment opportunities" as per the LLC agreement, Brown did not acquire any interest in these companies during the prohibited period, and his salary from his new employer, MSD, did not constitute an acquired interest.The court also found that Brown did not breach the confidentiality provisions. Court Square argued that Brown breached these provisions by requesting and receiving internal memos (HUMs) from his former colleague at Court Square. The court, however, found that the information in the HUMs was not confidential as it was widely circulated among private-equity firms and would have been easily accessible to anyone in Brown's position. Furthermore, Brown used these memos solely for formatting purposes and did not use the information for competitive purposes.The court therefore entered judgment in favor of Brown. View "Brown v. Court Square Capital Management, L.P." on Justia Law

In the state of Kansas, a number of non-profit groups, including the League of Women Voters of Kansas and the Kansas Appleseed Center for Law and Justice, challenged a law which made it a felony to engage in conduct that gives the appearance of being an election official or that would cause another person to believe a person is an election official. The non-profits argued that the law was overbroad and unconstitutionally vague, as it could criminalize their voter education and registration activities. They also claimed that the law violated their rights to free speech and association. The district court denied their request for a temporary injunction and the Court of Appeals dismissed the non-profits' claims for lack of standing, arguing that they were not at risk of prosecution under the statute. The Supreme Court of the State of Kansas reversed these decisions, finding that the non-profits did have standing to challenge the law. The Court held that when a law criminalizes speech and does not clearly demonstrate that only constitutionally unprotected speech is being criminalized, the law is unclear enough to confer pre-enforcement standing on a plaintiff challenging the law. The Supreme Court of the State of Kansas vacated the Court of Appeals' decision and remanded the case to the Court of Appeals for further proceedings. View "League of Women Voters of Kansas v. Schwab" on Justia Law

In this case, the Supreme Court of the State of Delaware reversed the decision of the Superior Court of the State of Delaware. The case centered around an insurance dispute involving Verizon Communications, Inc. and several of its insurers. The dispute arose after Verizon settled a lawsuit brought by a litigation trust, which was pursuing claims against Verizon arising out of a transaction Verizon had made with FairPoint Communications Inc. The litigation trust had alleged that Verizon made fraudulent transfers in the course of the transaction, which harmed FairPoint's creditors. After settling the lawsuit, Verizon sought coverage for the settlement payment and defense costs from its insurers.The insurers denied coverage, arguing that the litigation trust's claims did not qualify as a "Securities Claim" under the relevant insurance policies. The Superior Court disagreed, ruling that the litigation trust's claims were brought derivatively on behalf of FairPoint by a security holder of FairPoint, as required to qualify as a Securities Claim under the policies.The Supreme Court of Delaware reversed this decision, finding that the litigation trust's claims were direct, not derivative. The court reasoned that the trust's claims were brought on behalf of the creditors, not FairPoint or its subsidiary, and the relief sought would benefit the creditors, not the business entity. Therefore, the claims did not meet the definition of a Securities Claim under the insurance policies. Consequently, the Supreme Court held that the insurers were not obligated to cover Verizon's settlement payment and defense costs. View "In re Fairpoint Insurance Coverage Appeals" on Justia Law

The Supreme Court of Alabama has reversed an order by the Dale Circuit Court, which held Omni Healthcare Financial, LLC in contempt for failing to comply with a subpoena. This case arose from claims asserted by Amy Lee Walker against Eric Irvin Reese and SCP Distributors, LLC, following an automobile collision. Omni, a North Carolina-based factoring company, had purchased certain accounts receivable from a medical provider who had treated Walker. The accounts receivable are secured by an interest in any recovery that Walker obtains from her lawsuit against the defendants. The defendants had served a nonparty subpoena on Omni's registered agent in Alabama, seeking certain documents. Omni later responded with some documents but also asserted objections to the subpoena. The defendants then filed a motion asking the circuit court to hold Omni in contempt of court for failing to comply with the subpoena. The circuit court granted this motion, leading to Omni's appeal. The Supreme Court of Alabama found that the trial court erred by holding Omni in contempt, as the subpoena was invalid. It was determined that the subpoena seeking documents located in North Carolina needed to be issued by a North Carolina court and served in accordance with North Carolina law. As the defendants had not asked a North Carolina court to direct Omni to produce the documents, they had not complied with the requirements to hold Omni in contempt. The case was reversed and remanded for further proceedings. View "In re Omni Healthcare Financial, LLC" on Justia Law

In this case, a joint venture between Watershed Ventures, LLC and Patrick M. McGrath failed, leading to bankruptcy and litigation. McGrath and two investment vehicles he controlled sought coverage from Watershed's insurer, Scottsdale Insurance Company, under a directors and officers liability policy. Scottsdale denied coverage and sought a declaratory judgment as to its coverage obligations. McGrath countered with claims against Scottsdale and third-party claims against Watershed. The district court issued two summary judgment decisions. The first ruled that McGrath is an insured under the policy, while the second dismissed one of McGrath's counterclaims. The parties agreed to a "Stipulated Conditional Final Judgment Subject to Reservation of Rights of Appeal," which would become void if either of the district court’s two summary judgment rulings were partly vacated or reversed on appeal. The parties appealed, but the U.S. Court of Appeals for the Second Circuit dismissed both Scottsdale's appeal and McGrath's cross-appeal for lack of appellate jurisdiction, concluding that the Stipulated Conditional Final Judgment was not a "final decision" under 28 U.S.C. § 1291. The court reasoned that the Stipulated Conditional Final Judgment did not resolve all claims of all parties, was not entered under Federal Rule of Civil Procedure 54(b), and did not finally resolve whether Scottsdale breached its duty to defend under the policy. View "Scottsdale Ins. Co. v. McGrath" on Justia Law

The case involves the district attorneys of Los Angeles and San Francisco (the People) filing a complaint against the law firm Potter Handy, LLP and several of its attorneys (collectively, Potter) for violation of the Americans with Disabilities Act of 1990 (ADA). The People allege that Potter Handy has filed numerous ADA complaints containing false standing allegations as part of a scheme to extract settlements from small business owners in California. The People claim that this conduct constitutes an “unlawful” business practice under California's unfair competition law (UCL).Potter Handy demurred on the ground that the litigation privilege, which generally protects communications made as part of a judicial proceeding, immunizes their alleged conduct. The People argued that the litigation privilege does not bar their UCL claim as it is predicated on violations of a regulatory statute or rule that is itself exempt from the privilege. The trial court sustained Potter’s demurrer without leave to amend, and the People appealed.The Court of Appeal of the State of California, First Appellate District, Division Three, affirmed the trial court's decision. The court held that the litigation privilege does apply to the People's UCL claim. The court concluded that carving out an exception to the litigation privilege for the People’s UCL claim would not be proper because the Legislature’s prescribed remedies—prosecution directly under section 6128(a) and State Bar disciplinary proceedings—remain viable. View "People v. Potter Handy, LLP" on Justia Law

In this case between Norfolk Southern Railway Company and Zayo Group, LLC, the United States Court of Appeals for the Fourth Circuit affirmed the district court's judgment on the pleadings. The dispute arose from a lease agreement between the parties, in which Zayo leased a utility duct from Norfolk Southern. When the time came to renew the lease, the parties could not agree on the renewal rent and referred the dispute to three appraisers, as specified in the lease. The appraisers decided the rent by a two-to-one vote, but Zayo refused to pay the rent, arguing that the decision was not unanimous. Norfolk Southern sued for breach of the lease, and the district court entered judgment for Norfolk Southern, ordering Zayo to pay the rental amount determined by the appraisers. Zayo appealed, contending that the appraisers could determine the rent only by unanimous vote. The Fourth Circuit held that the lease's language was unambiguous and did not impose a unanimity requirement on the appraisers. Therefore, it found that Zayo breached the lease by refusing to pay the full amount determined by the appraisers. The court affirmed the district court's judgment, requiring Zayo to pay the rental amount determined by the appraisers. View "Norfolk Southern Railway Company v. Zayo Group, LLC" on Justia Law

The case involved a group of firearm and ammunition dealers and a business organization who appealed a decision by the United States District Court for the Northern District of New York. The appellants claimed that New York's commercial regulations on the sale of firearms and ammunition violated their customers' Second Amendment rights and that several provisions of New York law conflicted with federal law. Additionally, they claimed they lacked standing to challenge New York’s licensing scheme for semiautomatic rifles, its background-check requirement for ammunition purchases, and its firearm training requirement for concealed-carry licenses. The United States Court of Appeals for the Second Circuit affirmed the district court's decision, holding that the appellants failed to present evidence to support their claims. The court also affirmed that the appellants lacked standing to challenge the regulations as individuals. View "Gazzola v. Hochul" on Justia Law

In 2021, the Securities and Exchange Commission (SEC) sued Luis Jimenez Carrillo for securities violations he allegedly committed well after his divorce from Yolanda Sanchez-Diaz. Sanchez-Diaz was named as a relief defendant in the suit and the SEC sought to recover from her the value of a car she received four years earlier, claiming Carrillo paid for it with illicit funds. The SEC did not accuse Sanchez-Diaz of any wrongdoing but argued she had no legitimate claim to the car because she had not provided any consideration for it. The district court agreed and ordered her to pay almost $170,000, including interest.On appeal, the United States Court of Appeals for the First Circuit held that a relief defendant in an SEC enforcement action has a legitimate claim to funds if they have provided something of value in exchange and the value they provided is more than nominal in relation to the money received. In this case, the court concluded that through a 2016 child support agreement, Sanchez-Diaz provided more than nominal value in exchange for Carrillo's promise to purchase the car. The court found that the district court erred in its finding that Sanchez-Diaz provided no value at all. Accordingly, the Appeals Court reversed the district court's disgorgement order. View "SEC v. Sanchez Diaz Monge" on Justia Law