Justia Business Law Opinion Summaries

Walworth, a former stockholder, sued Mu Sigma, a privately held data analytics company, and Rajaram, the company’s founder, CEO, and board chairman, alleging that after reaping the benefits of Walworth’s $1.5 million investment and reputational capital, the defendants embarked on a fraudulent scheme to oust Walworth of its substantial ownership interest in the company.The Cook County circuit court dismissed the complaint, citing the stock repurchase agreement (SRA), which included anti-reliance and general release provisions. The appellate court reversed, holding that the anti-reliance language was ambiguous. The Illinois Supreme Court reinstated the dismissal, stating that “the broad and comprehensive release agreed to by [Walworth], a sophisticated party represented by experienced counsel, unambiguously encompasses” the unjust enrichment and breach of contract claims. The bargained-for anti-reliance provisions reflected the understanding that there may be undisclosed information but that Walworth was satisfied by the information provided. Walworth had direct access to Rajaram to negotiate the arm’s-length transaction at issue and Rajaram was not acting as a fiduciary for Walworth. A corporation owes no fiduciary duty to its shareholder and Delaware law does not impose “an affirmative fiduciary duty of disclosure for individual transactions.” View "Walworth Investments-LG, LLC v. Mu Sigma, Inc." on Justia Law

A Delaware superior court held that Plaintiffs-Appellees-Cross-Appellants, two doctors who started a laboratory testing enterprise known as Bako Diagnostics (“Bako”), breached certain restrictive covenants when they left Bako to form a new, competing laboratory enterprise. Despite fee-shifting provisions in certain of the contracts, the trial court declined to award attorneys’ fees. The Delaware Supreme Court agreed with the superior court’s determinations that the two doctors breached certain of the restrictive covenants. But because it appeared that the superior court may have misapplied the formula that both sides employed for calculating damages, the Court remanded the case for the trial court to clarify how it derived its damages award and for any needed revisions. Further, the Supreme Court disagreed that no attorneys’ fees were warranted under certain of the contracts. View "Bako Pathology LP v. Bakotic" on Justia Law

The Supreme Court answered a question of law certified by the district court in the negative, holding that two video streaming services - Netflix, Inc. and Hulu, LLC - did not provide "video service" within the meaning of Tenn. Code Ann. 7-59-303(19) and thus did not qualify as "video service providers" required to pay franchise fees to localities under section 7-59-303(20).The City of Knoxville brought this action asserting that Netflix and Hulu were required to pay franchise fees because they used public rights-of-way to provide video service. Specifically, Knoxville argued that Netflix and Hulu were "video service providers" as defined in the Competitive Cable and Video Services Act, Tenn. Code Ann. 7-59-301 to -318, and were thus required to apply for a franchise and pay franchise fees to Knoxville. The district court certified a question of law to the Supreme Court. The Supreme Court answered that Netflix and Hulu did not provide a "video service" within the meaning of section -303(19) and thus did not qualify as "video service providers" under section -303(20). View "City of Knoxville, Tenn. v. Netflix, Inc." on Justia Law

Huston, a Good Housekeeping magazine subscriber, filed a putative class action alleging that media conglomerate, Hearst, offered to sell and sold mailing lists containing her, and 9.1 million other subscribers’, identifying information. Huston sought statutory damages under the Illinois Right of Publicity Act (IRPA) and an injunction requiring Hearst to obtain prior written consent before selling its subscribers’ information.The district court dismissed. The Seventh Circuit affirmed. To establish an IRPA violation, the plaintiff must allege an appropriation of the plaintiff’s identity, without the plaintiff’s written consent, and for the defendant’s commercial purpose. IRPA prohibits the use or holding out of a person’s identifying information to offer to sell or sell a product, piece of merchandise, good, or service; it contemplates a use or holding out of an individual’s identity with the aim of effectuating a sale. Any use or holding out must either accompany an offer to sell or precede the sale, but it cannot follow the sale. Huston failed to allege that Hearst used or held out her identity to effectuate the sale of the mailing lists or her Good Housekeeping subscription. View "Huston v. Hearst Communications, Inc." on Justia Law

The Court of Chancery granted Plaintiff's motion for the issuance of a letter of request to obtain the assistance of the central authority in Switzerland to obtain electronic data that Swiss investigators seized from the law office of defendant Dieter Neupert while investigating whether Neupert falsified evidence in a Switzerland civil proceeding, holding that Plaintiff was entitled to relief.In granting the motion, the Court of Chancery held that Plaintiff showed that issuance of the letter of request was warranted. Specifically, the Court concluded that Plaintiff met her burden of convincing the issuing court to ask a foreign court for assistance by showing that the letter of request was targeted and appropriate, that it would be difficult to obtain the information through other means, that the crime/fraud exception to privilege issues applied, and that Neupert would not produce the discovery materials if he had them. View "In re Cote d'Azur Estate Corp." on Justia Law

The Court of Chancery granted Selling Stockholders' motion for partial judgment on the pleadings in this action brought after Corporation sold assets to Buyer and Buyer placed a portion of the consideration in escrow to fund any purchase price adjustment and to secure indemnification obligations, holding that there was no contractual basis for maintaining the funds in escrow.The asset purchase agreement in this case appointed Corporation's former CEO as the sellers' representative for purposes of making decisions about the escrowed funds, but the period for holding the escrowed funds had expired, and no claims against the escrowed funds remained outstanding. Selling Stockholders' filed this action against the former CEO asserting a series of claims designed to compel the release of the escrowed funds. The Court of Chancery granted relief, holding (1) the former CEO must exercise his discretionary authority over the release of the escrowed funds, but he must exercise that authority consistent with the implied covenant of good faith and fair dealing; and (2) the order implementing this ruling will provide for the release of funds from escrow on a date not earlier than sixty days after the judgment becomes final. View "American Healthcare Administrative Services, Inc. v. Aizen" on Justia Law

Appellants Bull Field, LLC, Barley, LLC and Colburn Hills Ranch, LLC (Appellants) appeal from a judgment denying their petition for a writ of mandate (Petition). Appellants sought an order compelling respondent Merced Irrigation District (District) to sell them surplus surface water for the 2019 water year. Appellants’ farmland is outside the District, but within the same groundwater basin as the District’s service area. The District authorized the sale of surplus water to out-of-district users for 2019 but denied Appellants’ application to purchase such water. The District claimed, and the trial court found, that the District’s general manager denied Appellants’ applications to purchase surplus surface water because the District had a history of difficult dealings with Appellants’ manager. Substantial evidence supports that finding.   The Second Appellate District affirmed, finding that District acted within its discretion in making its decision on this ground. The court explained that the court may not interfere with the District’s discretionary decision that denying Appellants’ applications to purchase surplus water was in its best interest. The court may not substitute its judgment for the District about how its interests would best be served. So long as the District actually exercised such discretion, this court may not issue a writ contravening the District’s decision. View "Bull Field, LLC v. Merced Irrigation Dist." on Justia Law

A transportation company, Wasatch Transportation, Inc., needed three buses to comply with a state contract. Compliance required "particularly durable buses" because the routes would exceed 350 miles in inclement weather with substantial changes in elevation. Wasatch bought Synergy buses from the manufacturer, Forest River, Inc., based on assurances from a Forest River sales personnel that the buses were “[q]uality buses” that Forest River “would take really good care of” and would “be amazing when they were done.” For each bus, Forest River provided a warranty packet containing three limitations: (1) the warranty covered only repair costs; (2) the warranty was exclusive, taking the place of other possible warranties; and (3) the warranty provided the buyer’s only remedy for defects under any legal theory. After the purchase, the buses developed mechanical problems. Even after the bus was repaired, it continued to break down. Another bus broke down soon after the purchase and was usable only a third of the next year. Given the breakdowns, Wasatch allegedly had to buy another bus to comply with the state contract; but the state cancelled the contract anyway. Wasatch thereafter sued Forest River for: breach of an express warranty; breach of an implied warranty of fitness for a particular purpose; and fraud. The district court granted summary judgment to Forest River, reasoning that its warranty packet prevented any relief. The Tenth Circuit Court of Appeals determined there were genuine issues of material fact to preclude the district court's grant of summary judgment. That judgment was reversed and the matter remanded for further proceedings. View "Wasatch Transportation v. Forest River" on Justia Law

The issue presented in this case before the Vermont Supreme Court stemmed from a dispute between former business partners and the turnover of records pursuant to a stipulated judgment entered following the dissolution of their business relationship. Plaintiff filed a complaint seeking to enforce the judgment’s record turnover requirement, and pled various causes of action for injuries arising out of defendant’s refusal to turn the records over immediately after the judgment. The trial court dismissed the related claims as time-barred, and ultimately adjudicated the enforcement claim on the merits in favor of defendant. The Vermont affirmed the trial court in all but one aspect: because the Supreme Court came to a different conclusion on whether certain types of documents were subject to the stipulated judgment’s turnover requirement, the Supreme Court remanded for the trial court to amend its judgment. View "Sutton v. Purzycki" on Justia Law

Caudill's subsidiary develops nutritional supplements. Jarrow, a dietary-supplement company, solicited Ashurst, Caudill’s Director of Research, who had extensively researched the development of broccoli-seed derivatives at issue. Ashurst had signed Non-Disclosure, Non-Competition, and Secrecy Agreements, and annually signed Caudill’s employee handbook, which barred him from disclosing Caudill’s trade secrets or other confidential information. In April 2011, Ashurst, still a Caudill employee, emailed Jarrow confidential Caudill documents. Days later, Jarrow requested a file of the pertinent data. Ashurst sent a physical disc. On May 1, Ashurst began to work for Jarrow. Ashurst then submitted his resignation to Caudill. Ashurst’s Agreement with Jarrow indicated that Jarrow hired him to mimic his work for Caudill, Ashurst proposed that Jarrow adopt the process that Caudill used to manufacture the raw materials for its BroccoMax supplement. Jarrow brought an activated broccoli product into commercial production four months after hiring Ashurst. From 2012-2019, Jarrow earned $7.5 million in sales of their BroccoMax-type product.In a suit under the Kentucky Uniform Trade Secrets Act, the Sixth Circuit affirmed a judgment of $2,427,605 in damages awarded by the jury, $1,000,000 in exemplary damages, $3,254,303.50 in attorney fees, and $69,871.82 in costs against Jarrow. The court rejected arguments that Caudill failed to define one of its Trade Secrets adequately, failed to show that Jarrow acquired that Trade Secret; and did not introduce sufficient evidence attributing its damages to that misappropriation, as well as challenges to the awards of damages. View "Caudill Seed & Warehouse Co. Inc. v. Jarrow Formulas, Inc." on Justia Law