Justia Commercial Law Opinion Summaries
Rexing Quality Eggs v. Rembrandt Enterprises, Inc.
Rexing sought a ruling that Rexing was excused from its obligations to purchase eggs under its contract with Rembrandt. Rembrandt filed a counterclaim seeking damages for Rexing’s repudiation of the contract, attorneys’ fees, and interest. Following discovery, the district court granted Rembrandt summary judgment on liability but concluded that there were genuine issues of triable fact as to damages. A jury awarded Rembrandt $1,268,481 for losses on eggs it had resold and another $193,752 for losses on eggs that it was not able to resell. The court determined that the interest term in the parties’ agreement was usurious, so that Rembrandt was not entitled to contractual interest or attorneys’ fees.The Seventh Circuit affirmed the damages award. The district court properly concluded that the resale remedy under Iowa’s version of the Uniform Commercial Code, Iowa Code 554.2706, was the appropriate mechanism for calculating Rembrandt’s damages and Rexing waived its arguments challenging the award by not presenting them to the district court in a post-verdict motion. Reversing in part, the court held that the parties’ agreement fell within the “Business Credit Exception” to Iowa’s usury statute, Iowa Code 535.5(2)(a)(5), and remanded the denial of Rembrandt’s request for interest and fees. View "Rexing Quality Eggs v. Rembrandt Enterprises, Inc." on Justia Law
Massachusetts Port Authority v. Turo Inc.
The Supreme Judicial Court affirmed the order of the superior court allowing Plaintiff's motion for a preliminary injunction but amended the first numbered paragraph of the order to affirmatively restrain only Turo Inc.'s conduct, holding that the preliminary injunction was properly granted.The Massachusetts Port Authority (Plaintiff) filed suit against Turo, RMG Motors LLC, and John Doe Nos. 1 through 100 (collectively, Defendants) in this dispute over the unregulated pick up and drop off of passengers at the Logan International Airport. At issue on appeal was the superior court judge's order granting a preliminary injunction in favor of Plaintiff that restricted Turo from conducting commercial activity at the airport without written permission from Plaintiff. The Supreme Judicial Court affirmed the order, holding that the judge did not err in issuing the preliminary injunction but that a modification of the terms of the injunction to comply with the requirements of the Communications Decency Act, 47 U.S.C. 230(c)(1) was required. View "Massachusetts Port Authority v. Turo Inc." on Justia Law
Next Technologies, Inc. v. Beyond the Office Door LLC
Next makes office equipment and refers potential customers to reviews that rate its products highly. Next's competitor, Beyond, published reviews critiquing Next’s standing desks. Instead of pursuing a claim under the Lanham Act, 15 U.S.C. 1125, Next sued in federal court under diversity jurisdiction, relying on Wisconsin’s common law of defamation. The district judge treated product reviews and political commentary as equivalent and cited the Constitution, holding that because Next is a “limited-purpose public figure”—made so by its own efforts to sell its wares—all criticism by a competitor is constitutionally protected unless the statements are knowingly false or made with reckless indifference to their truth. The court concluded that the standard was not met. The Seventh Circuit affirmed on other grounds, stating that it was “skeptical” about the trial court’s use of the Constitution. On the district court’s approach, few claims under the Lanham Act ever could succeed, and commercial advertising would be treated just like political campaigning. Next failed to state a claim under Wisconsin law. “Whatever one can say about whether both gray paint and polished metal should be called ‘silver,’ or whether two circuit boards are as good as one, these are not ‘false assertions of specific unfavorable facts.’” View "Next Technologies, Inc. v. Beyond the Office Door LLC" on Justia Law
Chen v. Paypal, Inc.
California residents who sell goods on eBay, an online marketplace, as part of their online businesses and use PayPal to receive payments for many of their sales filed a putative class action. The suit challenged provisions of the user agreements, including PayPal’s policy of placing a temporary hold on funds in a user’s account when PayPal believes there is a high level of risk associated with a transaction or a user’s account; PayPal’s retention of interest on users’ funds that are placed in pooled accounts when users maintain a balance in their PayPal accounts; PayPal’s buyer’s protection policy, which allows buyers, under certain circumstances, to dispute transactions up to 180 days after the date of purchase; and a claim that PayPal aids and abets buyers in defrauding sellers by the manner in which it resolves disputes. The court of appeal affirmed the dismissal of the claims against PayPal, without leave to amend. The challenged practices are not unconscionable. The degree of procedural unconscionability that arises from the fact that a contract is one of adhesion is ‘minimal.” View "Chen v. Paypal, Inc." on Justia Law
The Ohio State University v. Redbubble, Inc.
Redbubble operates a global online marketplace. Around 600,000 independent artists, not employed by Redbubble, upload images onto Redbubble’s interface. Consumers scroll through those images and order customized items. Once a consumer places an order, Redbubble notifies the artist and arranges the manufacturing and shipping of the product with independent third parties. Redbubble never takes title to any product shown on its website and does not design, manufacture, or handle these products. The shipped packages bear Redbubble's logo. Redbubble handles customer service, including returns. Redbubble markets goods listed on its website as Redbubble products; for instance, it provides instructions on how to care for “Redbubble garments.” Customers often receive goods from Redbubble’s marketplace in Redbubble packaging.Some of Redbubble’s artists uploaded trademark-infringing images that appeared on Redbubble’s website; consumers paid Redbubble to receive products bearing images trademarked by OSU. Redbubble’s user agreement states that trademark holders, and not Redbubble, bear the burden of monitoring and redressing trademark violations. Redbubble did not remove the offending products from its website. OSU sued, alleging trademark infringement, counterfeiting, and unfair competition under the Lanham Act, and Ohio’s right-of-publicity law. The district court granted Redbubble summary judgment. The Sixth Circuit reversed. Redbubble’s marketplace involves creating Redbubble products and garments that would not have existed but for Redbubble’s enterprise. The district court erred by entering summary judgment under an overly narrow reading of the Lanham Act. View "The Ohio State University v. Redbubble, Inc." on Justia Law
Subaru of America, Inc. v. Putnam Automotive, Inc.
Putnam purchased a service-only (satellite) Subaru facility in San Francisco. Putnam entered into a temporary “Dealer Candidate Satellite Service Facility Agreement.” Subaru and Putnam subsequently executed a Subaru Dealer Agreement for the sale and service of vehicles at a Burlingame dealership and a five-year (renewable) Satellite Service Facility Agreement, which contained an arbitration provision. In 2017, Subaru stated that it would not approve Putnam’s proposed relocation of the satellite facility and would not renew the Satellite Agreement in 2019. Putnam filed protests with the New Motor Vehicle Board. Subaru moved to compel arbitration.The trial court found that the Satellite Agreement did not come within the Motor Vehicle Franchise Contract Arbitration Fairness Act, an exception to the Federal Arbitration Act. Putnam was compelled to arbitrate claims arising from that agreement. The court denied Subaru’s request to compel Putnam to dismiss its Board protests, which were stayed pending arbitration. An arbitrator found that the Satellite Agreement was a franchise, that Subaru was required to show good cause, and that Subaru had established good cause for terminating the Satellite Agreement.The court of appeal affirmed the confirmation of the arbitration award, rejecting arguments that the arbitrator lacked jurisdiction to make a good cause determination; enforcement of the arbitration provision was illegal under the Vehicle Code; public policy underlying California’s New Motor Vehicle Board Act precluded the arbitrator from making a good cause determination; and that Putnam’s due process rights were violated when Subaru failed to provide the required notice of the reasons for termination. View "Subaru of America, Inc. v. Putnam Automotive, Inc." on Justia Law
Deutsche Bank Trust Co. v. U.S. Energy Development Corp.
Texas and Oklahoma oil and gas producers challenge the bankruptcy court's grant in part and denial in part of Deutsche Bank's motion for partial summary judgment in a lien priority dispute. The competing security interests arose out of proceeds from the sale of oil that debtor purchased from appellants before declaring bankruptcy.The Fifth Circuit affirmed the bankruptcy court's order, holding that the bankruptcy court did not err in holding that the warranty of title did not waive the Producers' rights to assert a lien under either Texas UCC 9.343 or the Oklahoma Lien Act; because the warranties did not waive Producers' claims to proceeds in the hands of debtor, the Bank's reliance is misplaced on cases where producers attempted to collect from purchasers downstream of the first purchasers; and following Fishback Nursery, Inc. v. PNC Bank, N.A., 920 F.3d 932, 939-40 (5th Cir. 2019), Delaware law governs the competing priorities under either Texas choice of law or the federal independent judgment test. The court affirmed the bankruptcy court's conclusion that the Bank's interests in the disputed collateral prime any interests held by the Texas Producers. Furthermore, the bankruptcy court correctly dismissed the Producers' affirmative defenses of estoppel, unclean hands, and waiver. View "Deutsche Bank Trust Co. v. U.S. Energy Development Corp." on Justia Law
EPLET, LLC v. DTE Pontiac North, LLC
In 2007, GM sold a power plant to DTEPN, which leased the land under the plant for 10 years. DTEPN agreed to sell utilities produced at the plant to GM, to maintain the plant according to specific criteria, and to address any environmental issues. DTEPN’s parent company, Energy, guaranteed DTEPN’s utility, environmental, and maintenance obligations. Two years later, GM filed for bankruptcy. GM and DTEPN agreed to GM’s rejection of the contracts. DTEPN exercised its right to continue occupying the property. An environmental trust (RACER) assumed ownership of some GM industrial property, including the DTEPN land. DTEPN remained in possession until the lease expired. RACER then discovered that DTEPN had allowed the power plant to fall into disrepair and contaminate the property.The district court dismissed the claims against Energy, reasoning that RACER’s allegations did not support piercing the corporate veil and Energy’s guaranty terminated after GM rejected the contracts in bankruptcy.The Sixth Circuit reversed. Michigan courts have held that a breach of contract can justify piercing a corporate veil if the corporate form has been abused. By allegedly directing its wholly-owned subsidiary to stop maintaining the property, Energy exercised control over DTEPN in a way that wronged RACER. DTEPN is now judgment-proof because it was not adequately capitalized by Energy. RACER would suffer an unjust loss if the corporate veil is not pierced. Rejection in bankruptcy does not terminate the contract; the contract is considered breached, 11 U.S.C. 365(g). The utility services agreement and the lease are not severable from each other. Energy guaranteed DTEPN’s obligations under the utility agreement concerning maintenance, environmental costs, and remediation, so Energy’s guaranty is joined to DTEPN’s section 365(h) election. View "EPLET, LLC v. DTE Pontiac North, LLC" on Justia Law
Crescent University City Venture, LLC v. Trussway Manufacturing, Inc.
The Supreme Court affirmed the order of the Business Court granting summary judgment in favor of Defendants, holding that the Business Court properly determined that North Carolina's economic loss rule requires negligence claims to be based upon the violation of an extra-contractual duty imposed by operation of law.At issue was whether a commercial property owner who contracts for the construction of a building may seek to recover in tort for its economic loss from a subcontracted manufacturer of building materials with whom the property owner does not have contractual privity. Applying the economic loss rule irrespective of the existence or lack of a contractual relationship between the property owner and the subcontracted manufacturer, the court dismissed Plaintiff's negligence claim with prejudice. The Supreme Court affirmed, holding that purely economic losses are not recoverable under tort law, particularly in the context of commercial transactions. View "Crescent University City Venture, LLC v. Trussway Manufacturing, Inc." on Justia Law
Bell v. Albertson Companies, Inc.
The defendants sell shaker tubes in grocery stores across the country, with labels advertising “100% Grated Parmesan Cheese.” The products are not 100 percent cheese but contain four to nine percent added cellulose powder and potassium sorbate, as indicated on the ingredient list on the back of the package. Plaintiffs claim that these ingredient lists show that the prominent “100%” labeling is deceptive under state consumer-protection laws. The Judicial Panel on Multidistrict Litigation transferred numerous similar actions to the Northern District of Illinois for consolidated pretrial proceedings. That court ultimately dismissed the plaintiffs’ deceptive labeling claims (100% claims) with prejudice.The Seventh Circuit reversed in part. Plaintiffs have plausibly alleged that the prominent “100%” labeling deceives a substantial portion of reasonable consumers, and their claims are not preempted by federal law. An accurate fine-print list of ingredients does not foreclose as a matter of law a claim that an ambiguous front label deceives reasonable consumers. Many reasonable consumers do not instinctively parse every front label or read every back label before purchasing groceries. For reasons specific to multidistrict litigation, the court concluded that it lacked appellate jurisdiction to review the dismissal of the 100% claims in two complaints because the appeals were filed too late. View "Bell v. Albertson Companies, Inc." on Justia Law