Justia Commercial Law Opinion Summaries

A nonprofit organization based in Washington, D.C. published articles critical of a technology company and its CEO, which led to corporations pulling their advertisements from the company’s platform, resulting in significant losses for the company. The technology company filed a lawsuit in the United States District Court for the Northern District of Texas, alleging interference with contract, business disparagement, and interference with prospective economic advantage under Texas law. The nonprofit and its employees sought dismissal for lack of personal jurisdiction, improper venue, and failure to state a claim. After this was denied, and following further discovery showing that affected advertisers were not based in Texas, the nonprofit moved to transfer the case to the Northern District of California, citing venue statutes and a forum-selection clause.The district court denied both the motion to dismiss and the motion to transfer venue, finding that the transfer request was untimely and that the evidence was insufficient to show the Texas venue was improper. It also expressed concerns about the nonprofit’s litigation conduct and considered possible sanctions. The nonprofit then petitioned for a writ of mandamus from the United States Court of Appeals for the Fifth Circuit, seeking to compel a venue transfer.The United States Court of Appeals for the Fifth Circuit granted the petition in part. It held that the district court erred by failing to consider the required eight public- and private-interest factors when analyzing the transfer motion under 28 U.S.C. §§ 1404(a) and 1406(a), instead focusing solely on the timeliness of the motion. The Court ordered the district court to vacate its denial of the transfer motion and conduct a new venue analysis consistent with appellate precedent. The nonprofit’s related interlocutory appeal was held in abeyance pending the outcome of the remand. View "In Re: Media Matters for America" on Justia Law

A Puerto Rican distributor of HVAC products brought suit against a Miami-based manufacturer after their commercial relationship deteriorated. The distributor alleged that the manufacturer’s actions impaired its distribution rights under Puerto Rico’s Dealer’s Act (Law 75). After the distributor dismissed claims against certain non-diverse defendants, the manufacturer removed the case to federal court and asserted a counterclaim alleging the distributor owed over $235,000, as well as seeking a declaratory judgment that it had just cause to terminate the relationship.The United States District Court for the District of Puerto Rico granted summary judgment to the manufacturer on the Law 75 claim, finding in its favor, and dismissed the manufacturer’s declaratory judgment counterclaim as unripe. The court denied summary judgment on the remaining damages counterclaim, finding material factual disputes and setting it for trial. The distributor sought entry of final judgment under Rule 54(b), which the court denied due to overlap between the claims. The distributor’s attempt to obtain appellate review via a petition under Rule 5 was also denied by the United States Court of Appeals for the First Circuit. Subsequently, the manufacturer moved to voluntarily dismiss its remaining counterclaim without prejudice. The district court granted that motion, dismissing the counterclaim without prejudice and denying the distributor’s requests for dismissal with prejudice or for attorney fees and costs. The court then entered judgment dismissing the distributor’s claims with prejudice and the manufacturer’s counterclaim without prejudice.On appeal, the United States Court of Appeals for the First Circuit determined that it lacked appellate jurisdiction. The court held that a voluntary dismissal without prejudice does not produce a final decision under 28 U.S.C. § 1291 when the dismissed claim could be revived in the same district court. Consequently, there was no final, appealable judgment, and the appeal was dismissed. View "Air-Con, Inc. v. Daikin Applied Latin America, LLC" on Justia Law

Merchants Bank of Indiana lent substantial amounts to two entities for the purchase of assisted living facilities in Arkansas and Tennessee. The loans were secured by mortgages on the properties as well as personal guaranties executed by three individuals. When the borrowers defaulted on the loans, Merchants initiated federal lawsuits against the guarantors to collect the outstanding debts and, after dismissing the borrowers from those suits, later began foreclosure actions on the mortgaged properties in state courts. Receivers were appointed for the properties, but Merchants had not recovered the loan amounts.After Merchants moved for summary judgment in the United States District Court for the Southern District of Indiana, the guarantors argued that Indiana’s “One Action” statute (Indiana Code § 32-30-10-10) barred simultaneous suits on the guaranties and foreclosures. The district court, acting on its own, granted summary judgment to the guarantors, finding that the statute applied to guaranties and rendered the waivers in the guaranty contracts unenforceable as contrary to Indiana public policy.On appeal, the United States Court of Appeals for the Seventh Circuit found that the scope of Indiana’s One Action statute and the enforceability of waivers in this context were unsettled under Indiana law. Recognizing the ambiguity and the lack of controlling precedent, the Seventh Circuit certified two questions to the Indiana Supreme Court: whether the statute prohibits a lender from foreclosing while simultaneously suing on guaranties in separate proceedings, and, if so, whether such protections may be waived by guarantors. The Seventh Circuit stayed further proceedings in the case pending the Indiana Supreme Court’s response. View "Merchants Bank of Indiana v. Craik" on Justia Law

A real estate investment trust issued shares governed by corporate charter documents that initially paid fixed dividends but were set to convert to floating rates tied to the London Inter-Bank Offered Rate (LIBOR). The charter provided three fallback options if LIBOR became unavailable. When LIBOR was discontinued, the company determined that the third fallback provision—a fixed rate based on the most recent dividend period—would apply. This decision was announced before the shares were set to convert to floating rates, leading to a decrease in the shares' market value.A shareholder filed a class action in the United States District Court for the Central District of California, alleging that the company’s failure to convert to SOFR-based floating rates, as selected by the Federal Reserve under the Adjustable Interest Rate (LIBOR) Act, violated California’s Unfair Competition Law (UCL). The shareholder claimed that a fixed rate could not serve as a valid “benchmark replacement” under the LIBOR Act. The company moved to dismiss, arguing that the fallback provision was a valid benchmark replacement, thus precluding a UCL claim. The district court denied the motion, finding ambiguity in the statute and relying on legislative history suggesting concern over fixed-rate conversions.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s order. The Ninth Circuit held that, under the plain text of the LIBOR Act, a “benchmark replacement” may include a fixed dividend rate as provided in the fallback provision, and there is no requirement that it be a floating rate. The court found the fallback provision to be a valid benchmark replacement and concluded that the company’s actions were not “unlawful” or “unfair” under the UCL. The case was remanded for further proceedings on any remaining issues. View "VERTHELYI V. PENNYMAC MORTGAGE INVESTMENT TRUST" on Justia Law

ThermoLife International, LLC and Muscle Beach Nutrition, LLC, companies involved in the distribution and licensing of dietary supplement ingredients, pursued false advertising and related claims under the Lanham Act against BPI Sports, LLC, a competitor in the sports nutrition market. ThermoLife had initiated an action against BPI in the District of Arizona in 2018, which was one of several similar lawsuits it filed against different distributors alleging nearly identical claims. These lawsuits were consistently dismissed for failure to allege competitive or commercial injury. Despite these outcomes, ThermoLife continued to assert similar claims against BPI, including filing a new action in the Southern District of Florida after voluntarily dismissing the Arizona case.Following the voluntary dismissal in Arizona and the subsequent refiling in Florida, the Florida court transferred the new case back to Arizona at BPI’s request. The United States District Court for the District of Arizona then dismissed ThermoLife’s claims with prejudice for the same deficiencies previously identified. ThermoLife appealed, but the United States Court of Appeals for the Ninth Circuit affirmed the dismissal on the merits, finding a lack of direct competition and competitive injury.After prevailing, BPI sought attorney’s fees for both the 2018 and 2020 litigations. The United States District Court for the District of Arizona awarded BPI attorney’s fees, finding the case “exceptional” under the Lanham Act due to ThermoLife’s pattern of vexatious litigation and forum shopping. The court also awarded attorney’s fees as “costs” under Federal Rule of Civil Procedure 41(d), reasoning that the Lanham Act allows such awards. On appeal, the United States Court of Appeals for the Ninth Circuit affirmed both the exceptional case finding and the availability of attorney’s fees under Rule 41(d) when the underlying statute provides for such fees, but remanded solely to correct a computational error in the fee calculation. View "THERMOLIFE INTERNATIONAL, LLC V. BPI SPORTS, LLC" on Justia Law

In this case, the plaintiff alleged that he was sexually assaulted by a Catholic priest in 1968, when he was nine years old and attended St. Mary’s Catholic School and Church in Moscow, Idaho, which are part of the Roman Catholic Diocese of Boise. The priest, who died in 1993, allegedly abused the plaintiff while babysitting him at the plaintiff’s home. The plaintiff did not disclose the abuse for over fifty years, first telling his therapist in 2019. In 2021, he filed suit against the Diocese and St. Mary’s, asserting a claim for constructive fraud. He alleged that the Diocese presented priests as trustworthy spiritual authorities while concealing known dangers of pedophilic priests, which he claimed created a power dynamic that enabled the abuse.The case was heard in the District Court of the Second Judicial District of Idaho, Latah County. The Diocese denied the allegations and moved for summary judgment, arguing that the plaintiff could not establish the elements of constructive fraud. The district court granted summary judgment to the Diocese, finding that the plaintiff had not shown a relationship of trust and confidence beyond that of a general parishioner and that a finding to the contrary would require improper inquiry into church doctrine. The district court also held that there was no evidence the Diocese had knowledge of the priest’s alleged misconduct or of pedophilic priests in the Diocese at the relevant time.On appeal, the Supreme Court of the State of Idaho affirmed the district court’s decision. The Idaho Supreme Court held that the plaintiff failed to establish a relationship of trust and confidence necessary for a constructive fraud claim and that there was no evidence the Diocese made a false representation or omission regarding known dangers. The court found summary judgment appropriate and did not reach constitutional or alternative grounds raised below. View "LERIGET v. THE ROMAN CATHOLIC DIOCESE OF BOISE" on Justia Law

Two competing companies in the athleticwear market, both producing bioceramic materials embedded in textiles, became involved in litigation over allegedly false advertising. One company, after settling the initial lawsuit by agreeing to pay $2.5 million and refrain from claiming FDA approval or health benefits for its product, filed for bankruptcy before completing the settlement payments. The plaintiff then brought a new action against the CEO of the defendant company, alleging both tortious interference with the settlement agreement and false advertising in violation of the Lanham Act, asserting that the defendant continued to falsely represent the product's health benefits and FDA approval.The United States District Court for the Central District of California presided over a jury trial. The jury found in favor of the plaintiff on the Lanham Act claim and awarded nominal damages. On post-trial motions, the district court granted judgment as a matter of law for the plaintiff on the tortious interference claim, awarded $2.5 million in damages, and further awarded the plaintiff disgorgement of the CEO’s salary (trebled) as "profits" under the Lanham Act, in addition to nearly $600,000 in attorneys’ fees.Upon appeal, the United States Court of Appeals for the Ninth Circuit reviewed the district court’s rulings. The Ninth Circuit held that, under California law, a corporate officer acting within the scope of agency and not at the expense of the corporation is immune from tortious interference claims, and reversed the district court’s denial of immunity and its tortious interference damages award. The court also reversed the district court’s disgorgement award, concluding that the CEO’s salary was not equivalent to profits under the Lanham Act. However, the Ninth Circuit affirmed the award of attorneys’ fees, finding no abuse of discretion in the district court’s determination that the case was “exceptional.” The case was remanded for further proceedings. View "MULTIPLE ENERGY TECHNOLOGIES, LLC V. CASDEN" on Justia Law

Buyers of over-the-counter nasal decongestants containing oral phenylephrine brought numerous class actions against drug manufacturers and retailers, alleging that for years these companies sold and advertised decongestant products they knew to be ineffective. The plaintiffs claimed that scientific studies, particularly since 2016, had shown oral phenylephrine to be no better than a placebo at relieving congestion, yet the companies continued to market their products as effective decongestants and complied with Food and Drug Administration (FDA) labeling requirements. The FDA, despite mounting evidence, did not remove oral phenylephrine’s designation as an effective decongestant under its regulations.The Judicial Panel on Multidistrict Litigation consolidated nearly one hundred class actions and transferred them to the United States District Court for the Eastern District of New York. Plaintiffs filed a complaint asserting New York statutory and common-law claims as well as a federal RICO claim. The district court granted the defendants’ motion to dismiss, holding that the Federal Food, Drug, and Cosmetic Act (FDCA) expressly preempted the state law claims because the drugs’ labels complied with FDA requirements, and that the plaintiffs lacked standing to bring the RICO claim. The court also dismissed a Lanham Act claim brought by one pharmacy plaintiff.On appeal, the United States Court of Appeals for the Second Circuit held that the FDCA expressly preempts most of the state law claims because the federal regime requires manufacturers to follow the FDA-approved labeling, but it vacated the dismissal for claims regarding “Maximum Strength” labeling and brand-name drugs approved via the New Drug Application process, remanding those for further proceedings. The court affirmed dismissal of the RICO claim, adopting the indirect purchaser rule, and upheld denial of the pharmacy’s motion for reconsideration regarding its Lanham Act claim. View "Yousefzadeh v. Johnson & Johnson Consumer Inc." on Justia Law

In the aftermath of the 2008 housing crisis, Congress created the Federal Housing Finance Agency (FHFA) and authorized it to place Fannie Mae and Freddie Mac into conservatorship. The FHFA and the U.S. Treasury entered into agreements whereby the Treasury would provide capital to these companies, initially in exchange for fixed-rate dividends. In 2012, these agreements were amended so that Fannie and Freddie were required to pay the Treasury dividends equal to their net worth above a specified reserve, a change known as the “Net Worth Sweep.” The announcement of this amendment caused the value of Fannie and Freddie shares to drop significantly, and shareholders, including those holding both common and junior preferred shares, filed suit alleging various statutory and contract violations.The United States District Court for the District of Columbia initially dismissed most claims, but after appellate review and remand, permitted the shareholders’ implied covenant of good faith and fair dealing claim to proceed to trial. The jury found the FHFA had violated this implied covenant by adopting the Net Worth Sweep, awarding over $612 million in damages, which the district court increased to $812 million with prejudgment interest. The district court denied the FHFA’s post-trial motions and rejected shareholders’ attempts to seek restitution or reliance damages beyond expectation damages.The United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s judgment. The Court of Appeals held that the implied covenant claim was not foreclosed by Supreme Court precedent or by the Housing and Economic Recovery Act, that the claim was available against the FHFA as conservator, and that the Net Worth Sweep violated the reasonable expectations of shareholders. The court also determined that post-Net Worth Sweep purchasers of shares could pursue the claim, and that the denial of restitution and reliance damages was proper. Accordingly, the award of expectation damages was affirmed. View "Fairholme Funds, Inc v. FHFA" on Justia Law

In this dispute, an Argentine construction company issued dollar-denominated convertible debt notes to two trusts as part of a capital-raising effort. The parties entered into an indenture agreement, later amended in December 2019, which authorized the company’s Board of Directors to convert the notes into equity if certain financial thresholds were met. Section 1301 of the indenture vested the Board with authority to determine if these conditions were satisfied, provided their determination was free from “manifest error.” In 2020, the Board concluded that the threshold for conversion had been reached, relying on the company’s increased net equity following the issuance of new preferred shares. The trusts disagreed, contending the Board’s calculation was manifestly erroneous and that the actual value of equity sold did not meet the $100 million threshold required by the indenture.The United States District Court for the Southern District of New York presided over a bench trial. The court dismissed the trusts’ claims regarding improper amendment and bad faith, focusing solely on the manifest error claim. After reviewing the evidence, the District Court concluded that the Board had manifestly erred by using metrics not contemplated by the indenture—specifically, shareholder equity changes and liquidation preferences—rather than the actual value of shares sold. The court found that the threshold for mandatory conversion had not been met, and GCDI breached the agreement by ceasing interest payments on the notes.The United States Court of Appeals for the Second Circuit reviewed the District Court’s factual findings for clear error and its legal conclusions de novo. The Second Circuit affirmed the District Court’s judgment, holding that the Board’s determination constituted a manifest error under New York law because it failed to value the equity sold as required by the indenture’s plain terms. The judgment awarding damages to the trusts was affirmed. View "Tennenbaum Living Tr. v. GCDI S.A." on Justia Law