Justia Commercial Law Opinion SummariesArticles Posted in Business Law
Turo v. Superior Court of the City and County of San Francisco
Turo, an Internet-based platform, allows vehicle owners to list, and customers to rent, specific passenger vehicles, processes reservations and payments and retains a percentage of the proceeds of each rental transaction. Turo provides a liability insurance policy through a third-party insurer. Turo competes with traditional on-airport and off-airport rental car companies and has used phrases like “rent” and “rental car” in its advertisements.The government sued Turo under the Unfair Competition Law (Bus. & Prof. Code 17200) for operating a rental car business at SFO without the required permit, engaging in prohibited curbside transactions at SFO, and using airport roadways and offering services on airport property without permission. Turo sought a declaratory judgment that it is not a rental car company and alleged that SFO had unlawfully demanded that Turo obtain an off-airport rental car company permit, and pay fees that SFO is authorized to charge only “rental car companies” under Government Code 50474.1(a).The court of appeal held that Turo is not a rental car company. That term is not defined in the Government Code but is defined in nearly identical language in three separate California statutes to mean a person or entity in the business of renting passenger vehicles to the public. A rental car company has control over the vehicles in its fleet in a way Turo does not View "Turo v. Superior Court of the City and County of San Francisco" on Justia Law
Fire Protection Service, Inc. v. Survitec Survival Products, Inc.
The Supreme Court held that the application the Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act, Tex. Bus. & Com. Code 57.001-.402, in this case did not violate the constitutional prohibition against retroactive laws in Tex. Const. art. I, 16.In the 1990s, Fire Protection Service, Inc. (FPS), orally agreed to be an authorized dealer and servicer of the life rafts manufactured by Survitec Survival Products, Inc. Nearly six years after the promulgation of the Act, which prohibits a supplier from terminating a dealer agreement without good cause, Survitec notified FPS that it was terminating their relationship. FPS sued for a violation of the Act. The district court entered judgment for Survitec. On appeal, the Fifth Circuit certified a question to the Supreme Court. The Supreme Court answered that the application of the Act to the parties' agreement does not violate the retroactivity clause in article I, section 16. View "Fire Protection Service, Inc. v. Survitec Survival Products, Inc." on Justia Law
NOCO Co. v. OJ Commerce, LLC
NOCO manufactures and sells battery chargers and related products. Although it sells these products itself, NOCO also authorizes resellers if they sign an agreement. NOCO discovered that OJC was selling NOCO’s products on Amazon without authorization. NOCO complained to Amazon that OJC was selling NOCO’s products in violation of Amazon’s policy. Around the same time, another company (Emson) also complained to Amazon about OJC. Amazon asked OJC for proof that it was complying with its policy concerning intellectual property rights. OJC did not provide adequate documents. Amazon temporarily deactivated OJC’s account.OJC claimed that NOCO submitted false complaints, and sued for defamation, tortious interference with a business relationship, and violation of the Ohio Deceptive Trade Practices Act. The Sixth Circuit affirmed the summary judgment rejection of OJC’s claims. To succeed on those claims, OJC must establish that NOCO was the proximate cause of its injury. It cannot do this because three intervening causes broke the causal chain, relieving NOCO of any liability: Emson’s complaint, Amazon’s independent investigation and decision, and OJC’s opportunity to prevent the harm to itself. View "NOCO Co. v. OJ Commerce, LLC" on Justia Law
Thornhill Motor Car, Inc. v. Honorable Miki Thompson
The Supreme Court granted a writ of prohibition sought by Thornhill Motor Care, Inc. to prevent the Circuit Court of Mingo County from enforcing its order denying Petitioner's motion to dismiss based on improper venue, holding that Thornhill established that it was entitled to the writ.Moore Chrysler, Inc. brought this action against Thornhill in Mingo County, alleging violations of W. Va. Code 17A-6A-1 to -18 and seeking declaratory and injunctive relief. Thornhill moved to dismiss the complaint pursuant to W. Va. R. Civ. P. 12(b)(3) on the basis of improper venue, asserting that the proper venue for this lawsuit was in Logan County pursuant to the general venue statute, W. Va. Code 56-1-1. The circuit court denied the motion, basing its ruling on a specific venue statute, W. Va. Code 17A-6A-12(3), which governs declaratory judgment actions brought by new motor vehicle dealers against manufacturers or distributors. Thornhill then sought the writ of prohibition at issue. The Supreme Court granted the writ, holding that the circuit court committed clear legal error in applying section 17A-6A-12(3) rather than section 56-1-1. View "Thornhill Motor Car, Inc. v. Honorable Miki Thompson" on Justia Law
Carpenters’ Pension Fund of IL v. Michael Neidorff
Following the merger of Centene Corporation ("Centene") and Health Net, Inc. ("Health Net)," certain shareholders of Centene (collectively, Plaintiffs) brought five claims on behalf of the corporation against certain of its former and then-current directors and officers and nominal defendant Centene (collectively, Defendants). Plaintiffs did not make a pre-suit demand on Centene's Board of Directors (the Board). The district court dismissed their complaint with prejudice, finding that the plaintiffs failed to plead particularized facts demonstrating that a demand would have been futile.The Eighth Circuit found that the plaintiffs failed to plead facts showing the relevant documents contained a material misrepresentation. Further, the court did not consider the second or third claims because the plaintiffs made no argument contesting the district court's finding that a majority of the Board faces a substantial likelihood of liability. Next, the circuit court held that the plaintiffs' futility argument was patently insufficient. Finally, the circuit court found that at least half of the Board does not face a substantial likelihood of liability under the plaintiffs' insider trading claim. As such, the circuit court found the same as to plaintiffs' unjust enrichment claim pertaining to alleged insider trading. The circuit court affirmed the district court's decisions. View "Carpenters' Pension Fund of IL v. Michael Neidorff" on Justia Law
Melendez v. Westlake Services, Inc.
Melendez purchased a used 2015 Toyota from Southgate under a retail installment sales contract. Southgate assigned the contract to Westlake. Weeks later, Melendez sent a notice alleging Southgate violated the Consumer Legal Remedies Act (CLRA) and demanded rescission, restitution, and an injunction. Melendez later sued Southgate and Westlake, alleging violations of the CLRA, the Song-Beverly Consumer Warranty Act, Civil Code 1632 (requiring translation of contracts negotiated primarily in Spanish), the unfair competition law, fraud, and negligent misrepresentation. Westlake assigned the contract back to Southgate. Default was entered against Southgate. Westlake agreed to pay $6,204.68 ($2,500 down payment and $3,704.68 Melendez paid in monthly payments). Melendez would have no further obligations under the contract.The parties agreed Melendez could seek attorney fees, costs, expenses, and prejudgment interest. Westlake was entitled to assert all available defenses, “including the defense that no fees at all should be awarded against it as a Holder” The FTC’s “holder rule” makes the holder of a consumer credit contract subject to all claims the debtor could assert against the seller of the goods or services but caps the debtor’s recovery from the holder to the amount paid by the debtor under the contract. The trial court awarded attorney fees ($115,987.50), prejudgment interest ($2,956.62), and costs ($14,295.63) jointly and severally against Westlake, Southgate, and other defendants. The court of appeal affirmed. The limitation does not preclude the recovery of attorney fees, costs, nonstatutory costs, or prejudgment interest. View "Melendez v. Westlake Services, Inc." on Justia Law
TitleMax of Delaware Inc v. Weissmann
TitleMax provides vehicle loans at interest rates as high as 180%. The entire process occurs at a TitleMax brick-and-mortar location. The borrower receives “a check drawn on a bank outside of Pennsylvania,” The borrower grants TitleMax a security interest in the vehicle. TitleMax records its lien with the appropriate state authority. Borrowers can make payments from their home states. TitleMax does not have any offices, employees, agents, or brick-and-mortar stores and is not licensed as a lender in Pennsylvania. TitleMax claims that it never solicited Pennsylvania business and does not run television ads within Pennsylvania.Pursuant to the Consumer Discount Company Act and the Loan Interest and Protection Law, Pennsylvania’s Department of Banking and Securities issued a subpoena requesting documents regarding TitleMax’s interactions with Pennsylvania residents. TitleMax then stopped making loans to Pennsylvania residents and asserts that it has lost revenue.The district court held that Younger abstention did not apply and that the Department’s subpoena’s effect was to apply Pennsylvania’s usury laws extraterritorially in violation of the Commerce Clause.The Third Circuit reversed. Applying the Pennsylvania statutes to TitleMax does not violate the extraterritoriality principle. TitleMax receives payments from within Pennsylvania and maintains an actionable security interest in vehicles located in Pennsylvania; its conduct is not “wholly outside” of Pennsylvania. The laws do not discriminate between in-staters and out-of-staters. Pennsylvania has a strong interest in prohibiting usury. Applying Pennsylvania’s usury laws to TitleMax’s loans furthers that interest and any resulting burden on interstate commerce is, at most, incidental. View "TitleMax of Delaware Inc v. Weissmann" on Justia Law
SodexoMAGIC LLC v. Drexel University
For 20 years, the vendor (SDM) provided food services at Drexel University in Philadelphia. In 2014 the university announced that it would competitively bid the contract for on-campus dining. The same vendor ultimately won that competition but about two years into the contract’s 10-year duration, the vendor sued the university for fraud, multiple breaches of contract, and alternatively for unjust enrichment. The university responded with fraud and breach-of-contract counterclaims. Only a few of the vendor’s breach-of-contract claims and portions of the university’s breach-of-contract claim survived summary judgment. The parties referred the remaining claims and counterclaims to arbitration and jointly moved to dismiss them. The district court granted that motion and entered final judgment, which the parties appealed, primarily to dispute the summary judgment ruling.The Third Circuit affirmed summary judgment in Drexel’s favor on SDM’s unjust enrichment and punitive damages claims, summary judgment in SDM’s favor on Drexel’s fraudulent inducement claim, and the district court’s decision to deny Drexel’s motion to strike declarations by SDM witnesses under the sham affidavit rule. The court vacated an order granting summary judgment to Drexel on SDM’s claims for fraudulent inducement, breach of contract for failure to renegotiate in good faith, and breach of a supplemental agreement for the Fall 2016 Semester. The surviving claims were remanded to the district court. View "SodexoMAGIC LLC v. Drexel University" on Justia Law
Long v. Piercy
Long and the Piercys operated a Tennessee quarry. Their agreement was silent as to whether their division of “profit” would be based on gross profit after payment of a royalty or net profit after payment of the royalty plus other costs. Based on the division of labor and respective contributions, Long believed that the four individuals should receive equal shares of the gross profit. When Long complained, the Piercys padlocked him off the property and threatened to call the sheriff, then stopped paying Long. A state court chancellor found that Long was entitled to the difference between what the Piercys had paid him and what Long should have received ($151,670.87) but rejected Long’s claim for lost anticipated profits, declining to find that the Piercys breached the partnership agreement but assessing costs against the Piercys.The Piercys sought Chapter 7 bankruptcy relief. Long initiated adversary proceedings, seeking a declaration that the judgment was nondischargeable under 11 U.S.C. 523(a)(4) for debts incurred by embezzlement, or through defalcation while acting in a fiduciary capacity. The Sixth Circuit reversed the bankruptcy court and district court. Long’s state-court judgment may be declared nondischargeable if Long can produce evidence of wrongful intent. The state-court judgment is unclear as to the basis for its relief and does not preclude a finding of fraud. Under the Tennessee Revised Uniform Partnership Act, partners owe each other fiduciary duties. View "Long v. Piercy" on Justia Law
Bacoka v. Best Buy Stores, L.P.
Plaintiffs alleged that they own an apartment complex and that their tenant purchased a washing machine from Best Buy, which was negligently installed. A resulting water leak resulted in significant damage to the property, rendering several units uninhabitable.Best Buy argued that its subsidiary had a contract with Penn Ridge, under which Penn Ridge “shall provide services . . . as a duly licensed broker of property by the U.S. Federal Motor Carrier Safety Administration … utilizing the services of independent motor carriers to effectuate the pick-up, delivery, and in-home installation of Merchandise” from Best Buy. Carriers are defined under the Agreement as “any independently owned and operated motor carrier under contract with [Penn Ridge] who may also provide Installation Services.” The carriers’ trucks did not display the Best Buy name or logo. Delivery teams did not wear any Best Buy branded clothing. The equipment used by the delivery teams varied among carriers. Penn Ridge alone determined if the carriers were qualified to provide necessary delivery and installation services. The contracts stated the carriers were providing services as independent contractors, Best Buy gave Penn Ridge access to its routing system and required that contractors comply with certain Best Buy policies and procedures.The court of appeal affirmed summary judgment in favor of Best Buy. There is no material dispute that the washing machine was installed by an independent contractor. View "Bacoka v. Best Buy Stores, L.P." on Justia Law