Justia Commercial Law Opinion Summaries

Fox used Amazon.com to order a hoverboard equipped with a battery pack. Although Fox claims she thought she was buying from Amazon, the hoverboard was owned and sold by a third-party that used Amazon marketplace, which handles communications with the buyer and processes payments. The board arrived in an Amazon-labeled box. The parties dispute whether Amazon provided storage and shipment. In November 2015, following news reports of hoverboard fires and explosions, Amazon began an investigation. On December 11, Amazon ceased all hoverboard sales worldwide. Approximately 250,000 hoverboards had been sold on its marketplace in the previous 30 days. Amazon anticipated more fires and explosions, scheduling employees to work on December 26, to monitor news reports and customer complaints. On December 12, Amazon sent a "non-alarmist" email to hoverboard purchasers. Fox does not recall receiving the email but testified that she would not have let the hoverboard remain in her home had she known all the facts. On January 9, Matthew Fox played with the hoverboard and left it on the first floor of the family’s two-story home. When a fire later broke out, caused by the hoverboard’s battery pack, two children were trapped on the second floor. Everyone escaped with various injuries; their home was destroyed.The Sixth Circuit affirmed the summary judgment rejection of allegations that Amazon sold the defective or unreasonably dangerous product (Tennessee Products Liability Act) and caused confusion about the source of that product (Tennessee Consumer Protection Act of 1977) but reversed a claim that Amazon breached a duty to warn about the defective or unreasonably dangerous nature of that product under Tennessee tort law. View "Fox v. Amazon.com, Inc." on Justia Law

The Supreme Court accepted two questions of Texas law certified to it from the United States Court of Appeals for the Fifth Circuit concerning the damages and attorney's fees available under the Texas Sales Representative Act, chapter 54 of the Business and Commerce Code, Tex. Bus. & Com. Code 54.001-.006. The Court answered (1) the time for determining the existence and amount of "unpaid commission due" under section 54.001(1) is the time of the jury or trial court determines the liability the defendant, whether at trial or through another dispositive trial-court process such as summary judgment; and (2) a plaintiff may recover attorney's fees and costs under section 54.004(2) even if the plaintiff does not receive treble damages if the fact-finder determines that the fees and costs were reasonably incurred under the circumstances. View "JCB, Inc. v. Horsburgh & Scott Co." on Justia Law

Apple sells iPhone applications (apps) directly to iPhone owners through its App Store—the only place where iPhone owners may lawfully buy apps. Most apps are created by independent developers under contracts with Apple. Apple charges the developers a $99 annual membership fee, allows them to set the retail price of the apps, and charges a 30% commission on every app sale. Four iPhone owners sued, alleging that Apple has unlawfully monopolized the aftermarket for iPhone apps. The Ninth Circuit reversed the dismissal of the suit concluding that the owners were direct purchasers under the Supreme Court’s “Illinois Brick” precedent.The Supreme Court affirmed. The Clayton Act provides that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue,” 15 U.S.C. 15(a), and readily covers consumers who purchase goods or services at higher-than-competitive prices from an allegedly monopolistic retailer. While indirect purchasers who are two or more steps removed from the violator in a distribution chain may not sue, the iPhone owners are not consumers at the bottom of a vertical distribution chain who are attempting to sue manufacturers at the top of the chain. The absence of an intermediary in the distribution chain between Apple and the consumer is dispositive. The Court rejected an argument that Illinois Brick allows consumers to sue only the party who sets the retail price. Apple’s interpretation would contradict the long-standing goal of effective private enforcement and consumer protection in antitrust cases. Illinois Brick is not a get-out-of-court-free card for monopolistic retailers any time that a damages calculation might be complicated. View "Apple, Inc. v. Pepper" on Justia Law

The Supreme Court affirmed in part and reversed in part the judgment of the intermediate court of appeals (ICA) partially vacating the circuit court's judgment entering judgment against Plaintiffs in this action alleging that Defendants intentionally misrepresented the value of a limousine service, holding that some of the rulings of the trial court in this complex commercial dispute involving the sale of the business were in error.The Lacy Parties represented Goran and Ana Maria Pleho in purchasing the business. The transaction was completed in the name of Goran PLeho LLC (GPLLC). After the purchase, the Plehos and GPLLC (collectively, Pleho Parties) sued, alleging that Lacy Parties intentionally misrepresented the value of the business. The Supreme Court (1) vacated the circuit court's dismissal of Pleho Parties' intentional infliction of emotional distress and negligent infliction of emotional distress claims and the court's grant of judgment as a matter of law in favor of Lacy Parties on GPLLC's fraud and punitive damages claims; (2) vacated the ICA's judgment to the extent that it vacated the circuit court's order denying Lacy Parties' motion in limine; and (3) vacated the ICA's judgment to the extent that it affirmed the grant of summary judgment in favor of Lacy Parties on the Pleho's unfair and deceptive trade practices claim. View "Goran Pleho, LLC v. Lacy" on Justia Law

Kreg, a medical-supply company, contracted with VitalGo, maker of the Total Lift Bed®, for exclusive distribution rights in several markets. A year and a half later, the arrangement soured. VitalGo told Kreg that it had not made the minimum‐purchase commitments required by the contract for Kreg to keep its exclusivity. Kreg thought VitalGo was wrong on the facts and the contract’s requirements. The district court ruled, on summary‐judgment that VitalGo breached the agreement. The damages issue went to a bench trial, despite a last-minute request from VitalGo to have it dismissed on pleading grounds. The court ordered VitalGo to pay Kreg about $1,000,000 in lost‐asset damages and prejudgment interest. The Seventh Circuit affirmed, upholding the district court’s rulings that the agreement allowed Kreg to make minimum-purchase commitments orally; that the minimum‐purchase commitment for the original territories was made in December 2010; that VitalGo breached the agreement by terminating exclusivity in June 2011 and by failing to deliver beds in September 2011; and concerning the foreseeability of damages. View "Kreg Therapeutics, Inc. v. VitalGo, Inc." on Justia Law

Total Wine challenged provisions of Connecticut’s Liquor Control Act and regulations as preempted by the Sherman Act, 15 U.S.C. 1. Connecticut’s “post and hold” provisions require state-licensed manufacturers, wholesalers, and out-of-state permittees to post a “bottle price” or “can price” and a “case price” each month with the Department of Consumer Protection for each alcoholic product that the wholesaler intends to sell during the following month; they may “amend” their posted prices to “match” competitors’ lower prices but are obligated to “hold” their prices at the posted price (amended or not) for a month. Connecticut’s minimum-retail-price provisions require that retailers sell to customers at or above a statutorily defined “[c]ost,” which is not defined as the retailer’s actual cost. The post-and-hold number supplies the central component of “[c]ost” and largely dictates the price at which Connecticut retailers must sell their alcoholic products. The Second Circuit affirmed dismissal of the complaint. Connecticut’s minimum-retail-price provisions, compelling only vertical pricing arrangements among private actors, are not preempted. The post-and-hold provisions were not preempted because they “do not compel any agreement” among wholesalers, but only individual action. The court also upheld a price discrimination prohibition as falling outside the scope of the Sherman Act. View "Connecticut Fine Wine and Spirits LLC v. Seagull" on Justia Law

ARC, a distributor of compressed gases, sold its assets to American. Because ARC leased asset cylinders to customers, it was not immediately able to identify the number of cylinders included in the purchase; the Agreement estimated 6,500 cylinders and provided that American would hold back $150,000 for 180 days to protect against a shortage of up to 1,200 cylinders, at $125 per cylinder. When American began billing the customers it acquired, it learned that many of them paid only to have cylinders refilled but did not pay rent on the cylinders they used. An audit revealed that ARC owned and transferred 4,663 asset cylinders--1,837 cylinders short of the 6,500 promised. In an ensuing breach of contract suit, ARC argued that American breached the contract because it did not complete its audit within the specified 180-day period. The district court disagreed, concluding that ARC extended that deadline and that, because only 4,663 cylinders were delivered, ARC was never entitled to receive any portion of the Cylinder Deferred Payment. The court granted American’s counterclaim for breach of contract, holding that American was entitled to the entire $150,000 and to recover $125 for each cylinder it failed to receive under the threshold of 5,300. The Seventh Circuit affirmed. Because ARC was not entitled to any of the Cylinder Deferred Payment in that it provided less than the 5,300 cylinders, it could not have been damaged by the delay in completing the audit. View "ARC Welding Supply, Co. Inc. v. American Welding & Gas, Inc." on Justia Law

1st Century was a Delaware corporation headquartered in Los Angeles; its shares were publicly traded on the NASDAQ. 1st Century and Midland announced merger plans. Midland was to acquire 1st Century for $11.22 in cash per share, a 36.3 percent premium over 1st Century’s closing share price on March 10, 2016. The merger was subject to approval by the holders of a majority of 1st Century’s outstanding shares. A shareholder vote on the proposed merger was scheduled. 1st Century’s certificate of incorporation authorized its directors “to adopt, alter, amend or repeal” the company’s bylaws, “subject to the power of the stockholders of the Corporation to alter or repeal any Bylaws whether adopted by them or otherwise.” 1st Century’s board of directors exercised that power when it approved the merger agreement, adding a forum selection bylaw providing that, absent the corporation’s written consent, Delaware is “the sole and exclusive forum for” intra-corporate disputes, including any action asserting a breach of fiduciary duty claim. The trial court stayed a putative shareholder class action, concluding that the bylaw’s forum selection clause was enforceable. The court of appeal affirmed, holding that a forum selection bylaw adopted by a Delaware corporation without stockholder consent is enforceable in California. View "Drulias v. 1st Century Bancshares, Inc." on Justia Law

Innovation sold 5-Hour Energy. In 2004, it contracted with CN to manufacture and package 5-Hour. Jones, CN's President and CEO, had previously manufactured an energy shot. When the business relationship ended, CN had extra ingredients and packaging, which Jones used to continue manufacturing 5-Hour, allegedly as mitigation of damages. The companies sued one another, asserting breach of contract, stolen trade secrets or intellectual property, and torts, then entered into the Settlement, which contains an admission that CN and Jones “wrongfully manufactured” 5-Hour products and forbids CN from manufacturing any new “Energy Liquid” that “contain[s] anything in the Choline Family.” CN received $1.85 million. CN was sold to a new corporation, NSL. Under the Purchase Agreement, NSL acquired CN's assets but is not “responsible for any liabilities ... obligations, or encumbrances” of CN except for bank debt. The Agreement includes one reference to the Settlement. NSL, with Jones representing himself as its President, took on CN’s orders and customers, selling energy shots containing substances listed in the Choline Family definition. Innovation sued. Innovation was awarded nominal damages for breach of contract. The Sixth Circuit affirmed the rejection of defendants’ antitrust counterclaim, that NSL is bound by the Settlement, and that reasonable royalty and disgorgement of profits are not appropriate measures of damages. Jones is not personally bound by the Agreement. Upon remand, Innovation may introduce testimony that uses market share to quantify its lost profits. The rule of reason provides the proper standard for evaluating the restrictive covenants; Defendants have the burden of showing an unreasonable restraint on trade. View "Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC" on Justia Law

NewSpin's “SwingSmart” product is a sensor module that attaches to sports equipment and analyzes the user’s swing technique, speed, and angle. Arrow representatives met with NewSpin several times in 2010-2011; NewSpin believed that Arrow knew how SwingSmart would function and understood its specifications. Arrow represented that Arrow had “successfully manufactured and provided substantially similar components for other customers.” NewSpin signed a contract with Arrow in August 2011. Arrow shipped some components to NewSpin in mid-2012. NewSpin alleges that those components were defective and did not conform to specifications. NewSpin used Arrow’s defective components to build 7,500 units; only 3,219 could be shipped to customers and, of those units, 697 were wholly inoperable. NewSpin paid Arrow $598,488 for these defective components and spent $200,000 for customer support efforts, testing, and repair, and that the defective components damaged its brand equity, reputation, and vendor relationships. The district court dismissed NewSpin’s January 2017 complaint as untimely, reasoning the Agreement was predominantly a contract for the sale of goods subject to the UCC’s four-year statute of limitations. The Seventh Circuit affirmed with respect to the contract-based claims and the unjust enrichment and negligent misrepresentation claims, which are duplicative of the contract claims. The court reversed the dismissal of fraud claims, applying Illinois’s five-year limitations period. As to procedural matters, the law of the forum controls over the contract's choice of law provision. View "NewSpin Sports, LLC v. Arrow Electronics, Inc." on Justia Law