Justia Commercial Law Opinion Summaries

In 2010, BRC and Continental entered into a five‐year agreement. Continental was to sell to BRC approximately 1.8 million pounds of prime carbon black, annually, in approximately equal monthly quantities, with baseline prices for three grades, including N762, “to remain firm throughout the term.” Continental could meet any better offers that BRC received. Shipments continued regularly until March 2011, when demand began to exceed Continental’s production ability. Continental notified its buyers that N762 would be unavailable in May. BRC nonetheless placed an order. The parties dispute the nature of subsequent communications. Continental neither confirmed BRC’s order nor shipped N762. BRC demanded immediate shipment. Continental responded that it did “not have N762 available.” BRC purchased some N762 from another supplier at a higher price. Days later, Continental offered to ship N762 at price increases, which BRC refused to pay. After discussions, Continental sent an email stating that Continental would continue "shipping timely at the contract prices, and would not cut off supply” and would “ship one car next week.” Continental emphasized that the Agreement required it to supply about 150,000 pounds per month and that it already had shipped approximately 300,000 pounds per month. Continental shipped one railcar. Within a week, Continental emailed BRC seeking to increase the baseline prices and to accelerate payment terms.BRC sued, seeking its costs in purchasing from another supplier following Continental’s alleged repudiation. The Seventh Circuit rejected the characterization of the agreement as a requirements contract. On remand, BRC, without amending its complaint, pursued the alternative theory that the agreement is for a fixed-amount supply. The Seventh Circuit reversed summary judgment and remanded, finding the agreement, supported by mutuality and consideration, enforceable. The agreement imposed sufficiently definite obligations on both parties and was not an unenforceable "buyer's option." BRC can proceed in characterizing the contract as for a fixed amount. BRC altered only its legal characterization; its factual theory remained constant and Continental is not prejudiced by the change. View "BRC Rubber & Plastics, Inc. v. Continental Carbon Co." on Justia Law

The Amex credit card companies use a two-sided transaction platform to serve cardholders and merchants. Unlike traditional markets, two-sided platforms exhibit “indirect network effects,” because the value of the platform to one group depends on how many members of another group participate. Two-sided platforms must take these effects into account before making a change in price on either side, or they risk creating a feedback loop of declining demand. Visa and MasterCard have structural advantages over Amex. Amex focuses on cardholder spending rather than cardholder lending. To encourage cardholder spending, Amex provides better rewards than the other credit-card companies. Amex continually invests in its cardholder rewards program and must charge merchants higher fees than its rivals. To avoid higher fees, merchants sometimes attempt to dissuade cardholders from using Amex cards (steering). Amex places anti-steering provisions in its contracts with merchants.The Supreme Court affirmed the Second Circuit in rejecting claims that Amex violated section 1 of the Sherman Antitrust Act, which prohibits "unreasonable restraints” of trade. Applying the "rule of reason" three-step burden-shifting framework, the Court concluded the plaintiffs did not establish that Amex’s anti-steering provisions have a substantial anticompetitive effect that harms consumers in the relevant market. Evidence of a price increase on one side of a two-sided transaction platform cannot, by itself, demonstrate an anticompetitive exercise of market power; plaintiffs must prove that Amex’s anti-steering provisions increased the cost of credit-card transactions above a competitive level, reduced the number of credit-card transactions, or otherwise stifled competition. They offered no evidence that the price of credit-card transactions was higher than the price one would expect in a competitive market. Amex’s increased merchant fees reflect increases in the value of its services and the cost of its transactions, not an ability to charge above a competitive price. The Court noted that Visa and MasterCard’s merchant fees have continued to increase, even where Amex is not accepted. The market actually experienced expanding output and improved quality. View "Ohio v. American Express Co." on Justia Law

Many states tax the retail sales of goods and services in the state. Sellers are required to collect and remit the tax; if they do not in-state consumers are responsible for paying a use tax at the same rate. Under earlier Supreme Court decisions, states could not require a business that had no physical presence in the state to collect its sales tax. Consumer compliance rates are low; it is estimated that South Dakota lost $48-$58 million annually. South Dakota enacted a law requiring out-of-state sellers to collect and remit sales tax, covering only sellers that annually deliver more than $100,000 of goods or services into the state or engage in 200 or more separate transactions for the delivery of goods or services into the state. State courts found the Act unconstitutional. The Supreme Court vacated, overruling the physical presence rule established by its decisions in Quill (1992), and National Bellas Hess (1967). That rule gave out-of-state sellers an advantage and each year becomes further removed from economic reality and results in significant revenue losses to the states. A business need not have a physical presence in a state to satisfy the demands of due process. The Commerce Clause requires “a sensitive, case-by-case analysis of purposes and effects,” to protect against any undue burden on interstate commerce, taking into consideration the small businesses, startups, or others who engage in commerce across state lines. Without the physical presence test, the first inquiry is whether the tax applies to an activity with a substantial nexus with the taxing state. Here, the nexus is sufficient. Any remaining Commerce Clause concerns may be addressed on remand. View "South Dakota v. Wayfair, Inc." on Justia Law

In 2003, Pain Center contracted with SSIMED for medical-billing software and related services. In 2006, the parties entered into another contract, for records-management software and related services. In 2013, Pain Center sued SSIMED for breach of contract, breach of warranty, breach of the implied duty of good faith, and four tort claims, all arising out of alleged shortcomings in SSIMED’s software and services. The district judge found the entire suit untimely. The Seventh Circuit affirmed on all but the claims for breach of contract. The judge applied the four-year statute of limitations under Indiana’s Uniform Commercial Code (UCC), holding that the two agreements are mixed contracts for goods and services, but the goods (i.e., the software) predominate. The Seventh Circuit disagreed. Under Indiana’s “predominant thrust” test for mixed contracts, the agreements in question fall on the “services” side of the line, so the UCC does not apply. The breach-of-contract claims are subject to Indiana’s 10-year statute of limitations for written contracts and are timely. Pain Center licensed SSIMED’s preexisting, standardized software but received monthly billing and IT services for the life of both contracts. View "Pain Center of SE Indiana, LLC v. Origin Healthcare Solutions LLC" on Justia Law

In this appeal, the issue before the Tenth Circuit Court of Appeals was whether the district court correctly held that ACE American Insurance Company (ACE) had no duty to defend and indemnify DISH Network (DISH) in a lawsuit alleging that DISH’s use of telemarketing phone calls violated various federal and state laws. The primary question centered on whether statutory damages and injunctive relief under the Telephone Consumer Protection Act were “damages” under the insurance policies at issue and insurable under Colorado law, or were uninsurable “penalties.” The Court concluded they were penalties under controlling Colorado law, and affirmed the district court’s grant of summary judgment in favor of ACE. View "ACE American Insurance Company v. Dish Network" on Justia Law

In this dispute between retailers and direct competitors in the gas station and convenience store market, the circuit court correctly determined that W. Va. Code 47-11A-6(a) does not include taxes in the calculation of a retailer’s cost under the West Virginia Unfair Practices Act.Plaintiff filed suit against Defendants alleging that Defendants had violated the Act by selling gasoline below cost. Both parties moved for summary judgment seeking a determination as to whether section 47-11A-6(a) includes taxes within the calculation of a retailer’s cost. The circuit court concluded that the calculation of a retailer’s cost does not include tax and awarded summary judgment to Defendants. The Supreme Court affirmed, holding that the statute does not include taxes in the calculation of a retailer’s cost. View "Alan Enterprizes LLC v. Mac's Convenience Stores LLC" on Justia Law

The Supreme Court reversed in part the circuit court’s judgment in favor of Sun Aviation, Inc. on the complaint filed by L-3 Communications Avionics Systems, Inc. for violations of various provisions of the Merchandising Practices Act, Mo. Rev. Stat. 407.010 et seq. When L-3’s parent company underwent a consolidation process, the parent decided to terminate L-3’s distributorship with Sun, and directed L-3 to do so. Sun then filed an action against L-3. The court held (1) L-3’s gyros and power supplies did not fit the definition of “industrial, maintenance and construction power equipment” as applicable in the Industrial Maintenance and Construction Power Equipment Act and the Inventory Repurchase Act; (2) the circuit court erred in entering judgment in favor of Sun on L-3’s fraudulent concealment claim because the circuit court erred in determining that L-3 had a duty to disclose its parent company’s consolidation plans; and (3) the circuit court erred in awarding eighteen years of lost profits as damages on the count alleging violations of the Franchise Act. The court remanded the case for a new trial on damages and affirmed the judgment in all other respects. View "Sun Aviation, Inc. v. L-3 Communications Avionics Systems, Inc." on Justia Law

If a municipality imposes a sales tax, the State Board of Equalization (now the California Department of Tax and Fee Administration) has the authority to collect and then remit the tax back to the municipality under the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; 7200 et seq.). The Board is authorized to determine where sales of personal property occur and to designate the municipality that will receive the local sales tax it collects. After an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Fontana and Lathrop, where the seller had warehouses, would be “reallocated” to Ontario, the site of the seller’s new marketing operation. The trial court set aside that decision. The court of appeal reversed, finding that the Board’s decision was supported by substantial evidence. The manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. Customers believed they were ordering goods from the Ontario facility, which became the retailer when it purchased goods for shipment to customers. View "City of Fontana v. California Department of Tax and Fee Administration" on Justia Law

In 2004, Baker Lofts purchased an abandoned building for renovation. Loans of more than $5 million from Huntington were secured by two mortgages on the building and by personal property, including a tax-increment-financing agreement, rental income, and Baker’s liquor license. Baker defaulted in 2011. Huntington assigned the 2005 mortgage to its subsidiary, Fourteen, which foreclosed by public auction. The Notice stated that “[t]he balance owing on the Mortgage is $5,254,435.04,” but did not mention the senior 2004 mortgage, which Huntington retained. Fourteen, the only bidder, purchased the property for $1,856,250. Huntington released the 2004 mortgage. Fourteen sold the property for $2,355,000. Huntington thought that Baker still owed $3.5 million and invoked its security interests in the remaining collateral. At a public sale, Huntington bought the rights to Baker's tax-increment-financing agreement for $1,107,000; began collecting rents; and asserted its security interest in the liquor license, which Baker had sold before it declared bankruptcy. Assignees of Baker's legal claims sought a declaratory judgment that the sale of the building extinguished all of Baker’s debt. They also raised conversion and tortious interference claims and a claim under Michigan’s secured transactions statute. The Sixth CIrcuit affirmed Huntington's judgment. The district court correctly concluded that Baker’s debt exceeded the value of the foreclosed building and that excess permitted Huntington to take possession of the other property securing its loans. View "DAGS II, LLC v. Huntington National Bank" on Justia Law

SemGroup purchased oil from producers and resold it to downstream purchasers. It also traded financial options contracts for the right to buy or sell oil at a fixed price on a future date. At the end of the fiscal year preceding bankruptcy, SemGroup’s revenues were $13.2 billion. SemGroup’s operating companies purchased oil from thousands of wells in several states and from thousands of oil producers, including from Appellants, producers in Texas, Kansas, and Oklahoma. The producers took no actions to protect themselves in case 11 of SemGroup’s insolvency. The downstream purchasers did; in the case of default, they could set off the amount they owed SemGroup for oil by the amount SemGroup would owe them for the value of the outstanding futures trades. When SemGroup filed for bankruptcy, the downstream purchasers were paid in full while the oil producers were paid only in part. The producers argued that local laws gave them automatically perfected security interests or trust rights in the oil that ended up in the hands of the downstream purchasers. The Third Circuit affirmed summary judgment in favor of the downstream purchasers; parties who took precautions against insolvency do not act as insurers to those who took none. View "In re: SemCrude LP" on Justia Law