Justia Commercial Law Opinion Summaries

Trostel was founded in 1858. By 2007 the founder's relations still owned about 11 percent of its stock. Smith, which owned the rest, decided to acquire remaining shares by freezeout merger. Trostel became Smith's wholly owned subsidiary. Notz, one of the Trostel great-grandchildren, who owned 5.5 percent of the stock, rejected proffered compensation of $11,900 per share (about $7.7 million). The rest of the outside investors accepted. In an appraisal action (Wis. Stat. 180.1330(1)), the district court denied Nost's motion to dismiss for lack of subject matter jurisdiction and concluded that fair value of the stock on the merger date was $11,900 per share. The Seventh Circuit affirmed. Wisconsin's corporate is legislative, not contractual and does not block corporations from availing themselves of diversity jurisdiction. View "Albert Trostel & Sons Co. v. Notz" on Justia Law

GMG contracted with Amicas to develop and license computer programs to accept information from a radiology patient management system established by Sage and send information to a billing system established by Sage. The warranty excluded any failure resulting from databases of GMG or third parties and warned that Amicas did not warrant that the software would meet GMG’s requirements. Amicas worked with Sage on the interfaces. GMG began using the programs and reported problems, eventually returning to its old method of manual processing, but did not inform Amicas of that decision or of persistent problems with the interface. GMG began negotiating with Sage to develop substitute software. When Amicas became aware of problems with the interface, it worked with Sage to resolve the concerns, but GMG sent Amicas a termination notice, citing failure to deliver a functional product. The district court found for Amicas on its breach of contract claim, rejected counterclaims, and awarded $778,889 in damages, $324,805 in attorneys’ fees, plus costs and interest. The Third Circuit affirmed, finding that Amicas satisfied its burden of proving performance and that GMG offered only conclusory allegations of noncompliance. View "Amicas, Inc. v. GMG Health Sys., LTD." on Justia Law

Ford provides a warranty, entitling buyers of new vehicles to have Ford repair or replace defective components at any Ford dealer, regardless of where they purchased the vehicle. Ford reimburses dealers, providing a mark-up of 40% over cost for most parts. However, under the New Jersey Franchise Protection Act, Ford must reimburse dealers for parts at the "prevailing retail rate," charged customers for non-warranty work. Ford implemented a Dealer Parity Surcharge to recoup the increased cost. Ford calculated, for each New Jersey dealer, the cost of increased warranty reimbursements and divided by the number of vehicles purchased by that same dealer. That amount constituted the surcharge added to the wholesale price of every vehicle. The Third Circuit affirmed summary judgment that DPS violated the NJFPA. Ford devised a new system, NJCS, under which Ford calculated its total cost of complying with the NJFPA and divided by the number of wholesale vehicles sold in the state. A dealer’s total NJCS increased in proportion to the number of vehicles it purchased, regardless of how many warranty repairs it submitted. The district court found that NJCS violated NJFPA. The Third Circuit reversed in part, holding that the scheme does not violate the statute. View "Liberty Lincoln-Mercury Inc. v. Ford Motor Co." on Justia Law

Companion was authorized to license space in Wal-Mart stores to companies that sell durable medical equipment and entered into licensing agreements with defendants. In 2007, defendants shut down operations. Companion sued. Problems arose during discovery, including defense counsel motions to withdraw, allegations of inadequate responses to discovery requests, objections to the scope of discovery, refusal to attend depositions, motions to compel, multiple extensions, and claims of obstruction. After three years, the district judge imposed a default as to all counts, based on discovery violations by the defendants. The court eventually lifted the default except as to Companion's veil piercing claim, allowing the substantive claims to go to trial. A jury found for Companion and awarded more than $1 million in damages. Defendants, personally liable as a result of the default, appealed. The First Circuit vacated the default and remanded, "because the district court imposed such a severe sanction based on a very limited slice of the relevant facts." View "Companion Health Servs, v. Majors Mobility, Inc." on Justia Law

The LLC was organized in 1999 to own and operate 100 fast-food restaurants. Khan owned 40% of the common units. Remaining common units, and all preferred units, were owned by Sentinel. Plaintiffs, restaurant managers, claim that they accepted lower salaries because Khan told them that he would acquire full ownership and would reward top managers with equity. In 2005, Khan became the sole equity owner, but did not distribute common units to any managers. Plaintiffs calculated that the price paid for Sentinel's interest implied that the business was worth about $48 million; in 2005, 20 managers qualified for units, so each lost about $1.2 million. The district court held that plaintiffs had not adequately estimated damages. The Seventh Circuit reversed, stating that value is what people will pay. The judiciary should not reject actual transactions prices when they are available.View "Malik v. Falcon Holdings, LLC" on Justia Law

Plaintiff rented a car, drove 64 miles in one day, refilled the fuel tank, and returned the car to the same location from which he rented the car. In addition to rental and other fees that he does not dispute, he was charged a $13.99 fuel service fee that he challenged by filing a putative class action, claiming breach of contract, fraud, and unjust enrichment. Defendant claimed that, because plaintiff drove fewer than 75 miles during the rental period, to avoid the charge he was required to return the car with a full fuel tank and to submit a receipt. The district court dismissed, finding that the contract was not ambiguous. The Sixth Circuit affirmed, citing the voluntary payment doctrine.View "Salling v. Budget Rent A Car Sys., Inc." on Justia Law

In 2006, BP began converting company-operated gas and convenience stores into franchisee-operated stores. From 2006 to 2008, plaintiffs purchased gas station sites and entered into long-term contracts with BP for fuel and use of BP's brand name and marks. In 2009 plaintiffs sued under the Illinois Franchise Disclosure Act. Consolidated cases were removed to federal court when plaintiffs added claims under the federal Petroleum Marketing Practices Act. They later added price discrimination claims under the Robinson-Patman Act. Before trial, all federal claims were withdrawn. The district judge relinquished supplemental jurisdiction and remanded to Illinois state court. The Seventh Circuit affirmed. A district court has broad discretion and the general presumption in favor of relinquishment was particularly strong because the state-law claims are complex and raise unsettled legal issues. View "RWJ Mgmt. Co., Inc. v. BP Prod. N. Am., Inc." on Justia Law

Plaintiffs brought separate suits alleging unlawful retaliation by their corporate employers, which are private companies that act as contract advisers to and managers of mutual funds organized under the Investment Company Act of 1940. The district court addressed both cases in a single order, holding that the whistleblower protection provision within the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1514A extends beyond "employees" of "public" companies to encompass employees of private companies that are contractors or subcontractors to those public companies if the employees report violations "relating to fraud against shareholders." The First Circuit reversed, concluding that the protections are limited to employees of public companies, as defined by the statute. View "Lawson v. FMR LLC" on Justia Law

The Fair and Accurate Credit Transactions Act, 15 U.S.C. 1681, provides that merchants who accept credit or debit cards shall not print the expiration date of the cards upon any receipt provided to the cardholder at the point of the sale. The district court found no willful violation where a retailer printed the expiration month, but not the year, of the credit card on a receipt. The Third Circuit affirmed, finding that the retailer's interpretation of the law was erroneous, but not objectively unreasonable. View "Long v. Tommy Hilfiger U.S.A., Inc." on Justia Law

In 2005, plaintiff began consulting for defendant and signed an agreement prohibiting disclosure of proprietary information to third parties, and a non- competition covenant effective during his employment and for two years thereafter. In July, 2006, he left the company. In January 2007, he began consulting for another company. Defendant sued under the agreement. The company filed for bankruptcy. A purchaser moved to substitute itself as plaintiff, but the state court dismissed without prejudice for failure to prosecute. After the court reinstated the case, plaintiff filed in federal court, alleging that the state court suit constituted abuse of process under Massachusetts law and seeking to enjoin the proceedings. He alleged that the amount in controversy was "at least $1,000,000," based on "emotional distress" and harm to his reputation, emotional tranquility, and privacy. The district court dismissed. The First Circuit affirmed. Plaintiff failed to allege damages with substantial particularity to establish jurisdiction. He provided no substantiation for or valuation of any of the alleged economic, emotional or physical damages and could not meet the "good faith" requirement with respect to his assertions. View "Abdel-Aleem v. OPK Biotech LLC" on Justia Law