Justia Commercial Law Opinion SummariesArticles Posted in Commercial Law
Ivey v. Transunion Rental Screening Solutions Inc.
TURSS provided background and credit screening services to property management professionals and landlords through its online platforms and undertook to build an online platform to sell customizable electronic lease forms. TURSS sent Helix a letter of intent that the platform would be completed in 2009. The companies entered into a five-year marketing agreement that required TURSS to provide the platform and Helix to provide the product. TURSS would receive 35% of the revenue generated from sales and Helix would receive 65%. The agreement was not exclusive. Helix provided electronic forms and supporting materials to TURSS but the platform was still not completed in 2015.Helix sued TURSS for“willful and intentional” breach of contract, fraud, negligent misrepresentation, and promissory estoppel. The court ultimately granted TURSS summary judgment. The appellate court and Illinois Supreme Court reversed, finding that Helix failed to present proof of its damages with reasonable certainty. Helix did not present evidence of revenues of a similar product or a similar business in a similar market. Where a plaintiff seeks lost profits for a new company, "without a track record of profit, attempting to sell a new and untested product to a new market,” the specter of impermissible speculation arises. View "Ivey v. Transunion Rental Screening Solutions Inc." on Justia Law
Walworth Investments-LG, LLC v. Mu Sigma, Inc.
Walworth, a former stockholder, sued Mu Sigma, a privately held data analytics company, and Rajaram, the company’s founder, CEO, and board chairman, alleging that after reaping the benefits of Walworth’s $1.5 million investment and reputational capital, the defendants embarked on a fraudulent scheme to oust Walworth of its substantial ownership interest in the company.The Cook County circuit court dismissed the complaint, citing the stock repurchase agreement (SRA), which included anti-reliance and general release provisions. The appellate court reversed, holding that the anti-reliance language was ambiguous. The Illinois Supreme Court reinstated the dismissal, stating that “the broad and comprehensive release agreed to by [Walworth], a sophisticated party represented by experienced counsel, unambiguously encompasses” the unjust enrichment and breach of contract claims. The bargained-for anti-reliance provisions reflected the understanding that there may be undisclosed information but that Walworth was satisfied by the information provided. Walworth had direct access to Rajaram to negotiate the arm’s-length transaction at issue and Rajaram was not acting as a fiduciary for Walworth. A corporation owes no fiduciary duty to its shareholder and Delaware law does not impose “an affirmative fiduciary duty of disclosure for individual transactions.” View "Walworth Investments-LG, LLC v. Mu Sigma, Inc." on Justia Law
Caudill Seed & Warehouse Co. Inc. v. Jarrow Formulas, Inc.
Caudill's subsidiary develops nutritional supplements. Jarrow, a dietary-supplement company, solicited Ashurst, Caudill’s Director of Research, who had extensively researched the development of broccoli-seed derivatives at issue. Ashurst had signed Non-Disclosure, Non-Competition, and Secrecy Agreements, and annually signed Caudill’s employee handbook, which barred him from disclosing Caudill’s trade secrets or other confidential information. In April 2011, Ashurst, still a Caudill employee, emailed Jarrow confidential Caudill documents. Days later, Jarrow requested a file of the pertinent data. Ashurst sent a physical disc. On May 1, Ashurst began to work for Jarrow. Ashurst then submitted his resignation to Caudill. Ashurst’s Agreement with Jarrow indicated that Jarrow hired him to mimic his work for Caudill, Ashurst proposed that Jarrow adopt the process that Caudill used to manufacture the raw materials for its BroccoMax supplement. Jarrow brought an activated broccoli product into commercial production four months after hiring Ashurst. From 2012-2019, Jarrow earned $7.5 million in sales of their BroccoMax-type product.In a suit under the Kentucky Uniform Trade Secrets Act, the Sixth Circuit affirmed a judgment of $2,427,605 in damages awarded by the jury, $1,000,000 in exemplary damages, $3,254,303.50 in attorney fees, and $69,871.82 in costs against Jarrow. The court rejected arguments that Caudill failed to define one of its Trade Secrets adequately, failed to show that Jarrow acquired that Trade Secret; and did not introduce sufficient evidence attributing its damages to that misappropriation, as well as challenges to the awards of damages. View "Caudill Seed & Warehouse Co. Inc. v. Jarrow Formulas, Inc." on Justia Law
Stackpole International Engineered Products, Ltd.. v. Angstrom Automotive Group, LLC
Stackpole (Purchaser) makes car parts. Precision (Seller) makes automotive subcomponents. In 2014, Seller gave Purchaser quotes on pumps, making “[a]cceptance of order” subject to APQP [Advanced Product Quality Planning Review]. Purchaser issued a “Letter of Intent” to buy 1.1 million 10R/10L shafts and 306,000 Nano shafts. Seller's employee signed the letter, which provided that Purchaser would issue purchase orders for actual shipments. The purchase orders contained six pages of supplemental terms, allowing Purchaer to “terminate . . . this contract, at any time and for any reason, by giving written notice,” and providing that purchase orders would “not become binding” until the additional provisions were “signed and returned.” Seller did not sign the purchase orders but shipped parts to Purchaser for two years. In 2017, Seller stated that it needed a price increase or it would have to halt production. Purchaser agreed to price increases “under duress and protest,” then sued for breach of contract. Seller counterclaimed, alleging that Purchaser had impermissibly withheld its approval to make the parts by an automatic rather than manual process.The district court awarded Purchaser summary judgment, finding the parties had formed a contract “for successive performances.” “indefinite in duration.” Michigan law makes such contracts presumptively terminable upon “reasonable notification” A jury awarded $1 million. The Sixth Circuit affirmed. The Letter of Intent constituted a contract, notwithstanding the failure to engage in APQP. No contextual factor suggests a right to terminate the Letter of Intent without notice. View "Stackpole International Engineered Products, Ltd.. v. Angstrom Automotive Group, LLC" on Justia Law
United Food & Commercial Workers v. Kroger Co.
KLPI operates Kroger grocery stores throughout Tennessee. KLPI has a collective bargaining agreement (CBA) with the Union, which represents all retail employees in different retail-store configurations. The Union immediately represents the employees in any new KLPI store. In 2020, Kroger’s “Supply Chain Division” opened the Knoxville Local Fulfillment Center. After the warehouse opened, the Union filed a grievance, claiming that the Union represented employees at that facility—which the Union called the “Knoxville eCommerce Store.” The Union described how warehouse employees fill orders placed by Walgreens pharmacies and that employees who pick and deliver these orders perform “fundamental[ly] bargaining[-]unit work” like unionized employees at KLPI’s grocery stores. KLPI refused to process the grievance for itself or Kroger, claiming that the Center is a warehouse, not a grocery store, and is part of Kroger’s “supply chain network,” independent from KLPI’s retail stores; KLPI has no relationship with Fulfillment Center employees.The Union pursued arbitration under the CBA. KLPI refused to arbitrate. The district court determined the Union’s claim was arbitrable under the CBA but Kroger was not a party to the CBA; KLPI was ordered to arbitrate. The Sixth Circuit affirmed. The grievance falls within the scope of the CBA’s arbitration agreement, which does not prevent the possible inference that the fulfillment center and its employees are covered by the CBA. View "United Food & Commercial Workers v. Kroger Co." on Justia Law
Xi’an Metals & Minerals Import & Export Co. Ltd. v. United States
In the tenth administrative review of the antidumping order on steel nails from China, the U.S. Department of Commerce found that Pioneer did not cooperate to the best of its ability with Commerce’s request for information, Commerce applied adverse facts available (AFA) and assigned an antidumping margin of 118.04 percent to Pioneer. Following the 2013 third administrative review, Commerce had announced that “all other future respondents for this case report all FOPs [factors of production] data on a CONNUM-specific [control number] basis using all product characteristics in subsequent reviews, as documentation and data collection requirements should now be fully understood by [the particular respondent] and all other respondents.” CONNUM is Commerce jargon for a unique product.The Trade Court and the Federal Circuit affirmed. Commerce’s 2013 pronouncement reflects a statement of policy, not the agency’s explicit invocation of general legislative authority; the CONNUM-specific rule is not subject to notice-and-comment rulemaking under the APA. The use of the CONNUM rule is not inconsistent with 19 U.S.C. 1677b, concerning the calculation of the normal value of merchandise. Commerce determined that CONNUM-specific data is essential for the accurate calculation of costs due to the variations in the physical characteristics of the merchandise. Pioneer did not provide required answers, so the application of AFA was supported by substantial evidence. View "Xi’an Metals & Minerals Import & Export Co. Ltd. v. United States" on Justia Law
Product Solutions International, Inc. v. Aldez Containers, LLC
PSI helps customers bring products to market. P.B. contacted PSI for assistance with the design, manufacture, and distribution of a custom cosmetics bag (Orgo Bag). PSI submitted a purchase order to its Chinese manufacturers indicating that P.B. would purchase 100,000 Orgo Bags in the first year and purchase another 1.5 million bags annually thereafter. During the first 18 months, P.B. purchased only 38,296 Orgo Bags. PSI directed the Chinese manufacturer to mitigate its losses and liquidate any materials it had purchased for the Orgo. The failure of the Orgo cost PSI $506,129.44. In 2019, PSI sued P.B., Aldez, Copek, and Byrne, alleging breach of contract, promissory estoppel, fraud, silent fraud, negligent misrepresentation, innocent misrepresentation, and non-acceptance of conforming goods under the U.C.C. The court dismissed Copek, Byrne, and Aldez but permitted some claims against P.B. to continue.In 2021, PSI sued Aldez for breach of contract, promissory estoppel, and nonacceptance of conforming goods, arguing that in the 2019 suit, its claims were pleaded directly against Aldez, whereas in the 2021 suit, it sought to pierce P.B.’s corporate veil and hold Aldez vicariously liable. The district court dismissed, citing res judicata. The Sixth Circuit affirmed. The complaint does not allege any wrongdoing by Aldez and corporate veil piercing is not a cause of action under Michigan law; the 2021 suit’s complaint fails to state a claim. View "Product Solutions International, Inc. v. Aldez Containers, LLC" on Justia Law
Bret Healy v. Albert Fox
Plaintiff filed Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims against several parties after a family-help ranch was sold to a corporate entity against his knowledge.In 1961, Plaintiff’s father and grandfather formed the Healy Ranch Partnership (“HRP”). In 1986, Plaintiff’s grandmother transferred her partnership interest to Plaintiff in exchange for him assuming the partnership’s debt and making certain payments to her. In 1994, Plaintiff’s mother formed a South Dakota corporation, Healy Ranch, Inc. (“HRI”). She filed articles of incorporation authorizing HRI to issue 1,000,000 shares of common stock with a par value of one dollar per share. The articles of incorporation stated that the “corporation will not commence business until consideration of the value of at least Five Thousand Dollars has been received for the issuance of shares.” That same year, Plaintiff’s mother and her lawyer caused HRI to issue nearly 300,000 shares without consideration. In 1995, Plaintiff’s mother conveyed all of the partnership’s real-property interest in the ranch to HRI, including both her 50 percent share as well as Plaintiff’s 50 percent share. In 2000, Plaintiff’s mother sold one-third of her shares of HRI to Plaintiff and one-third to each of his two brothers. In Healy I, the court dismissed Plaintiff’s actions.Plaintiff then filed this RICO action; which the court dismissed because it ran afoul of res judicata and the four-year statute of limitations for RICO claims. View "Bret Healy v. Albert Fox" on Justia Law
Meyer Corp., U.S. v. United States
Meyer imports cookware. Each cookware item manufactured in Thailand began as a steel disc imported from China. In Thailand, the manufacturer transforms the discs into finished cookware and sells finished cookware to distributors in Macau and Hong Kong. The manufacturers, distributors, and Meyer have a common parent/shareholder.Meyer requested duty-free treatment for the cookware produced in Thailand, based on Thailand’s status as a beneficiary developing country under the Generalized System of Preferences. Meyer also asked Customs to value its cookware based on the first-sale price that its affiliated distributors paid to the manufacturers. Customs denied duty-free treatment and assessed duties based on the second-sale price that Meyer paid to its distributors. The Court of International Trade ruled that raw materials from nonbeneficiary developing countries must undergo a “double substantial transformation” in the beneficiary developing country to count toward duty-free treatment and the manufacturer did not substantially transform the input a second time by converting the shell into a finished pot; Meyer failed to show that an unfinished shell is a “distinct article of commerce.”The Federal Circuit affirmed in part. The Trade Court properly found only one substantial transformation but erred in requiring Meyer to prove that the first sales were at arm’s length and also unaffected by China’s status as a non-market economy. The court remanded for reconsideration of whether Meyer may rely on its first-sale prices. View "Meyer Corp., U.S. v. United States" on Justia Law
Taizhou Yuanda Investment Group Co., Ltd. v. Z Outdoor Living, LLC
Taizhou, a Chinese manufacturer, entered into a Cooperation Agreement with Z Outdoor, a Wisconsin company owned by Casual Products: Taizhou would manufacture outdoor furniture and other related items for Z Outdoor to sell to customers. Z Outdoor eventually stopped paying Taizhou. The Cornings, on behalf of Z Outdoor, made false statements about future business, forthcoming payments, and causes for the delays. Taizhou continued to fill customer orders without receiving compensation. In 2018, AFG (a Wisconsin LLC also owned by Casual) started submitting purchase orders to Taizhou. AFG never signed the Cooperation Agreement. Taizhou filled the orders and sent AFG invoices. AFG eventually stopped paying Taizhou and made false statements regarding payment delays. The total due from Z Outdoor and AFG accrued to $14 million for purchase orders sent, 2017-2019.The district court entered a default judgment against the corporate defendants on Taizhou's contract claims but ruled against Taizhou on unjust enrichment, fraud, and conversion claims, finding the fraud and conversion claims barred by Wisconsin’s economic loss doctrine and q “mere repackaging of Taizhou’s ‘straightforward breach of contract claim.’” The Seventh Circuit affirmed. Any fraud was interwoven with the Cooperation Agreement, so the economic loss doctrine applies. To the extent the damages amounted to lost profits or lost business, those are also economic losses under Wisconsin law. View "Taizhou Yuanda Investment Group Co., Ltd. v. Z Outdoor Living, LLC" on Justia Law