Justia Commercial Law Opinion Summaries

Littlejohn sought to sue Costco, the California Board of Equalization, and Abbott to recover sales tax on purchases of Abbott’s product Ensure. Littlejohn alleged that Ensure is properly categorized as a food; no sales tax was actually due on his purchases; Costco was under no obligation to pay and should not have paid sales tax on its sales of Ensure. The complaint alleged that during the period in question Ensure was classified as a food product exempt from sales tax, not a nutritional supplement. Littlejohn based his claim on a 1974 California Supreme Court decision, Javor. The trial court concluded that the judicially noticed documents in the record showed the Board had not resolved the question of whether Ensure was nontaxable during the relevant period.. The court held that the documents were entitled to deference, but did not have the same force of law as Board regulations and were not binding. The court of appeal affirmed, reasoning that the case does not involve allegations of unique circumstances showing the Board has concluded consumers are owed refunds for taxes paid on sales of Ensure. A Javor remedy should be limited to the unique circumstances where the plaintiff shows that the state has been unjustly enriched by the overpayment of sales tax, and the Board concurs that the circumstances warrant refunds. View "Littlejohn v. Costco Wholesale Corp." 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

Defendants are the nation’s largest distributors of pre-filled propane exchange tanks, which come in a standard size. Before 2008, Defendants filled the tanks with 17 pounds of propane. In 2008, due to rising prices, Defendants reduced the amount in each tato 15 pounds, maintaining the same price. Plaintiffs, indirect purchasers, who bought tanks from retailers, claimed this effectively raised the price. In 2009, plaintiffs filed a class action alleging conspiracy under the Sherman Act. Plaintiffs settled with both Defendants. In 2014, the Federal Trade Commission issued a complaint against Defendants, which settled in 2015 by consent orders, for conspiring to artificially inflate tank prices. In 2014, another group of indirect purchasers (Ortiz) brought a class action against Defendants, alleging: “Despite their settlements, Defendants continued to conspire, and ... maintained their illegally agreed-upon fill levels, preserving the unlawfully inflated prices." The Ortiz suit became part of a multidistrict proceeding that included similar allegations by direct purchasers (who bought tanks directly from Defendants for resale). The Eighth Circuit reversed the dismissal of the direct-purchaser suit as time-barred, holding that each sale in a price-fixing conspiracy starts the statutory period running again. The court subsequently held that the indirect purchasers inadequately pled an injury-in-fact and lack standing to pursue an injunction to increase the fill levels of the tanks and may not seek disgorgement of profits. View "Ortiz v. Ferrellgas Partners, L.P." on Justia Law

At issue was how to calculate “fair market value” of a repossessed automobile under Mass. Gen. Laws ch. 255B, 20 B and the notices that are required with respect to this calculation.Under section 20B, a creditor who repossesses and sells a vehicle is entitled to recover form the debt the deficiency that remains after deducting the “fair market value” of the vehicle from the debtor’s unpaid balance. Plaintiff in this case alleged that the fair market value of her repossessed automobile was the fair market retail value of the automobile, rather than the amount paid at an auction open to licensed dealers. The federal district court granted summary judgment to American Honda Finance Corporation (Honda). The court of appeals certified to the Supreme Judicial Court three questions. The Court answered (1) the ultimate determination of fair market value is left to the courts in contested cases, taking into account both creditor and debtor interests, and the means, methods, and markets used to sell the vehicle; and (2) the resale and postsale notices provided to the debtor must expressly describe the deficiency as the difference between the amount owed on the loan and the fair market value of the vehicle. View "Williams v. American Honda Finance Corp." on Justia Law

A seller’s fraudulent statements about the fitness of a vehicle for the purpose for which it was purchased make disclaimers in purchase documents stating that the buyer purchased the vehicle “as is” ineffective.The district court in this case awarded relief to the buyer on both fraud and breach of warranty theories. The Supreme Court affirmed, holding (1) the buyer’s fraudulent statements about the fitness of the vehicle being sold for the purpose for which the vehicle was purchased made the “as is” disclaimers of implied warranties in the purchase documents ineffective under Minn. Stat. 336.2-316(3)(a); and (2) under the Uniform Commercial Code, a party may seek remedies for fraud, including breach of warranty, even after the rescission of a purchase contract, and therefore, the district court did not err in awarding damages under both fraud and breach of an implied warranty theories of liability. View "Sorchaga v. Ride Auto, LLC" on Justia Law

The Supreme Court affirmed the district court’s order dismissing with prejudice Plaintiff’s complaint for failure to state a claim upon which relief could be granted. Plaintiff, which operated commercial grain warehouses and elevators and owned trading businesses through Nebraska, filed a complaint alleging that several defendants engaged in a pattern of behavior with the intent to deprive it of information, an opportunity to be heard, and due process of law. The district court concluded that Defendants were entitled to immunity under Nebraska’s Consumer Protection Act and the Noerr-Pennington doctrine and that Plaintiff’s claims of conspiracy and aiding and abetting required an underlying tort to be actionable. The Supreme Court affirmed, holding (1) Plaintiff failed to state a claim upon which relief could be granted because Defendants were entitled to immunity under the Noerr-Pennington doctrine and Plaintiff alleged only underlying statutory violations; and (2) any amendment to Plaintiff’s petition would be futile. View "Salem Grain Co. v. Consolidated Grain & Barge Co." on Justia Law

McNeil opened a business checking account with Defendant. A “Master Services Agreement,” stated: [W]e have available certain products designed to discover or prevent unauthorized transactions, …. You agree that if your account is eligible for those products and you choose not to avail yourself of them, then we will have no liability for any transaction that occurs on your account that those products were designed to discover or prevent. McNeil was not given a signed copy of the Agreement, nor was he advised of its details. McNeil ordered hologram checks from a third party to avoid fraudulent activity. McNeil later noticed unauthorized checks totaling $3,973.96. The checks did not contain the hologram and their numbers were duplicative of checks that Defendant had properly paid. Defendant refused to reimburse McNeil, stating that “reasonable care was not used in declining to use our ... services, which substantially contributed to the making of the forged item(s).” Government agencies indicated that they would not intervene in a private dispute involving the interpretation of a contract. Plaintiff filed a putative class action, citing Uniform Commercial Code 4-401 and 4-103(a), The district court dismissed, holding that the Agreement did not violate the UCC and shifted liability to Plaintiff. The Sixth Circuit reversed. Plaintiff stated a plausible claim that the provision unreasonably disclaims all liability under these circumstances; the UCC forbids a bank from disclaiming all of its liability to exercise ordinary care and good faith. View "Majestic Building Maintenance, Inc. v. Huntington Bancshares, Inc." on Justia Law

Plaintiff defaulted after Defendant loaned Plaintiff money to buy a car. Defendant repossessed the vehicle and sent Plaintiff two notices in connection with its efforts to sell the car and collect any deficiency owed on the loan - a pre-sale notice and a post-sale notice. Plaintiff filed this putative class action claiming that the two notices violated the Uniform Commercial Code and Massachusetts consumer protection laws. Even though the parties did not request it, the First Circuit certified three questions to the Massachusetts Supreme Judicial Court because the outcome of this case hinged entirely on questions of Massachusetts law that Massachusetts courts have not yet addressed. View "Williams v. American Honda Finance Corp." on Justia Law

Businesses challenged New York General Business Law section 518, which provides that “[n]o seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means,” as violating the First Amendment by regulating how they communicate their prices, and as unconstitutionally vague. The Second Circuit vacated a judgment in favor of the businesses, reasoning that in the context of singlesticker pricing—where merchants post one price and would like to charge more to customers who pay by credit card—the law required that the sticker price be the same as the price charged to credit card users. In that context, the law regulated a relationship between two prices: conduct, not speech. The Supreme Court vacated, limiting its review to single-sticker pricing. Section 518 regulates speech. It is not a typical price regulation, which simply regulates the amount a store can collect. The law tells merchants nothing about the amount they may collect from a cash or credit card payer, but regulates how sellers may communicate their prices. Section 518 is not vague as applied to the businesses; it bans the single-sticker pricing they wish to employ, and “a plaintiff whose speech is clearly proscribed cannot raise a successful vagueness claim.” View "Expressions Hair Design v. Schneiderman" on Justia Law

This lawsuit involved a loan agreement between Lender and Borrowers. The agreement gave Lender an option to purchase the collateral for the loan - the famous ex-Presidential Yacht Sequoia. A valuation of the Sequoia for purposes of securing the loan was established via fraud on the part of Borrowers. The claims and counterclaims arising out of the loan agreement were eventually resolved by a settlement entered as a court order. The only issue remaining for the Court of Chancery was to oversee the computation of the amount due Borrowers from Lender should Lender elect to acquire the Sequoia. Lender agreed to a minimum option price of zero dollars. The Court of Chancery found the option price to be zero dollars. View "The Sequoia Presidential Yacht Group LLC v. FE Partners LLC" on Justia Law