Justia Commercial Law Opinion Summaries
Articles Posted in Government & Administrative Law
United Parcel Service, Inc. v. PRC
United Parcel Service, Inc. (UPS) challenged the Postal Regulatory Commission's (Commission) handling of the United States Postal Service's (Postal Service) pricing of competitive products, arguing that the Postal Service underprices these products by not accounting for "peak-season" costs incurred during the holiday season. UPS claimed that these costs, driven by increased demand for package deliveries, should be attributed to competitive products rather than being treated as institutional costs.The Commission denied UPS's petition to initiate rulemaking proceedings and its subsequent motion for reconsideration. The Commission found that UPS's methodology for calculating peak-season costs was flawed and did not produce reliable estimates. It also concluded that the existing cost-attribution framework already accounted for the costs caused by competitive products during the peak season. The Commission explained that the Postal Service's costing models, which use an incremental-cost approach, appropriately attribute costs to competitive products and that the remaining costs are correctly treated as institutional costs.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court upheld the Commission's decision, finding that the Commission's rejection of UPS's methodology was reasonable and well-explained. The court noted that the Commission had addressed UPS's concerns about the Postal Service's costing models and had initiated further proceedings to explore potential updates to the models. The court also rejected UPS's argument that the Commission failed to consider whether peak-season costs are institutional costs uniquely associated with competitive products, noting that this issue was not properly presented in this case.The court denied UPS's petition for review, affirming the Commission's orders. View "United Parcel Service, Inc. v. PRC" on Justia Law
F.C. Bloxom Company v. Tom Lange Company International, Inc.
F.C. Bloxom Company, a Seattle-based distributor of fresh produce, entered into an agreement with Seven Seas Fruit to deliver three loads of onions to Honduras. The onions required phytosanitary certificates from the U.S. Department of Agriculture to clear Honduran customs, but the parties did not explicitly discuss who would procure these certificates. Bloxom believed Seven Seas would handle it, based on past practices and vague assurances. However, the onions were shipped without the necessary certificates, leading to their rejection in Honduras and eventual spoilage upon return to the U.S.Seven Seas initiated administrative proceedings under the Perishable Agricultural Commodities Act (PACA) when Bloxom refused to pay for the onions. The Secretary of Agriculture ruled in favor of Seven Seas, finding no evidence that Seven Seas had agreed to procure the certificates. Bloxom appealed to the U.S. District Court for the Central District of Illinois, which granted summary judgment for Seven Seas. The court found that Bloxom had accepted the onions at the Port of Long Beach and did not revoke that acceptance, thus obligating Bloxom to pay for the onions.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that Bloxom had accepted the onions by shipping them to Honduras and did not revoke this acceptance even after learning the certificates were missing. The court also found no abuse of discretion in the district court's denial of Bloxom's request for additional discovery time, as further discovery would not have changed the outcome. The court concluded that Bloxom was liable for the payment under PACA. View "F.C. Bloxom Company v. Tom Lange Company International, Inc." on Justia Law
United Parcel Service, Inc. v. Postal Regulatory Commission
The United States Court of Appeals for the District of Columbia Circuit was tasked with evaluating a previous decision by the Postal Regulatory Commission (PRC) regarding cost allocation between the United States Postal Service's (USPS) market-dominant and competitive products. United Parcel Service (UPS), a competitor of the USPS, challenged the PRC's formula for allocating institutional costs.The USPS offers both market-dominant products, like standard mail (where it holds a near-monopoly), and competitive products, like package delivery (where it competes with private companies like UPS). The PRC's task is to ensure that the USPS's competitive products cover an "appropriate share" of institutional costs. In 2020, the court had remanded the PRC's Order that adopted a formula for this "appropriate share", and asked the PRC to better explain its reasoning.On remand, the PRC revised its analysis but maintained the same formula. The court of appeals concluded that the PRC had adequately addressed the previous issues identified and reasonably exercised its statutory discretion in adopting the formula. Consequently, UPS's petition for review was denied.The court found that the PRC's interpretation of the distinction between costs attributable to competitive products and costs uniquely or disproportionately associated with competitive products was reasonable. It also found the PRC's decision to not include attributable costs directly in the appropriate share to be reasonable, to avoid double-counting. The court rejected UPS's claim that the PRC was required to allocate all of the USPS's institutional costs between market-dominant and competitive products, and it also found that the PRC had adequately considered competitive products' market conditions. Lastly, the court upheld the PRC's proposed formula for setting the appropriate share.
View "United Parcel Service, Inc. v. Postal Regulatory Commission" on Justia Law
Petróleos de Venezuela S.A. v MUFG Union Bank, N.A.
In 2016, Venezuela's state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), offered a bond swap whereby its noteholders could exchange unsecured notes due in 2017 for new, secured notes due in 2020. PDVSA defaulted in 2019, and the National Assembly of Venezuela passed a resolution declaring the bond swap a "national public contract" requiring its approval under Article 150 of the Venezuelan Constitution. PDVSA, along with its subsidiaries PDVSA Petróleo S.A. and PDV Holding, Inc., initiated a lawsuit seeking a judgment declaring the 2020 Notes and their governing documents "invalid, illegal, null, and void ab initio, and thus unenforceable." The case was taken to the United States Court of Appeals for the Second Circuit, which certified three questions to the New York Court of Appeals.The New York Court of Appeals, in answering the first question, ruled that Venezuelan law governs the validity of the notes under Uniform Commercial Code § 8-110 (a) (1), which encompasses plaintiffs' arguments concerning whether the issuance of the notes was duly authorized by the Venezuelan National Assembly under the Venezuelan Constitution. However, New York law governs the transaction in all other respects, including the consequences if a security was "issued with a defect going to its validity." Given the court's answer to the first certified question, it did not answer the remaining questions. View "Petróleos de Venezuela S.A. v MUFG Union Bank, N.A." on Justia Law
Logic Technology Development LLC v. United States Food and Drug Administration
The Family Smoking Prevention and Tobacco Control Act requires any tobacco product not on the market before February 15, 2007, to receive FDA approval, 21 U.S.C. 387j(a)(1)–(2). Only if the FDA concludes that “permitting such tobacco product to be marketed would be appropriate for the protection of the public health” can the product be approved. Manufacturers seeking advance permission to market new products. In 2020, the FDA began taking aggressive action to remove fruit- and dessert-flavored e-cigarettes (electronic nicotine delivery systems (ENDS)) from the market, leaving aside tobacco- and menthol-flavored ENDS. More recently, based on additional studies and market data, the FDA has denied the applications of importers and manufacturers to market menthol-flavored ENDS.An importer challenged that denial, arguing that it was arbitrary and capricious for the FDA to apply the same regulatory framework to menthol that it used to assess the appropriateness of sweeter flavors, to ultimately reject its applications for its menthol-flavored ENDS to remain on the market, and to do so without granting a transition period. The Third Circuit denied a petition for review. The FDA applied a regulatory framework consistent with its statutory mandate, provided a reasoned explanation for its denial, and based its decision on scientific judgments that courts may not second-guess. View "Logic Technology Development LLC v. United States Food and Drug Administration" on Justia Law
Camara de Mercadeo v. Emanuelli Hernandez
The First Circuit affirmed the judgment of the district court granting Defendants' motion to dismiss the underlying complaint in its entirety, holding that the district court did not err in finding that the challenged regulations in this case were not null and remained enforceable and that there is no private right of action to enforce the Puerto Rico Oversight Management Stability Act (PROMESA), 48 U.S.C. 2101.Plaintiff, Camara de Mercadeo, Industria y Distribución de Alimentos, Inc., filed the underlying complaint on behalf of its members - businesses in the food industry - seeking declaratory and injunctive relief from certain regulations related to freight tariffs and implementing circular letters promulgated by the Commonwealth of Puerto Rico's Transportation and other Public Services Bureau. Specifically, Plaintiff alleged that the challenged regulations were unlawful under PROMESA. The district court granted Defendants' motion to dismiss. The First Circuit affirmed, holding that Plaintiff was not entitled to relief on its allegations of error. View "Camara de Mercadeo v. Emanuelli Hernandez" on Justia Law
City of Fontana v. California Department of Tax and Fee Administration
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
A&D Auto Sales, Inc. v. United States
Former GM and Chrysler dealers, whose franchises were terminated in the 2009 bankruptcies of those companies, sued, alleging that the terminations constituted a taking because the government required them as a condition of its providing financial assistance to the companies. The Bankruptcy Code, 11 U.S.C. 363, 365, authorizes certain sales of a debtor’s assets and provides that a bankruptcy trustee “may assume or reject any executory contract or unexpired lease of the debtor.” Debtors-in-possession in chapter 11 bankruptcies, like GM and Chrysler, generally have a trustee’s powers. The Claims Court denied motions to dismiss. In interlocutory appeals, the Federal Circuit remanded for consideration of the issues of the “regulatory” impact of the government’s “coercion” and of economic impact. While the allegations of economic loss are deficient in not sufficiently alleging that the economic value of the franchises was reduced or eliminated as a result of the government’s actions, the proper remedy is to grant to leave to amend the complaints to include the necessary allegations. View "A&D Auto Sales, Inc. v. United States" on Justia Law
Itochu Bldg. Prods. v. United States
Itochu asked the U.S. Department of Commerce to act under 19 U.S.C. 1675(b) to revoke part of an antidumping-duty order applicable to imported steel nails. Before Commerce issued its preliminary determination, Itochu submitted comments and provided legal authority to urge that the requested partial revocation take effect at an early specified date. Commerce rejected that position in its preliminary ruling and generally invited interested parties to comment. Itochu did not avail itself of that opportunity. In its final ruling, Commerce adopted the partial revocation, which the domestic industry did not oppose, but with the later effective date. When Itochu challenged the effective-date determination, the U.S.s Court of International Trade declined to address the merits, citing failure to exhaust administrative remedies, 28 U.S.C. 2637(d), because Itochu had failed to resubmit, after the preliminary ruling, the comments it had submitted earlier. The Federal Circuit reversed, stating that in these circumstances, requiring exhaustion served no discernible practical purpose and resulting delay would have risked harm to Itochu. View "Itochu Bldg. Prods. v. United States" on Justia Law
Hartney Fuel Oil Co. v. Village of Forest View
Hartney, a fuel oil retailer with a home office in Forest View, in Cook County, accepted purchase orders in the Village of Mark, in Putnam County, through a business with which it contracted. No Hartney employees were involved there. By so structuring sales, Hartney avoided liability for retail occupation taxes of Cook County, Forest View, and the Regional Transportation Authority. Hartney’s interpretation of the law was consistent with regulations published at the time. However, The Illinois Department of Revenue determined, through audit, that Hartney’s sales were attributable to the company’s Forest View office, rather than the Mark location reported by the company, and issued a notice of tax liability. Hartney paid penalties of $23,111,939 under protest and filed suit. The court agreed that the bright-line test for the situs of sale is where purchase orders are accepted. The appellate court affirmed. The Illinois Supreme Court, court disagreed. The court found the “Jurisdictional Questions” regulations of the Administrative Code inconsistent with the statutes and case law. The legislature has not adopted a single-factor test for the situs of retail activity. The court’s own precedent calls for fact-intensive inquiry where there is a composite of many activities, and the legislature, by consistently employing the “business of selling” language, has effectively invoked that precedent. The Department of Revenue must abate Hartney’s penalties and tax liability for the relevant period because Hartney’s actions were consistent with its regulations in effect at the time.View "Hartney Fuel Oil Co. v. Village of Forest View" on Justia Law