Justia Commercial Law Opinion Summaries

A plaintiff filed a putative class action against a dietary supplement company, alleging that the supplement Hydro BCAA was mislabeled. The plaintiff claimed that preliminary testing showed the supplement contained more carbohydrates and calories than listed on its FDA-prescribed label. The plaintiff tested the supplement using FDA methods but did not follow the FDA’s twelve-sample sampling process.The United States District Court for the Southern District of California dismissed the complaint, holding that the Food, Drug, and Cosmetic Act preempted the claims because the plaintiff did not plead that he tested the supplement according to the FDA’s sampling process. The district court noted a divide among district courts on whether plaintiffs must plead compliance with the FDA’s testing methods and sampling processes to avoid preemption.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the plaintiff’s complaint allowed a reasonable inference that the supplement was misbranded under the Act, even without allegations of compliance with the FDA’s sampling process. The court found that the plaintiff’s preliminary testing of one sample, which showed significant discrepancies in carbohydrate and calorie content, was sufficient to survive a motion to dismiss. The court emphasized that plaintiffs are not required to perform the FDA’s sampling process at the pleading stage to avoid preemption.The Ninth Circuit reversed the district court’s dismissal, allowing the plaintiff’s state-law claims to proceed. The court concluded that the plaintiff’s allegations were sufficient to avoid preemption and stated a plausible claim that the supplement was mislabeled under the Act. View "SCHEIBE V. PROSUPPS USA, LLC" on Justia Law

Plaintiffs sued Qualcomm Inc., alleging that its business practices violated state and federal antitrust laws. These practices included Qualcomm’s “no license, no chips” policy, which required cellular manufacturers to license Qualcomm’s patents to purchase its modem chips, and alleged exclusive dealing agreements with Apple and Samsung. The Federal Trade Commission (FTC) had previously challenged these practices, but the Ninth Circuit reversed the district court’s ruling in favor of the FTC, holding that Qualcomm did not violate the Sherman Act.The district court in the current case certified a nationwide class, but the Ninth Circuit vacated the class certification order and remanded to consider the viability of plaintiffs’ claims post-FTC v. Qualcomm. On remand, plaintiffs proceeded with state-law claims under California’s Cartwright Act and Unfair Competition Law (UCL). The district court dismissed the tying claims and granted summary judgment on the exclusive dealing claims. The court found that the Cartwright Act did not depart from the Sherman Act and that plaintiffs failed to show market foreclosure or anticompetitive impact in the tied product market. The court also rejected the UCL claims, finding no fraudulent practices and determining that plaintiffs could not seek equitable relief.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal of the tying claims and the summary judgment on the exclusive dealing claims under the Cartwright Act. The court held that Qualcomm’s “no license, no chips” policy was not anticompetitive and that plaintiffs failed to show substantial market foreclosure or antitrust injury. The court also affirmed the rejection of the UCL claims but vacated the summary judgment on the UCL unfairness claim related to exclusive dealing, remanding with instructions to dismiss that claim without prejudice for refiling in state court. View "KEY V. QUALCOMM INCORPORATED" on Justia Law

Growers sold their perishable agricultural products on credit to a distributor, Tanimura, which made Tanimura trustee over a Perishable Agricultural Commodities Act (PACA), 7 U.S.C. 499a-499t, trust holding the perishable products and any resulting proceeds for the Growers as PACA-trust beneficiaries. Tanimura then sold the products on credit to third parties and transferred its own resulting accounts receivable to Agricap through a Factoring Agreement or sale of accounts. In this suit against Agricap, Growers alleged that the Factoring Agreement was merely a secured lending arrangement structured to look like a sale but transferring no substantial risk of nonpayment on the accounts; the accounts receivable and proceeds remained trust property under PACA; because the accounts receivable remained trust property, Tanimura breached the PACA trust and Agricap was complicit in the breach; and PACA-trust beneficiaries such as Growers held an interest superior to Agricap, and Agricap was liable to Growers. The court agreed with the district court's conclusion that Boulder Fruit Express & Heger Organic Farm Sales v. Transportation Factoring, Inc., controls the outcome of the case. The district court noted that the Ninth Circuit in Boulder Fruit expressly addressed the commercial reasonableness of a factoring agreement but implicitly rejected a separate, transfer-of-risk test. The district court further noted that the factoring agreement in Boulder Fruit transferred even less risk than the Factoring Agreement in the present case. Accordingly, the court affirmed the judgment. View "G.W. Palmer & Co. v. Agricap Financial" on Justia Law