Justia Commercial Law Opinion SummariesArticles Posted in US Court of Appeals for the Third Circuit
United States v. United States Sugar Corp.
Imperial Sugar went bankrupt in 2001 and suffered a costly accident in 2008, prompting its sale to Louis Dreyfus. Imperial receives from Louis Dreyfus only minimal investment and is an “import-based, price-uncompetitive sugar refinery” that is “structurally uncompetitive” and lost roughly 10 percent of its customers from 2021-2022. Florida-based refiner U.S. Sugar agreed to purchase Imperial. The government sought an injunction (Clayton Act. 15 U.S.C. 18), arguing that the acquisition would have anticompetitive effects, leaving only two entities in control of 75% of refined sugar sales in the southeastern United States. The government applied the hypothetical monopolist test to demonstrate the validity of its proposed product and geographic markets. U.S. Sugar responded that it does not sell its own sugar but participates with other producers in a Capper-Volstead agricultural cooperative that markets and sells the firms’ output collectively but exercises no control over the quantities produced. At capacity, Imperial’s facility could produce only about seven percent of national output. U.S. Sugar argued that distributors constitute a crucial competitive check on producer-refiners that would undermine any attempt to increase prices and noted evidence of the high mobility of refined sugar throughout the country.The Third Circuit affirmed the denial of an injunction, upholding a finding that the government overlooked the pro-competitive effects of distributors in the market, erroneously lumped together heterogeneous wholesale customers, and defined the relevant geographic market without regard for the high mobility of sugar throughout the country. View "United States v. United States Sugar Corp." on Justia Law
Rowland v. Bissell Homecare, Inc.
Each of the four plaintiffs filed a putative class action complaint in state court, alleging violations of the Magnuson-Moss Warranty Act (MMWA), 15 U.S.C. 2301, claiming that the defendants either concealed written warranties prior to sale or provided warranties that prohibit the use of third-party repair services or parts in violation of MMWA. The defendants removed the actions to the U.S. District Court for the Western District of Pennsylvania pursuant to the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d)(2).The plaintiffs moved to remand to state court. The district court held that remand was appropriate because MMWA’s jurisdictional requirements were not satisfied and neither CAFA nor traditional diversity jurisdiction can be used to circumvent those jurisdictional requirements. The Third Circuit affirmed.MMWA claims can only be brought in federal court if section 2310(d)(3)’s requirements are satisfied, including that a class action name at least 100 plaintiffs; here, each complaint names only one plaintiff. MMWA’s stringent jurisdictional requirements are irreconcilable with CAFA. Allowing CAFA to govern MMWA class claims would undercut the MMWA’s requirement and allow an MMWA class action to proceed in contravention of the MMWA. View "Rowland v. Bissell Homecare, Inc." on Justia Law
Pacira Biosciences Inc v. American Society of Anesthesiologists Inc
Liposomal bupivacaine is a nonopioid pain medication that Pacira manufactures under the name EXPAREL; it is a local anesthetic administered at the time of surgery to control post-surgical pain. As of 2020, EXPAREL sales represented nearly all of Pacira’s total revenue. Pacira complains that the defendants, the American Society of Anesthesiologists, its journal, its editor, and authors published statements in a variety of forms, conveying their view that EXPAREL is “not superior” to standard analgesics or provides “inferior” pain relief.The Third Circuit affirmed the dismissal of Pacira’s suit for trade libel. Opinion statements are generally nonactionable. A “fair and natural” reading of the statements at issue shows that these are nonactionable subjective expressions. Pacira’s allegations boil down to disagreements about the reliability of the methodology and data underlying the statements; “a scientific conclusion based on nonfraudulent data in an academic publication is not a ‘fact’ that can be proven false through litigation.” Pacira failed to identify any aspect of the Articles, a Continuing Medical Education program, or a Podcast that “bring their conclusions outside the protected realm of scientific opinion.” View "Pacira Biosciences Inc v. American Society of Anesthesiologists Inc" on Justia Law
TitleMax of Delaware Inc v. Weissmann
TitleMax provides vehicle loans at interest rates as high as 180%. The entire process occurs at a TitleMax brick-and-mortar location. The borrower receives “a check drawn on a bank outside of Pennsylvania,” The borrower grants TitleMax a security interest in the vehicle. TitleMax records its lien with the appropriate state authority. Borrowers can make payments from their home states. TitleMax does not have any offices, employees, agents, or brick-and-mortar stores and is not licensed as a lender in Pennsylvania. TitleMax claims that it never solicited Pennsylvania business and does not run television ads within Pennsylvania.Pursuant to the Consumer Discount Company Act and the Loan Interest and Protection Law, Pennsylvania’s Department of Banking and Securities issued a subpoena requesting documents regarding TitleMax’s interactions with Pennsylvania residents. TitleMax then stopped making loans to Pennsylvania residents and asserts that it has lost revenue.The district court held that Younger abstention did not apply and that the Department’s subpoena’s effect was to apply Pennsylvania’s usury laws extraterritorially in violation of the Commerce Clause.The Third Circuit reversed. Applying the Pennsylvania statutes to TitleMax does not violate the extraterritoriality principle. TitleMax receives payments from within Pennsylvania and maintains an actionable security interest in vehicles located in Pennsylvania; its conduct is not “wholly outside” of Pennsylvania. The laws do not discriminate between in-staters and out-of-staters. Pennsylvania has a strong interest in prohibiting usury. Applying Pennsylvania’s usury laws to TitleMax’s loans furthers that interest and any resulting burden on interstate commerce is, at most, incidental. View "TitleMax of Delaware Inc v. Weissmann" on Justia Law
SodexoMAGIC LLC v. Drexel University
For 20 years, the vendor (SDM) provided food services at Drexel University in Philadelphia. In 2014 the university announced that it would competitively bid the contract for on-campus dining. The same vendor ultimately won that competition but about two years into the contract’s 10-year duration, the vendor sued the university for fraud, multiple breaches of contract, and alternatively for unjust enrichment. The university responded with fraud and breach-of-contract counterclaims. Only a few of the vendor’s breach-of-contract claims and portions of the university’s breach-of-contract claim survived summary judgment. The parties referred the remaining claims and counterclaims to arbitration and jointly moved to dismiss them. The district court granted that motion and entered final judgment, which the parties appealed, primarily to dispute the summary judgment ruling.The Third Circuit affirmed summary judgment in Drexel’s favor on SDM’s unjust enrichment and punitive damages claims, summary judgment in SDM’s favor on Drexel’s fraudulent inducement claim, and the district court’s decision to deny Drexel’s motion to strike declarations by SDM witnesses under the sham affidavit rule. The court vacated an order granting summary judgment to Drexel on SDM’s claims for fraudulent inducement, breach of contract for failure to renegotiate in good faith, and breach of a supplemental agreement for the Fall 2016 Semester. The surviving claims were remanded to the district court. View "SodexoMAGIC LLC v. Drexel University" on Justia Law
New Jersey Coalition of Automotive Retailers, Inc. v. Mazda Motor of America Inc
The Coalition, an association of franchised New Jersey new car dealerships, filed suit under the New Jersey Franchise Practices Act on behalf of 16 Mazda dealer-members. Mazda had an incentive program for its franchised dealers (MBEP), which provides incentives, per-vehicle discounts or rebates on the dealers’ purchases of vehicles from Mazda, to dealers who make certain investments in their physical facilities that highlight their sale of Mazda vehicles or dedicate their dealerships exclusively to the sale of Mazda vehicles. The incentives come in different tiers, with the highest tier available to dealers who have exclusive Mazda facilities and a dedicated, exclusive Mazda general manager. Mazda dealers also earn incentives if they meet customer experience metrics. Mazda dealers who sell other brands of vehicles as well as Mazdas, do not receive incentives for brand commitment. Only three of the 16 Mazda dealers in the Coalition qualified for the highest tier; eight others qualified for some tier of incentives. The complaint alleged that the MBEP creates unfair competitive advantages for dealers who qualify for incentives under the MBEP at the expense of those dealers who do not, and even among incentivized dealers through different tiers.The Third Circuit reversed the dismissal of the case, rejecting as too narrow the district court’s rationale--that the Coalition lacked standing because only five of the 16 Mazda dealers would benefit from the lawsuit, so the Coalition cannot possibly be protecting the interests of its members. View "New Jersey Coalition of Automotive Retailers, Inc. v. Mazda Motor of America Inc" on Justia Law
Wells Fargo, N.A. v. Bear Stearns & Co., Inc.
HomeBanc, in the residential mortgage loan business, obtained financing from Bear Stearns under 2005 repurchase agreements and transferred multiple securities to Bear Stearns. In 2007 HomeBanc failed to repurchase the securities or pay for an extension of the due date. Bear Stearns issued a notice of default. HomeBanc filed voluntary bankruptcy petitions. Bear Stearns, claiming outright ownership of the securities, auctioned them to determine their fair market value. After the auction closed, Bear Stearns’s finance desk determined that Bear Stearns’s mortgage trading desk had won. Bear Stearns allocated the $60.5 million bid across 36 securities. HomeBanc believed itself entitled to the August 2007 principal and interest payments from the securities. HomeBanc claimed conversion, breach of contract, and violation of the automatic bankruptcy stay. Following multiple rounds of litigation, the district court found that Bear Stearns acted reasonably and in good faith. The Third Circuit affirmed. A bankruptcy court’s determination of good faith regarding an obligatory post-default valuation of collateral subject to a repurchase agreement receives mixed review. Factual findings are reviewed for clear-error while the ultimate issue of good faith receives plenary review. Bear Stearns liquidated the securities at issue in good faith compliance with the Repurchasing Agreement. Bear Stearns never claimed damages; 11 U.S.C. 101(47)(A)(v) “damages,” which may trigger the requirements of 11 U.S.C. 562, require a non-breaching party to bring a legal claim for damages. The broader safe harbor protections of 11 U.S.C. 559 were relevant. View "Wells Fargo, N.A. v. Bear Stearns & Co., Inc." on Justia Law
In re: Avandia Marketing, Sales and Products Liability Litigation
Health benefit plans sued GSK, the manufacturer of the prescription drug Avandia, under state consumer-protection laws and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. ch. 96 (RICO), based on GSK’s marketing of Avandia as having benefits to justify its price, which was higher than the price of other drugs used to treat type-2 diabetes. The district court granted GSK summary judgment, finding that the state-law consumer-protection claims were preempted by the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. ch. 9; the Plans had failed to identify a sufficient “enterprise” for purposes of RICO; and the Plans’ arguments related to GSK’s alleged attempts to market Avandia as providing cardiovascular “benefits” were “belated.” The Third Circuit reversed, applying the Supreme Court’s 2019 "Merck" decision. The state-law consumer-protection claims are not preempted by the FDCA. The Plans should have been given the opportunity to seek discovery before summary judgment on the RICO claims. Further, from the inception of this litigation, the Plans’ claims have centered on GSK’s marketing of Avandia as providing cardiovascular benefits as compared to other forms of treatment, so the district court’s refusal to consider the Plans’ “benefits” arguments was in error because those arguments were timely raised. View "In re: Avandia Marketing, Sales and Products Liability Litigation" on Justia Law
Sapa Extrusions, Inc. v. Liberty Mutual Insurance Co.
Sapa manufactures aluminum extruded profiles, pre-treats the metal and coats it with primer and topcoat. For decades, Sapa supplied “organically coated extruded aluminum profiles” to Marvin, which incorporated these extrusions with other materials to manufacture aluminum-clad windows and doors. This process was permanent, so if an extrusion was defective, it could not be swapped out; the whole window or door had to be replaced. In 2000-2010, Marvin bought about 28 million Sapa extrusions and incorporated them in about 8.5 million windows and doors. Marvin sometimes received complaints that the aluminum parts of its windows and doors would oxidize or corrode. The companies initially worked together to resolve the issues. In the mid-2000s, there was an increase in complaints, mostly from people who lived close to the ocean. In 2010, Marvin sued Sapa, alleging that Sapa had sold it extrusions that failed to meet Marvin’s specifications. In 2013, the companies settled their dispute for a large sum.Throughout the relevant period, Sapa maintained 28 commercial general liability insurance policies through eight carriers. Zurich accepted the defense under a reservation of rights, but the Insurers disclaimed coverage. Sapa sued them, asserting breach of contract. The district court held that Marvin’s claims were not an “occurrence” that triggered coverage. The Third Circuit vacated in part, citing Pennsylvania insurance law: whether a manufacturer may recover from its liability insurers the cost of settling a lawsuit alleging that the manufacturer’s product was defective turns on the language of the specific policies. Nineteen policies, containing an Accident Definition of “occurrence,” do not cover Marvin’s allegations, which are solely for faulty workmanship. Seven policies contain an Expected/Intended Definition that triggers a subjective-intent standard that must be considered on remand. Two policies with an Injurious Exposure Definition also include the Insured’s Intent Clause and require further consideration. View "Sapa Extrusions, Inc. v. Liberty Mutual Insurance Co." on Justia Law
Spartan Concrete Products LLC v. Argos USVI Corp.
Spartan, which operated on St. Croix, sought to displace Heavy Materials as the sole provider of ready-mix concrete on St. Thomas. Upon entering the St. Thomas market, Spartan started a price war that caused financial losses to Spartan while Heavy Materials retained its dominant position. After three years of fierce competition, the companies reached a truce: Spartan agreed to sell on St. Croix while Heavy Materials would keep selling on St. Thomas. Spartan then sued Argos, a bulk cement vendor, alleging violations of the Robinson-Patman Act, 15 U.S.C. 13(a), by giving Heavy Materials a 10 percent volume discount during the price war. The district court entered judgment for Argos and denied Spartan leave to amend its complaint to include two tort claims, finding undue delay and prejudice. The Third Circuit affirmed. Although Argos gave Heavy Materials alone a 10 percent volume discount on concrete, Spartan presented no evidence linking this discount to its inability to compete in the St. Thomas market. Spartan did compete with Heavy Materials for three years and not only lowered its retail prices, but also began a price war and achieved a nearly 30 percent share of the St. Thomas retail ready-mix concrete market. View "Spartan Concrete Products LLC v. Argos USVI Corp." on Justia Law