Justia Commercial Law Opinion Summaries

Losing money on every box fan it sold, Lakewood authorized CAM to practice Lakewood’s patents and put its trademarks on completed fans. Lakewood was to take orders; CAM would ship to customers. CAM was reluctant to gear up for production of about 1.2 million fans that Lakewood estimated it would require during the 2009 season. Lakewood provided assurance by authorizing CAM to sell the 2009 fans for its own account if Lakewood did not purchase them. Months later, Lakewood’s creditors filed an involuntary bankruptcy petition against it. The court-appointed trustee sold Lakewood’s business. Jarden bought the assets, including patents and trademarks. Jarden did not want Lakewood-branded fans CAM had in inventory, nor did it want CAM to sell them in competition with Jarden’s products. Lakewood’s trustee rejected the executory portion of the CAM contract, 11 U.S.C. 365(a). CAM continued to make and sell Lakewood fans. The bankruptcy judge found the contract ambiguous, relied on extrinsic evidence, and concluded that CAM was entitled to make as many fans as Lakewood estimated for the 2009 season and sell them bearing Lakewood’s marks. The Seventh Circuit affirmed, rejecting an argument that CAM had to stop making and selling fans once Lakewood stopped having requirements. View "Sunbeam Prods, Inc. v. Chicago Am. Mfg." on Justia Law

Plaintiff sought damages resulting from a delayed delivery of perishable food items from Puerto Limón, Costa Rica to San Juan, Puerto Rico. The district court dismissed as time-barred by the statute of limitations in the Carriage of Goods by Sea Act, 46 U.S.C. 30701. The First Circuit affirmed,rejecting and argument that the parties meant to incorporate COGSA solely for the purpose of limiting the carrier's liability to $500, per COGSA's limitation of liability provision and equitable arguments. View "Greenpack of PR, Inc. v. Am. President Lines" on Justia Law

In 1957, Dominic opened an Italian restaurant, “Dominic’s.” It closed in 2007, but daughter-in-law, Anne, continues to market “Dominic’s Foods of Dayton.” In 2007, Christie, a granddaughter, contracted to operate a restaurant with Powers and Lee, a former Dominic’s chef. In pre-opening publicity, they promised to bring back original Dominic’s recipes. They named the business “Dominic’s Restaurant, Inc.” and registered with the Ohio Secretary of State. Anne brought claims of trademark infringement, trademark dilution, unfair practices, unfair competition, tortious interference with contract, conversion, misappropriation of business property, breach of contract, fraudulent and/or negligent misrepresentation, and breach of implied covenant of good faith and fair dealing. The district court concluded that defendants had engaged in infringing behavior before and after entry of a TRO. Powers and Lee later closed the restaurant and withdrew registration of the name, but motions continued, arising out of efforts to open under another name. The district court eventually granted default judgment against defendants, rejecting a claim that proceedings were automatically stayed by Powers’ bankruptcy filing. The Sixth Circuit affirmed. The stay does not protect a debtor’s tortious use of his property and, while the stay would bar assessment of damages, it would not bar injunctive relief. View "Dominic's Rest. of Dayton, Inc. v. Mantia" on Justia Law

TAMS, a medical device manufacturer, hired Comtrans to coordinate shipment of equipment to a trade show in Chicago. Comtrans is not a carrier. It used its affiliate, ACS, which retained Atlas to perform the actual shipment. The Atlas truck was involved in a serious accident, leaving TAMS with more than $1 million in losses. TAMS’s insurance company sued on behalf of TAMS. Atlas is an interstate motor carrier authorized by the Federal Motor Carrier Safety Administration to transport goods in interstate commerce. Claims are subject to the Carmack Amendment, 49 U.S.C. 14706, which provides that a carrier of property in interstate commerce is liable for the actual loss or injury to the property caused b” the carrier, which may be limited “to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances.” Atlas relied on the contract it had in place with ACS and the bill of lading delivered signed by a Comtrans warehouse manager when Atlas picked up TAMS’s shipment, as limiting liability to $0.60 per pound. The district court entered summary judgment for Atlas. The Seventh Circuit remanded for further development of the facts. View "Nipponkoa Ins. Co., L v. Atlas Van Lines, Inc." on Justia Law

HSN sold through its website and television station about 70,000 "Esteban" guitars that it identified, inaccurately, as containing Fishman pickups. Esteban is the performance name used by musician Paul who, with his company Daystar, has collaborated with HSN since 2001 to market Esteban guitar packages. Fishman, manufacturer of the pickup at issue, which is attached to musical instruments for sound amplification, claimed trademark infringement and false advertising under the Lanham Act, 15 U.S.C.1051, against HSN, Paul, and Daystar. The district court rejected the claims, finding that the violations were not "willful." The judge chose not to order disgorgement of profits. The First Circuit affirmed, rejecting challenges to evidentiary rulings and jury instructions. In federal civil litigation willfulness requires a conscious awareness of wrongdoing by the defendant or at least conduct deemed "objectively reckless" measured against standards of reasonable behavi View "Fishman Transducers, Inc. v. Paul" on Justia Law

Over seven days in 2009, Ocean Bank authorized six apparently fraudulent withdrawals, totaling $588,851.26, from an account held by Patco, after the perpetrators correctly supplied Patco's customized answers to security questions. Although the bank's security system flagged each transaction as unusually "high-risk" because they were inconsistent with the timing, value, and geographic location of Patco's regular orders, the system did not notify commercial customers of such information and allowed the payments to go through. Ocean Bank was able to block or recover $243,406.83. Patco sued, alleging that the bank should bear the loss because its security system was not commercially reasonable under Article 4A of the Uniform Commercial Code (Me. Rev. Stat. tit. 11, 4-1101) and that Patco had not consented to the procedures. The district court held that the bank's security system was commercially reasonable and entered judgment in favor of the bank. The First Circuit reversed the grant of summary judgment on commercial reasonableness and remanded for determination of what, if any, obligations or responsibilities Article 4A imposes on Patco. View "Patco Constr. Co., Inc. v. People's United Bank" on Justia Law

After the company began to fail, plaintiffs, co-founders and shareholders of Environamics, which designed, manufactured, and sold pumps and sealing devices, sought investors to satisfy its debt. SKF learned that Environamics had developed and patented a "universal power frame" that SKF had been trying to develop for some time, and repeatedly expressed interest in acquiring Environamics. Environamics began to share confidential business information with SKF, stopped seeking out new distribution channels and ceased looking for other opportunities to pay its debt. They gave SKF an irrevocable option to purchase all outstanding Environamics stock and made SKF exclusive marketer and reseller of Environamics products. SKF paid Environamics $2 million. The relationship deteriorated as Environamics required additional financing. Because of SKF’s rights and requirements, plaintiffs made personal guarantees to obtain financing from Wells Fargo. Eventually Environamics filed for bankruptcy. Plaintiffs, responsible for roughly $5 million in personal guarantees on the Wells Fargo loan, sued under an estoppel theory. The district court granted SKF summary judgment. The First Circuit affirmed, finding no specific, competent evidence of any promise made by SKF to buy Environamics on terms other than those of the Option on which plaintiffs could reasonably have relied View "Rockwood v. SKF, USA, Inc." on Justia Law

Plaintiff, a former assistant branch manager at Enterprise, filed a nationwide class action, claiming that Enterprise violated the Fair Labor Standards Act, 29 U.S.C. 207(a)(1), by failing to pay required overtime wages. The district court held that the parent company, which is the sole stockholder of 38 domestic subsidiaries, was not a “joint employer,” and granted summary judgment in favor of the parent company. The Third Circuit affirmed after examining a number of factors concerning the relationship between the parent company and the direct employer. View "In Re: Enter. Rent-A-Car Wage & Hour Emp't Practices Litig." on Justia Law

Platte Valley Bank (PVB), a banking corporation, claimed a perfected security interest in certain equipment owned by Heggem Construction, Inc. In 2008, Heggem sold the equipment in a sale and leaseback transaction to Tetra Financial Group, LLC. Tetra later transferred the equipment to Republic Bank, Inc. (with Tetra, Appellees). PVB sued Appellees, claiming Appellees converted the equipment and the collateral proceeds of the sale. The district court granted summary judgment in favor of Appellees, finding the undisputed facts in the record did not support PVB's conversion claims. The Eighth Circuit affirmed, holding (1) the district court did not err in concluding any interference by Appellees with PVB's right in the equipment was not so serious or important as to constitute conversion; and (2) because PVB failed to articulate any significant harm it suffered as a result of Appellees' action with respect to its deposit account, the district court did not err in concluding no conversion occurred. View "Platte Valley Bank v. Tetra Fin. Group, LLC" on Justia Law

Griffin, a futures commission merchant, went bankrupt in 1998 after one of its customers, Park, sustained trading losses of several million dollars and neither Park nor Griffin had enough capital to cover the obligations. The Bankruptcy Court first relied on admissions by the controlling Griffin partners that they failed to block a wire transfer, allowing segregated customer funds to be used to help cover Park’s (and thus Griffin’s) losses. On remand, the court reversed itself and held that the trustee failed to establish that the partners actually caused the loss of customer funds and failed to establish damages. The district court affirmed, applying the Illinois version of the Uniform Commercial Code to a series of transactions that was initiated by the margin call that caused Griffin’s downfall. The Seventh Circuit affirmed, stating that there is no reason why the transactions at issue (which involved banks in England, Canada, France, and Germany, but not Illinois) would be governed by Illinois law. The Bankruptcy Court’s first decision appropriately relied on the partners’ admission that they failed in their obligation to protect customer funds, which was enough to hold them liable for the entire value of the wire transfer. View "Inskeep v. Griffin" on Justia Law