Articles Posted in Business Law

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Plaintiff filed a putative class action alleging that Uber engaged in illegal price fixing. After the district court denied Uber's motion to compel arbitration, holding that plaintiff did not have reasonably conspicuous notice of and did not unambiguously manifest assent to Uber's Terms of Service when he registered. The Second Circuit vacated the district court's judgment, holding that the Uber App provided reasonably conspicuous notice of the Terms of Service as a matter of California law, and plaintiff's assent to arbitration was unambiguous in light of the objectively reasonable notice of the terms. The court remanded to the district court to consider whether defendants have waived their rights to arbitration and for any further proceedings. View "Meyer v. Uber Technologies, Inc." on Justia Law

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Plaintiff, a shareholder in three public companies, filed suit seeking disgorgement of "short-swing" profits under Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78p(b), from investment entities controlled by Carl C. Icahn. The district court dismissed plaintiff's actions on behalf of the companies under Rule 12(b)(6). The Second Circuit affirmed the dismissal, holding that plaintiff has not plausibly alleged that Icahn failed to disgorge all of the premiums received for writing (selling) the put options. In this case, the complaint did not state a claim for relief because it relied exclusively on comparisons to options traded on the open market that have no meaningful similarities to the options at issue here. View "Olagues v. Icahn" on Justia Law

Posted in: Business Law

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Tannerite appealed the district court's dismissal of its defamation suit against NBC. The Second Circuit held that federal pleading standards, when applied to New York law, require a plaintiff asserting a defamation claim to allege facts demonstrating that the defendant made a false statement. In this case, Tannerite's complaint failed to allege that NBC made false statements regarding Tannerite exploding rifle targets. View "Tannerite Sports, LLC v. NBCUniversal News Group" on Justia Law

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Plaintiffs, holders of Petrobras equity, filed a class action against various defendants after the multinational oil and gas company was involved in money-laundering and kickback schemes. The district court certified two classes: the first asserting claims under the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq.; and the second asserting claims under the Securities Act of 1933,15 U.S.C. 77a et seq. The Second Circuit clarified the scope of the contested ascertainability doctrine and held that a class is ascertainable if it is defined using objective criteria that establish a membership with definite boundaries. That threshold requirement was met in this case. The court held that the district court committed legal error by finding that Federal Rule of Civil Procedure 23(b)(3)'s predominance requirement was satisfied without considering the need for individual Morrison v. National Australia Bank Ltd., 561 U.S. 247 (2010), inquiries regarding domestic transactions. Therefore, the court vacated this portion of the Certification Order. The court also held that the district court did not abuse its discretion by determining that the Exchange Act class met their burden under Basic Inc. v. Levinson, 485 U.S. 224 (1988), with a combination of direct and indirect evidence of market efficiency.  Accordingly, the court affirmed as to this issue. View "In re Petrobras Securities" on Justia Law

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After a jury awarded damages based on CSS's avoided costs in a misappropriation and unfair competition action, TydenBrooks requested mandatory prejudgment interest under section 5001(a) of the New York Civil Practice Law and Rules (CPLR). The Second Circuit affirmed the district court's denial of relief insofar as it related to CSS's liability. The court otherwise reserved judgment as to damages and certified the following questions to the New York Court of Appeals: 1. Whether, under New York law, a plaintiff asserting claims of misappropriation of a trade secret, unfair competition, and unjust enrichment can recover damages that are measured by the costs the defendant avoided due to its unlawful activity. 2. If the answer to the first question is "yes," whether prejudgment interest under New York Civil Practice Law and Rules 5001(a) is mandatory where a plaintiff recovers damages as measured by the defendant's avoided costs. View "E.J. Brooks Co. v. Cambridge Security Seals" on Justia Law

Posted in: Business Law

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F5, a Cayman Islands corporation that invests in international shipping companies, filed a shareholder derivative action on behalf of Star Bulk, a global shipping company, alleging that individual members of Star Bulk's board and affiliated entities improperly exploited their control over the corporation in executing three separate transactions. F5's complaint included four causes of action, three of which were derivative and one of which purported to be a direct class-action claim for wrongful equity dilution. In this case, F5 did not seek intracorporate remedies by making a pre-suit demand on Star Bulk's board of directors. The district court dismissed the complaint, concluding that the dilution claim was properly derivative under Delaware law and that F5 failed to plead demand futility under Federal Rule of Civil Procedure 23.1(b)(3)(B), as to any of the claims. The court affirmed, concluding that F5's dilution claim was properly derivative, not direct; the district court had subject matter jurisdiction to adjudicate the non-class, derivative claims; and F5 did not allege facts sufficient to excuse it from making a pre-suit demand. View "F5 Capital v. Pappas" on Justia Law

Posted in: Business Law

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Plaintiffs, unsuccessful bidders in a bankruptcy proceeding, appealed the district court's dismissal of their suit alleging claims for breach of fiduciary duty, tortious interference, and common law fraud against the law firm K&L Gates, LLP and two of its former partners. Plaintiffs alleged that defendants used their prior representation of plaintiffs to undermine plaintiffs' attempt to acquire assets in a bankruptcy sale.  The district court granted defendants' motion to dismiss based on res judicata. The court agreed with plaintiffs that they could not have brought their claims during the bankruptcy proceedings, and that this present action would not disturb the orders of the bankruptcy court. The court explained that the circumstances in this case did not demand that plaintiffs raise their claim in the bankruptcy proceeding, and noted that the relevant issues were not litigated through an adversary proceeding or otherwise. Accordingly, the court reversed and vacated, remanding for further proceedings. View "Brown Media Corp. v. K&L Gates, LLP" on Justia Law

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Carrington appealed the district court's judgment requiring them to pay plaintiff, the indirect purchaser and assignee of a limited prejudgment interest in defendants' fund, damages plus prejudgment interest for breach of the limited partnership agreement. Defendants principally contend that the district court erred in its interpretation of the agreement and should have granted summary judgment in their favor on the issue of liability. Defendants argue that, in any event, permitting plaintiff to withdraw from the fund would have precipitated a sale of fund assets at distressed prices, making it impossible for plaintiff to receive more than a minuscule distribution, if any. The court rejected defendants' challenges to the district court's ruling on the issue of liability. However, the court concluded that there were factual issues to be tried as to the calculation of damages. Accordingly, the court vacated and remanded for further proceedings. View "Umbach v. Carrington Investment Partners (US)" on Justia Law

Posted in: Business Law, Contracts

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TAL challenges the district court's grant of summary judgment to the Chugh Defendants. The district court held that TAL's claims for breach of fiduciary duty by Chugh had previously been determined in Chugh's favor in a prior proceeding and thus TAL was collaterally estopped from asserting them. The court concluded that Chapter 15 of the Bankruptcy Code does not apply when a court in the United States simply gives preclusive effect to factual findings from an otherwise unrelated foreign liquidation proceeding, as was done here; the district court properly applied the doctrine of collateral estoppel where the affirmative defenses in the wind-up proceeding are based in substance on the same allegations made in the Third Amended Complaint; TAL's contention that findings of fact made by the Cayman court cannot have preclusive effect in the district court proceeding are meritless; and TAL's comity argument also lacks merit. Accordingly, the court affirmed the judgment. View "Trikona Advisers Limited v. Chugh" on Justia Law

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Defendant, a marketer of over-the-counter pregnancy test kits, was found liable for false advertising in violation of section 43(a) of the Lanham Act, 15 U.S.C. 1125(a). Plaintiff, a leading competing marketer of over-the-counter pregnancy test kits, claimed that, in informing the user as to how long her pregnancy had been in effect, defendant’s product communicated the false impression that it uses the same metric and gives the same number of weeks of pregnancy as a medical professional would do. The district court found in favor of plaintiff and imposed an injunction on defendant. The court agreed with the district court that plaintiff's Lanham Act claim is not precluded by the Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et seq., claim; there is no error in the district court's finding of falsity in defendant's Launch Package and advertising messages associated with it by reason of their unambiguous implication that defendant’s product measures weeks-pregnant in a manner that is consistent with the measurement used by doctors; agreed with the district court's finding, based on survey evidence, that the message communicated by the Revised Package was impliedly false; there was no error in the district court’s findings that the falsity was material and injurious to plaintiff; and the court did not abuse its discretion in issuing the injunction. Accordingly, the court affirmed the judgment. View "Church & Dwight Co. v. SPD Swiss Precision Diagnostics" on Justia Law

Posted in: Business Law