Articles Posted in Business Law

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Debtors filed voluntary petitions under chapter 11 of the Bankruptcy Code and a motion seeking bankruptcy court approval of an asset purchase agreement (APA), whereby they agreed to seek substantially all of their assets to Buyer. The bankruptcy court approved the APA through a sale order and confirmed Debtors’ proposed plan of reorganization. Appellants, senior executives of Debtor, were then informed that their employment was terminated the day the sale closed. The bankruptcy court found Buyer liable to Appellants under the APA for their severance pay. The district court vacated the judgment against Buyer, finding that Appellants’ claims against Buyer fell outside the bankruptcy court’s statutorily granted jurisdiction. The First Circuit affirmed, holding that the bankruptcy court had no jurisdiction over Appellants’ claims for severance pay from Buyer because the claims were not proceedings which “arise in” the chapter 11 bankruptcy such that they fell within the grant of jurisdiction contained in 28 U.S.C. 1334. View "Quincy Medical Center v. Gupta" on Justia Law

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The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), enacted in 2016 to address Puerto Rico’s financial crisis, provides for a temporary stay of debt-related litigation against the Puerto Rico government. The statute, however, allows creditors to move for relief from the stay and directs courts to grant such relief “after notice and a hearing…for cause shown.” Movant Peaje Investments LLC and various appellants in Altair Global Credit Opportunities Fund (A), LLC v. Garcia-Padilla (the Altair Movants) filed lift-stay motions. The First Circuit (1) affirmed the district court’s denial of the Peaje Movant’s motion, holding that Peaje failed to set forth a legally sufficient claim of “cause” to lift the PROMESA stay; and (2) the Altair Movants presented sufficient allegations to entitle them to a hearing. View "Peaje Investments LLC v. Garcia-Padilla" on Justia Law

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Tutor Perini Corporation, a giant construction company, sued Banc of America Securities LLC (BAS) and Bank of America, N.A. (BANA), alleging that BAS, acting as its broker-dealer and with BANA’s knowledge and acquiescence, sold Tutor Perini auction-rate securities (ARS) without disclosing that the ARS market was heading for a crash. Tutor Perini filed suit in Massachusetts’s federal district court, alleging securities fraud under state and federal law and several other state-law claims. BAS and BANA moved for summary judgment on all claims, claiming that BAS actually disclosed the risks that later materialized. The district court granted BAS and BANA’s motion. The First Circuit (1) vacated the summary judgment for BAS on the state securities-fraud claim, the federal securities-fraud claim, the state negligent-misrepresentation claim, and the state unfair-business-practices claim, holding that genuine issues of material fact existed as to these claims; and (2) affirmed in all other respects. Remanded. View "Tutor Perini Corp. v. Banc of America Securities LLC" on Justia Law

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Evergreen Partnering Group, Inc. processed used polystyrene products into a recycled polystyrene resin, which it sold to converters to use in a “green foam” line of products. Evergreen sued Defendants - the five largest converters of polystyrene products and a trade association - arguing that Defendants illegally agreed to refuse to deal with Evergreen in order to prevent polystyrene recycling from becoming viable and to maintain their market positions. The district court entered summary judgment in favor of Defendants, concluding that Evergreen failed to present evidence that tended to exclude the possibility that each polystyrene manufacturer independently chose not to partner with Evergreen as required by caselaw. The First Circuit affirmed, holding that no genuine issue of material fact existed as to whether there was a conspiracy. View "Evergreen Partnering Group v. Pactiv Corp." on Justia Law

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Patricia Cornwell, a well-known crime novelist, and her spouse filed suit against their former business managers Anchin Block & Anchin and the company’s principal, Evan Snapper, alleging New York state law claims of negligent performance of professional services, breach of contract, and breach of fiduciary duty. The jury returned a verdict in favor of Plaintiffs on all three claims and awarded Plaintiffs $51 million in damages. Thereafter, the district court vacated the jury’s decision, ruling that it had incorrectly instructed the jury and that Defendants’ statements to the Department of Justice (DOJ) were protected by a qualified privilege and therefore should not have been considered by the jury. The First Circuit reversed in part, holding (1) the district court correctly found that it incorrectly instructed the jury on New York’s statute of limitations for a breach of fiduciary duty claim; and (2) the district court erred in entering judgment as a matter of law for Defendants on the DOJ issue. Remanded for a new trial. View "Cornwell Ent., Inc. v. Anchin, Block & Anchin, LLP" on Justia Law

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This appeal stemmed from an employment dispute between Angel Edgardo Rodriguez-Miranda (Rodriguez) and Malik Benin (Benin), two former colleagues. At issue in this, the the latest round of litigation, was a judgment entered against Benin’s company, Coquico, Inc., in favor of Rodriguez for $348,821. Benin apparently sought to avoid paying the judgment by transferring Coquico’s assets to his mother, Acquanetta Benin (Acquanetta) and to 18 Degrees North, LLC. The district court used Fed. R. Civ. P. 25(c) to hold Coquico, Benin, Acquanetta, and 18 Degrees North (collectively, Appellants) all liable for the judgment. The court also found Benin in civil contempt and imposed a monetary sanction. The First Circuit affirmed, holding (1) the district court did not plainly err in joining Benin, Acquanetta, and 18 Degrees North under Rule 25(c) as alter egos of Coquico and holding them liable for the judgment originally entered against Coquico only; and (2) the district court did not err in fining Appellants in civil contempt and imposing a $5,000 sanction on Benin. View "Rodriguez-Miranda v. Benin" on Justia Law

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Trafon Group, Inc., a Puerto Rico-based wholesale food distributor, filed suit in the District of Puerto Rico alleging that Butterball LLC breached an exclusive distribution agreement in violation of Puerto Rico’s Law 75 of June 24, 1964. Trafon moved for a preliminary injunction enjoining Butterball from further impairing the alleged exclusive distribution agreement. The district court denied the motion, concluding that Trafon’s claim was barred under Law 75’s three-year statute of limitations. The district court then dismissed the case under Fed. R. Civ. P. 56(f). The First Circuit affirmed, holding that Trafon’s action was time-barred under Law 75. View "Trafon Group, Inc. v. Butterball LLC" on Justia Law

Posted in: Business Law, Contracts

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Plaintiff obtained a $23 million judgment against a Corporation. Plaintiff sought to secure payment on that judgment by filing suit in federal district court against the Corporation’s president and its corporate parent, alleging that Defendants had looted the Corporation of more than $18 million in assets in order to render it judgment-proof. After Plaintiff learned that one of the Corporation’s corporate parents planned to merge with an Austrian subsidiary, the district court issued a temporary restraining order, later converted into a preliminary injunction, barring the merger. Defendants nevertheless effected the merger. The district court issued civil contempt sanctions on Defendants for violating the court’s preliminary injunction order. Plaintiff subsequently moved for default judgment based on Defendants’ assertion that they had no intention of complying with the contempt order. The district court entered judgment for Plaintiff and awarded $75 million to Plaintiff. The First Circuit affirmed, holding (1) the district court properly exercised personal jurisdiction over Defendants; (2) Plaintiff’s complaint adequately stated valid causes of action for, inter alia, tortious interference with contractual relations and veil piercing; (3) the district court did not abuse its discretion in entering default judgment as a sanction for Defendants’ discovery violations; and (4) the district court did not err when it entered a damage award without an evidentiary hearing. View "AngioDynamics, Inc. v. Biolitec AG" on Justia Law

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Plaintiff obtained a $23 million judgment in New York against a New Jersey corporation ("Corporation") with its principal place of business in Massachusetts. Plaintiff sought to secure payment on that judgment by bringing suit in the District of Massachusetts against the Corporation’s president and its corporate parents, alleging that Defendants had looted BI of more than $18 million in assets in order to render it judgment-proof. Plaintiff later learned that one of BI’s corporate parents planned to merge with an Austrian subsidiary, which would place the company’s assets out of Plaintiff’s reach. The district court issued a temporary restraining order, later converted into a preliminary injunction, barring the merger. Defendant unsuccessfully moved to vacate the injunction and then appealed. While the appeal was pending, Defendants effected the merger. The district court issued civil contempt sanctions on Defendant for violating the court’s preliminary injunction order. The First Circuit affirmed, holding that the district court (1) did not exceed the bounds of its authority when it imposed the civil contempt sanctions; and (2) did not err when it declined to vacate the underlying preliminary injunction. View "AngioDynamics, Inc. v. Biolitec AG" on Justia Law

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This shareholder derivative suit was one of several suits alleging that Smith & Wesson Holding Corporation, a major gun manufacturer incorporated in Nevada, made misleading public statements in 2007 about demand for its products. In reaction to these cases, Smith & Wesson formed a Special Litigation Committee (SLC) to investigate and evaluate the viability of any of these claims and to make a recommendation to Smith & Wesson’s Board whether to pursue any of these claims. The SLC issued a final report recommending against filing any claims. In 2010, Plaintiff asserted Nevada state law claims against Smith & Wesson’s officers and directors, including breach of fiduciary duty and waste of corporate assets. On the basis of the SLC’s conclusions, Defendants, former and current officers and directors of Smith & Wesson, moved for summary dismissal under Delaware law, as adopted by Nevada. The district court granted the motion. The First Circuit affirmed, holding that the district court did not err in finding as a matter of law that the SLC was independent and that the SLC’s investigation was reasonable and conducted in good faith. View "Sarnacki v. Golden" on Justia Law