Justia U.S. 1st Circuit Court of Appeals Opinion Summaries

The parties in this case were a group of chess players and their opponent, the Puerto Rico Chess Federation. The chess players filed suit against the chess federation in Puerto Rico court, alleging violations of their rights under the United States and Puerto Rico constitutions and Puerto Rico law. The chess federation successfully removed the case to federal court. The chess players subsequently filed a second case, again in Puerto Rico court, excluding any claims under federal law. The federation also removed this case. The district court consolidated the two cases and declared jurisdiction over the second case under the All Writs Act. Ultimately, the district court granted summary judgment in favor of the federation on all claims. The First Circuit Court of Appeals affirmed in part and reversed in part, holding (1) the district court had federal subject matter jurisdiction over the first case but did not have subject matter jurisdiction over the second case; and (2) the district court incorrectly granted summary judgment to the federal on some of the chess players' Commonwealth law claims. View "Ortiz-Bonilla v. Federacion de Ajedrez de P.R., Inc." on Justia Law

This case concerned the withdrawal liability for a pro rata share of unfunded vested benefits to a multiemployer pension fund of Scott Brass, Inc. (SBI), a bankrupt company. SBI had withdrawal pension obligations to the multiemployer pension fund (TPF), which sought to impose the obligations on two private equity funds (Plaintiffs). Plaintiffs asserted they were passive investors that indirectly controlled SBI and sought a declaratory judgment against the TPF. The TPF counterclaimed and sought payment of the withdrawal liability at issue. The district court entered summary judgment for Plaintiffs. The First Circuit Court of Appeals affirmed in part, reversed in part, and vacated in part, holding (1) at least one of the private equity funds that operated SBI sufficiently operated and was advantaged by its relationship with SBI, and further factual development was necessary as to the other equity fund; (2) the district court erred in entering summary judgment for Plaintiffs under the "trades or businesses" aspect of a two-part "control group" test under 29 U.S.C. 1301(b)(1); and (3) the district court correctly entered summary judgment for Plaintiffs on TPF's claim of liability on the ground that the funds had engaged in a transaction to evade or avoid withdrawal liability. Remanded. View "Sun Capital Partners III, LP v. New England Teamsters & Trucking Indus. Pension Fund" on Justia Law

Appellant signed a loan agreement with Bank for a line of credit for his business (Business). Appellant later defaulted on the loan, and Bank brought a collection action against Appellant, his wife, their conjugal partnership, and Business. The FDIC subsequently took over the Bank as receiver and obtained summary judgment in its favor on the collection action. The district court also dismissed Appellants' counterclaim for lack of jurisdiction, finding that Appellants had not timely taken the steps necessary to maintain an action against the FDIC. The First Circuit Court of Appeals affirmed, holding (1) summary judgment was properly granted on the collection action because factual disputes did not remain concerning Bank's role in causing Appellants to breach their loan agreement and whether Appellants should be released from their obligations under that agreement; and (2) the district court correctly dismissed Appellants' counterclaims on jurisdictional grounds, as the Bank had insufficient assets to make any distribution on the claims of general unsecured creditors, including Appellants if they prevailed on their counterclaim, and therefore, the claim was not redressable. View "Fed. Deposit Ins. Corp., as receiver for R-G Premier Bank of P.R. v. Estrada-Rivera" on Justia Law

Plaintiff filed a second amended complaint against polystyrene food service packaging manufacturers and two trade associations, claiming that Defendants refused in concert to deal with Plaintiff in a recycling business method for polystyrene food service products. In its complaint, Plaintiff alleged violations of section 1 of the Sherman Act and the Massachusetts Fair Business Practices Act (Mass. Gen. Laws ch. 93A). The district court granted Defendants' motions to dismiss and entered judgment in their favor, finding that, as in Bell Atlantic Corp. v. Twombly, there were legitimate business reasons that could explain Defendants' refusal to deal with Plaintiff or to compete with each other for market share. The First Circuit Court of Appeals vacated and remanded, holding (1) Plaintiff alleged sufficient facts to adequately plead its Sherman Act claim; and (2) because the district court summarily dismissed Plaintiff's chapter 93 claim because it failed for the same reasons that its Sherman Act claim failed, the issue needed to be reconsidered. View "Evergreen Partnering Group, Inc. v. Pactiv Corp." on Justia Law

CVS Corp. and Caremark Rx Inc. merged in 2007, creating CVS Caremark Corporation. In 2010, Plaintiffs filed this putative class action against CVS Caremark and certain of its current and former employees. The complaint was later amended to add new plaintiffs - the retirement systems of the city of Brockton and the counties of Plymouth and Norfolk, Massachusetts (collectively, the Retirement Systems). The Retirement Systems claimed that Defendants made material misrepresentations in violation of the Securities Exchange Act and rule 10b-5 of the Securities and Exchange Commission. Specifically, the Retirement Systems alleged that CVS Caremark's CEO's statements in an earnings call with investors caused a drop in CVS Caremark's share price. The district court granted Defendants' motion to dismiss the complaint for failure to state a claim for relief. The First Circuit Court of Appeals vacated the dismissal of the complaint and remanded, holding that Plaintiffs' complaint alleged loss causation sufficiently plausible to foreclose dismissal. View "Mass. Ret. Sys. v. CVS Caremark Corp." on Justia Law

Relator brought a federal False Claims Act (FCA) suit against Millennium Laboratories of California (Millennium) and several physicians, alleging that Millennium encouraged physicians to bill the government multiple times for single drug tests and to perform excessive, medically unnecessary original and confirmation tests. Prior to the filing of the complaint, Millennium filed a suit against Relator's employer, Calloway Laboratories (Calloway), in California state court. Millennium attached emails from from Calloway employees to third parties suggesting fraudulent activity in Millennium's billing practices. The district court dismissed Relator's complaint, finding that the prior disclosure constituted a jurisdictional bar to Relator's suit. The First Circuit Court of Appeals held that the court erred in dismissing all of Relator's claims when only some of them had been disclosed by way of being substantially similar to the information contained in Millennium's prior California suit. Remanded for the district court's consideration of whether Relator's remaining FCA claim was sufficiently pled. View "United States ex rel. Estate of Cunningham v. Millennium Labs. of Cal., Inc." on Justia Law

Biolitec, Inc. (BI), a U.S.-based subsidiary of Biolitec AG (BAG), sold medical equipment to Plaintiff AngioDynamics, Inc. (ADI) and agreed to indemnify ADI or any patent infringement claims. Patent infringement claims were subsequently brought against ADI, and ADI settled the claims. In a separate lawsuit, ADI obtained a $23 million judgment against BI under the indemnification clause. Attempting to secure payment on that judgment, ADI sued BAG, BI, and other related entities (collectively, Defendants) on claims including corporate veil-piercing and violation of the Massachusetts Uniform Fraudulent Transfers Act MUFTA), alleging that BAG looted more than $18 million from BI to move BI's assets beyond reach. The district court granted ADI a preliminary injunction barring Defendants from carrying out the proposed downstream merger of BAG with its Austrian subsidiary and from transferring any ownership interest the held in any other defendant. The First Circuit Court of Appeals affirmed, holding (1) as a matter of law, preliminary injunctive relief was not barred in this case; and (2) the district court did not err in finding that ADI had demonstrated likelihood of success on the merits and irreparable harm. View "AngioDynamics, Inc. v. Biolitec AG" on Justia Law

Four corporations acknowledged they owed the federal government more than $24 million in taxes and penalties, but before the IRS could collect its dues, the corporations transferred all of their assets to other entities. At issue was whether the previous owner of the four corporations, a trust (Trust), was liable to the IRS for the corporations' unpaid taxes and penalties. The tax court looked to state substantive law to determine the Trust's liability and concluded that the Trust could not be held liable because the IRS (1) failed to prove the Trust had knowledge of the new shareholders' asset-stripping scheme, and (2) did not show that any of the corporation's assets were transferred directly to the Trust. The First Circuit Court of Appeals reversed, holding (1) the tax court correctly looked to Massachusetts law to determine whether the Trust could be held liable for the corporations' taxes and penalties; but (2) the tax court misconstrued Massachusetts fraudulent transfer law in making its decision. Remanded for a determination of whether the conditions for liability were met in this case. View "Frank Sawyer Trust of May 1992 v. Comm'r of Internal Revenue" on Justia Law

Plaintiffs brought this putative class action under sections 11, 12, and 15 of the Securities Act, alleging that a prospectus and registration statement (the offering documents) issued by AMAG Pharmaceutical, Inc. in connection with a secondary stock offering held in 2010 contained two serious omissions: (1) a failure to disclose almost two dozen reports of serious adverse effects linked to a make-or-break drug for AMAG's future; and (2) failure to disclose information the FDA revealed in a warning letter issued after the offering. The district court dismissed the entire complaint on the ground that Plaintiffs failed sufficiently to plead section 11 claims pursuant to an SEC regulation. The First Circuit Court of Appeals (1) reversed the dismissal of the claims of actionable omissions because of the undisclosed reports because the reports gave rise to uncertainties AMAG knew would adversely affect future revenues and risk factors that made the offering risky and speculative; (2) affirmed as to the claims of omissions regarding the FDA information; and (3) reversed the dismissal of Plaintiffs' sections 12 and 15 causes of action. Remanded. View "Silverstrand Invs. v. Amag Pharms., Inc." on Justia Law

For approximately a decade, Global NAPs, Inc. (GNAPs) had been engaged in litigation with Verizon New England, Inc. The dispute arose over access fees the companies owed each other. Verizon prevailed in the dispute in 2009, but the district court as of the date of this appeal was still overseeing a receivership sale to satisfy the judgment against GNAPs. In 2011, the district court entered a sale order authorizing the sale of assets to Quality Speaks, LLC. In 2012, the district court entered an order imposing an injunction against GNAPs' former principal, Frank Gangi, prohibiting Gangi from taking any action to interfere with the ability of the receiver to transfer purchased assets in connection with the sale, or to reduce the value of the purchased assets. Gangi appealed. The First Circuit Court of Appeals affirmed, holding that the injunction was plainly justified under longstanding equity principles. View "Global Naps, Inc. v. Verizon New England, Inc." on Justia Law