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

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

Taxpayer owned fifteen acres of land in Ludlow, Massachusetts. Taxpayer obtained a commitment from Bank to make a loan to fund development on the land. The commitment stipulated that the loan would be made to Taxpayer or "nominee" and that, if Taxpayer assigned the commitment to a nominee, he would be required to guarantee the loan personally. Taxpayer subsequently transferred title of the property to an LLC he formed. Later, the loan became delinquent, and Bank foreclosed on unsold lots in the development. After selling the lots at auction, Bank filed this interpleader action to determine who had the right to the surplus proceeds. The United States claimed an interest in the fund, as did the town of Ludlow. At issue was who was the "nominee" of Taxpayer for purposes of the federal tax lien that attached to Taxpayer's property. The district court held in favor of the United States, concluding that the LLC was Taxpayer's nominee. The First Circuit Court of Appeals affirmed, holding that the nature of the relationship between Taxpayer pointed to the fact that the LLC was a "legal fiction," and therefore, the district court did not err in concluding that the LLC was Taxpayer's nominee. View "Berkshire Bank v. Town of Ludlow, Mass." on Justia Law

Plaintiffs were Puerto Rico pension plans that owned shared in closed-end investment funds (the Funds) advised by UBS Trust Company of Puerto Rico (UBS Trust). In 2008, UBS Trust, acting as the Funds' investment adviser, purchased $757 million worth of bonds from a series of issuances underwritten by UBS Financial Services Inc. of Puerto Rico (UBS Financial), and then sold these bonds to the Funds. Consequently, the Funds were so heavily invested in these bonds that they suffered significant losses when the value of the bonds depreciated. Plaintiffs brought a shareholder derivative action against the Funds' directors, UBS Trust, and UBS Financial. The district court dismissed the claims on the ground that no presuit demand had been made on the Funds' boards of directors, and Plaintiffs had failed in their complaint to state with particularity the reasons such a demand would have been futile. The First Circuit vacated the dismissal of the derivative claims and remanded, holding that Plaintiffs' allegations established with sufficient particularity that a presuit demand would have been futile, and the district court erred in reaching a contrary conclusion. View "Union de Empleados de Muelles v. UBS Fin. Servs. Inc." on Justia Law

Upon an investigation by the Maine Bureau of Insurance (Bureau) and the Maine Attorney General's Office (AG's Office) into the questionable business practices of Bankers Life and Casualty Company (Company), Appellant, the Company's employee, accepted responsibility for his own unlawful conduct. In exchange, several state officials (Appellees) representing the Bureau and the AG's Office agreed to take no further action against Appellant. Appellees, however, subsequently agreed to Appellant's termination in a separate agreement with the Company. Appellant filed a complaint against Appellees, asserting violations of 42 U.S.C. 1983 and 42 U.S.C. 1985(2). The district court dismissed the complaint, concluding (1) Appellees were entitled to absolute immunity on the section 1983 claim, and (2) Appellant failed to plead a plausible section 1985(2) claim. The First Circuit Court of Appeals affirmed, holding (1) Appellees met their burden in establishing they were entitled to absolute immunity for entering into the consent agreements with Appellant and the Company, and the district court did not err by refusing to invoke the doctrine of judicial estoppel on Appellees' immunity defense; and (2) because the complaint failed to allege any racial or class-based invidiously discriminatory animus underlying Appellees' actions, the district court properly dismissed Appellant's section 1985(2) claim. View "Knowlton v. Shaw" on Justia Law

This appeal involved litigation between Coverall North America, Inc. and its franchisees. Proceeding under federal diversity jurisdiction, the franchisees asserted a variety of state-law claims against Coverall. Which of the various plaintiffs were subject to the arbitration provisions of the Franchise Agreement was at issue in this appeal. Appellees were a subgroup of Plaintiffs who became Coverall franchisees by signing consent to transfer agreements, which by reference incorporated under franchise agreements that contained arbitration clauses. The district court determined that Appellees did not have to arbitrate their claims against Coverall because they did not have adequate notice of the arbitration clauses contained in the franchise agreements. The First Circuit Court of Appeals reversed, holding that the district court erred because (1) Massachusetts law, which governed this dispute, did not impose any such special notice requirement upon these commercial contractual provisions; and (2) in any event, any special notice requirement would be preempted by the Federal Arbitration Act. View "Awuah v. Coverall N.A., Inc. " on Justia Law

House of Flavors purchased equipment from Tetra and executed an agreement with Tetra to fund its installation. Under the agreement, Tetra paid for the installation, House of Flavors then transferred ownership of the installed system to Tetra, and Tetra leased the system back to House of Flavors. After House of Flavors began monthly lease payments, it sought to exercise the buy back option a year early. Notwithstanding the twelve percent estimate it quoted earlier, Tetra quoted a purchase price around forty percent of the equipment and installation costs. House of Flavors filed suit in federal district court, where it prevailed on its claims. The First Circuit Court of Appeals affirmed but remanded the case to reconsider the balance due between the parties. On remand, the judge recalculated the balance due and determined that, rather than owing House of Flavors, Tetra was in fact due $156,399. The First Circuit dismissed House of Flavors' appeal, holding (1) the attack on the recalculated figure was foreclosed by a jurisdictional objection, as the appeal was untimely; and (2) the appeal was jurisdictionally timely as to the district court's refusal to award attorneys' fees under a Utah statute, but the denial of attorneys' fees was affirmed. View "House of Flavors, Inc. v. TFG-Michigan, L.P." on Justia Law

Appellant Loan Modification Group, Inc. (LMG) appealed from a jury verdict awarding $414,000 in damages against LMG for breach of partnership duties and responsibilities owed to Appellee, Lisa Reed. The First Circuit Court of Appeals affirmed, holding (1) the jury was entitled to find that although Reed and LMG's partnership was formed in anticipation of and carried out in accordance with the Home Affordable Modification Program (HAMP), it could be fully performed within one year and need not last for the entire four-year duration of HAMP, and thus, the jury could have reasonably rejected application of the Statute of Frauds; (2) the evidence supported the jury's finding that a partnership existed, whether based on an express oral partnership agreement or on an implied partnership agreement; (3) having found that the partnership was never terminated and that LMG breached its fiduciary duties, the jury's damages award was proper; and (4) there was adequate evidentiary support to sustain the jury's damages award. View "Loan Modification Group, Inc. v. Reed" on Justia Law

Two physicians who contracted with HMOs refused to accept capitation payments in place of fee-for-service payments, so the HMOs dropped the physicians' contracts. The physicians brought constitutional and antitrust claims against the companies, which the district court rejected on a motion to dismiss. The physicians appealed. The First Circuit Court of Appeals affirmed, holding (1) because the appellees were not governmental actors, Appellants' constitutional claims failed; and (2) because the appellees that Appellants contended violated the Sherman Act were not independent firms and were, rather, wholly owned subsidiaries of the same parent company, the appellees could not have violated the Act's conspiracy prohibition. View "Gonzalez-Maldonado v. MMM Health Care, Inc." on Justia Law

Petitioner sought review of an administrative determination sustained by the Securities and Exchange Commission (SEC) that Petitioner mismanaged various brokerage accounts under his supervision. The original determination including sanctions was made by the Financial Industry Regulatory Authority (FINRA). The First Circuit Court of Appeals affirmed, holding, inter alia, (1) FINRA gave Petitioner the substance of due process as required by statute; (2) FINRA and the SEC did not err in finding that investments Petitioner made were unsuitable even though the investments ultimately turned a profit; (3) the findings against Petitioner were well supported; and (4) although one of the exhibits offered against Petitioner had errors, the exhibit's exclusion cured any potential error in the analysis. View "Cody v. SEC" on Justia Law

In 2011, FSRO filed a Demand for Arbitration against Fantastic Sam's Franchise Corporation, on behalf of its members, who are franchisees, holding individual license agreements with Fantastic Sams. FSRO alleged that the Corporation had breached those license agreements. The Corporation filed a petition pursuant to the Federal Arbitration Act, 9 U.S.C. 4, to stay FSRO's arbitration and to compel FSRO members to arbitrate their claims individually. The district court allowed the petition as to license agreements that specifically prohibit class-arbitration. The decision in favor of the Corporation was not appealed. The court denied relief as to other agreements, which state: “Any controversy or claim arising out of or relating in any way to this Agreement or with regard to its formation, interpretation or breach shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association." The First Circuit affirmed. Whether the language permits group arbitration, as requested by FSRO, is a question for the arbitrators. View "Fantastic Sams Franchise Corp. v. FSRO Ass'n, Ltd." on Justia Law