Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Eric Smith was the majority owner, chairman, and CEO of Consulting Services Support Corporation (CSSC), which wholly owned CSSC Brokerage Services, Inc. (CSSC-BD), a registered FINRA broker-dealer. Although CSSC-BD was registered, Smith did not personally register with FINRA, claiming an exemption so long as he was not involved in managing the securities business. However, between 2010 and 2015, Smith actively managed CSSC-BD, including overseeing debt offerings, preparing offering documents with false statements, and soliciting investments totaling $130,000 from four investors. A FINRA examination and investor complaints uncovered these activities.Following an investigation, FINRA’s Department of Enforcement filed a complaint against Smith for violations of federal securities laws and FINRA rules. After a disciplinary proceeding, FINRA found against Smith and imposed sanctions, including $130,000 in restitution and a bar from associating with any FINRA member. Smith appealed to the United States Securities and Exchange Commission (SEC), which affirmed FINRA’s findings and sanctions. Smith then sought review in the United States Court of Appeals for the Sixth Circuit, arguing that FINRA lacked jurisdiction over him and that the proceedings violated his rights under Article III and the Seventh Amendment.The United States Court of Appeals for the Sixth Circuit held that FINRA had statutory authority to discipline Smith because, despite not registering, he controlled a FINRA member firm and was therefore a “person associated with a member” under the relevant statute. The court found Smith’s constitutional claims barred because he failed to raise them before the SEC as required by statute, and none of the exceptions to the exhaustion requirement applied. The petition for review was denied. View "Smith v. Securities and Exchange Commission" on Justia Law

Four women incarcerated at the Huron Valley Correctional Facility in Michigan suffered from persistent, painful rashes between 2016 and 2019. Despite repeated complaints, medical staff—contracted through Corizon Health—failed to diagnose scabies, instead providing ineffective treatments and attributing the condition to environmental factors like improper laundering. It was only after an outside dermatologist intervened that scabies was correctly identified, prompting prison-wide treatment efforts. However, these efforts were delayed and, in some cases, inadequate, resulting in prolonged suffering for the affected inmates.After their experiences, the four women filed suit in the United States District Court for the Eastern District of Michigan against multiple defendants, including high-level Michigan Department of Corrections officials and Wayne State University medical officers, alleging Eighth Amendment violations and state-law negligence. The district court found that the women’s complaint plausibly alleged “clearly established” Eighth Amendment violations by all defendants and denied the officials’ request for qualified immunity. The court also rejected a claim of state-law immunity, finding that the officials could be the proximate cause of the inmates’ injuries under Michigan law.On appeal, the United States Court of Appeals for the Sixth Circuit reviewed the district court’s denials. The Sixth Circuit held that existing precedent did not “clearly establish” that the non-treating prison officials’ reliance on contracted medical providers was so unreasonable as to violate the Eighth Amendment. Thus, it reversed the district court’s denial of qualified immunity on the federal damages claims. However, the appellate court affirmed the denial of state-law immunity, finding the plaintiffs adequately pleaded proximate cause under Michigan law. The case was remanded for further proceedings consistent with these holdings. View "Machelle Pearson v. MDOC" on Justia Law

A dispute arose between two bourbon companies, each owned by African Americans, regarding which could claim to be the first to distill bourbon in Kentucky. Victory Global, operating as Brough Brothers, began by sourcing bourbon from Indiana in 2020 and later opened its own distillery in Louisville, filling its first barrel of Kentucky bourbon at the end of that year. Fresh Bourbon, started by the Edwardses, developed its recipe and, lacking a distillery, began distilling bourbon at Hartfield & Co. in Bourbon County in 2018 with increasing hands-on involvement. Fresh Bourbon sold its Kentucky-made bourbon in 2020 and later opened its own distillery in Lexington in 2022 or 2023. Both companies marketed themselves as African American-owned, but Brough Brothers objected to Fresh Bourbon’s claims of being the first, arguing those statements were false or misleading.The United States District Court for the Eastern District of Kentucky reviewed the case on summary judgment. Brough Brothers alleged false advertising under the Lanham Act, asserting that Fresh Bourbon’s marketing contained literally false statements about being the first African American distillery or having the first African American master distiller since slavery. The district court found that the contested statements were, at most, misleading rather than literally false, and that Brough Brothers had not introduced evidence that consumers were actually deceived. It also concluded there was no showing of material impact on consumer decisions.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s decision de novo. The Sixth Circuit affirmed summary judgment for Fresh Bourbon, holding that the statements in question were ambiguous and not literally false. The court emphasized that, absent unambiguously false statements, Brough Brothers needed to present evidence of consumer deception, which it failed to do. Thus, Brough Brothers’ claims under the Lanham Act could not survive. The decision of the district court was affirmed. View "Victory Global, LLC v. Fresh Bourbon, LLC" on Justia Law

Several women incarcerated at a Michigan prison developed painful, persistent rashes between 2016 and 2019. Their complaints were largely ignored by prison staff, and medical providers initially misdiagnosed the condition, ruling out scabies, a highly contagious skin infestation. The prison’s contracted health care provider, Corizon Health, and its infectious disease coordinator were tasked with managing infectious diseases but failed to control the outbreak. Only after an outside dermatologist diagnosed scabies did prison officials begin widespread treatment and quarantine measures, though these efforts were not immediately effective. Four inmates who suffered from these conditions filed suit, seeking damages and injunctive relief against both the medical providers and high-level prison officials who had not directly treated them.The United States District Court for the Eastern District of Michigan denied motions for judgment on the pleadings by the Michigan Department of Corrections and Wayne State Officials. The district court held that the inmates had plausibly alleged that all defendants, including non-treating prison officials, committed clearly established Eighth Amendment violations and were not entitled to qualified immunity. The court also found that the gross negligence claims could proceed under Michigan law, as the complaint adequately alleged that the officials proximately caused the harms.On appeal, the United States Court of Appeals for the Sixth Circuit determined that, under existing precedent, non-treating prison officials’ reliance on contracted medical providers did not clearly constitute an Eighth Amendment violation. The court reversed the district court’s denial of qualified immunity on the inmates’ federal damages claims against these officials, finding no clearly established law requiring them to override medical judgments. However, the court affirmed the denial of state-law immunity, concluding that proximate cause under Michigan law could not be resolved at the pleading stage. The case was remanded for further proceedings consistent with these rulings. View "BLC Lexington SNF, LLC v. Townsend" on Justia Law

A Florida-based limited partnership invested in commercial real estate in Kentucky and purchased insurance for those properties from an insurer. The insured property suffered damage in March 2022, and the partnership promptly filed a claim. The insurer’s adjuster evaluated the damage, determined it was repairable, and offered to pay the cost of repairs minus a deduction for depreciation, explaining that the insured could recover the deducted amount after completing repairs. The partnership had purchased additional coverage that would pay for repairs “without deduction for depreciation” if repairs were completed within two years; however, at the time of the claim, the repairs had not been made.After rejecting the insurer’s offer, the partnership filed a putative class action in the United States District Court for the Southern District of Ohio, arguing that the insurer breached the policy by deducting depreciation from the repair-cost settlement. The insurer moved to dismiss the complaint for failure to state a claim. The district court granted the motion, finding that the policy allowed the insurer to deduct depreciation unless and until the insured completed repairs, at which point the depreciation could be recovered under the optional coverage.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that, under Kentucky law and the specific terms of the policy, the insurer was permitted to deduct depreciation from the payment for repair costs because the insured had not yet completed repairs. The court found that the optional coverage only eliminated the depreciation deduction if the insured actually repaired the property, which had not occurred. The Sixth Circuit affirmed the district court’s dismissal, concluding that the insurer’s actions were consistent with the contract’s terms. View "Schoening Investment LP v. Cincinnati Casualty Company" on Justia Law

Federal authorities investigated a drug trafficking scheme operating within Tennessee prisons, led by members of the Aryan Nation gang. Michael Bailey, while incarcerated, coordinated with James Payne (outside prison) to distribute methamphetamine and fentanyl. Bailey used contraband cell phones to direct drug purchases and sales, communicating with his girlfriend, mother, and other associates to manage the operation and profits. Law enforcement apprehended several participants, seized drugs and cash, and collected evidence, including recorded calls and testimony from co-conspirators.After an indictment, a jury in the United States District Court for the Western District of Tennessee found Bailey guilty of two counts of conspiracy to possess with intent to distribute controlled substances. He was sentenced to concurrent 300-month prison terms. Bailey moved for a judgment of acquittal and a new trial, arguing errors in jury instructions, evidence admission, and insufficient evidence, but the district court denied his motions. He then appealed to the United States Court of Appeals for the Sixth Circuit.The Sixth Circuit reviewed Bailey’s claims. It held that the jury instructions on conspiracy accurately stated the law, even after subsequent amendments to the pattern instructions. The court found no error in not giving a specific instruction on law enforcement testimony, as the standard instructions on witness credibility sufficed. The district court did not abuse its discretion in admitting evidence of gang affiliation, disciplinary records regarding cell phone possession, or a recorded phone call, finding them relevant and not unfairly prejudicial. Lastly, the appellate court held that sufficient evidence supported Bailey’s convictions. The court affirmed the district court’s judgment. View "United States v. Bailey" on Justia Law

Daniel and Shatina Grady were arrested by police during a late-night shooting investigation outside a Michigan residence owned by their daughter. The Gradys lived nearby and approached the scene, filming officers and questioning their authority as they crossed into a perimeter that officers had established around the house suspected to contain the shooter. Despite receiving repeated commands to step back, the Gradys refused and continued to challenge the officers verbally. After warnings, the officers arrested them for interfering with the investigation, which led to a physical struggle.The Gradys were prosecuted in Michigan state court for assaulting, resisting, or obstructing the officers and damaging a police cruiser but were acquitted by a jury. While those charges were pending, the Gradys filed a civil suit in the United States District Court for the Eastern District of Michigan, raising several claims, including First Amendment retaliation. The district court found that the officers had probable cause to arrest the Gradys for failing to comply with lawful orders but allowed the First Amendment claim to proceed under the exception recognized in Nieves v. Bartlett. The district court concluded that the Gradys presented evidence that other bystanders, who had not criticized the police and were not arrested, were similarly situated.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s denial of qualified immunity to the officers. The appellate court held that the other bystanders cited by the Gradys were not similarly situated because they did not enter the established perimeter or defy police orders. The court further found that the Gradys did not provide other objective evidence to satisfy the Nieves exception. As a result, the presence of probable cause defeated the Gradys’ First Amendment retaliatory arrest claim. The Sixth Circuit reversed the district court’s decision and remanded the case for further proceedings. View "Grady v. Cratsenburg" on Justia Law

Police officers found the defendant unconscious in the driver’s seat of a vehicle parked behind an apartment building. During the ensuing welfare check, officers observed a firearm with a large drum magazine in the vehicle’s center console, along with suspected narcotics, a digital scale, sandwich bags (some containing substances), empty bags, cash, and several cellphones. The substances later tested positive for controlled drugs, including cocaine, fentanyl, methamphetamine, and psilocin. The vehicle was registered to another individual, Francine Gill. After his arrest, the defendant made jail calls referencing large amounts of money on Cash App cards and discussing the car with Gill.A federal grand jury indicted the defendant on six counts, including possession of controlled substances with intent to distribute, using or carrying a firearm during a drug trafficking crime, and being a felon in possession of a firearm. At trial in the United States District Court for the Northern District of Ohio, the prosecution presented evidence connecting the defendant to the drugs, cash, and firearm, including the jail call excerpts. The district court overruled the defendant’s objection to the admission of the calls. The jury convicted the defendant of possession with intent to distribute cocaine, using or carrying a firearm during and in relation to a drug trafficking crime, and being a felon in possession of a firearm. He was acquitted on other drug counts. The district court sentenced him to 154 months’ imprisonment after considering his health conditions and criminal history, but declined to grant a downward departure or variance.The United States Court of Appeals for the Sixth Circuit affirmed the convictions and sentence. The court held that sufficient evidence supported the convictions, that the district court did not abuse its discretion in admitting the jail calls, and that the sentence was substantively reasonable. The court also held that the denial of a downward departure was unreviewable because the district court understood its authority to grant one. View "United States v. Curry" on Justia Law

A defendant with a prior felony conviction was found with a firearm while on supervised release, in violation of federal law prohibiting felons from possessing firearms. The conduct leading to the indictment included absconding from supervision and being discovered with a gun, which also violated the terms of his supervised release. He moved to dismiss the federal indictment, arguing that the statute was unconstitutional both on its face and as applied to him, relying on recent Supreme Court decisions concerning the Second Amendment.The United States District Court for the Northern District of Ohio granted the motion to dismiss, finding the relevant federal statute unconstitutional as applied to the defendant. The district court placed the burden on the government to justify the restriction, considered only the defendant's felony convictions (not his entire criminal record), and did not account for his supervised release status. The government appealed to the United States Court of Appeals for the Sixth Circuit.While the appeal was pending, the Sixth Circuit issued new precedent clarifying the proper standard for reviewing Second Amendment challenges. This precedent shifted the burden to the defendant to show he is not dangerous and required courts to consider the full criminal history and supervised release status. The United States Court of Appeals for the Sixth Circuit determined that the district court had not applied the correct legal standard and that the existing record was insufficient for an individualized dangerousness determination. The appellate court vacated the district court’s dismissal and remanded for reconsideration of the motion to dismiss, instructing the district court to apply the correct legal standard consistent with current circuit precedent and to provide the defendant an opportunity to demonstrate he is not dangerous. View "United States v. Hostettler" on Justia Law

Fetch! Pet Care, Inc., a nationwide franchisor of pet-care services, alleged that a group of former franchisees coordinated to exit their franchise agreements and start competing businesses, allegedly misappropriating Fetch!’s branding, client lists, intellectual property, and trade secrets. The franchisees contended that the newer “2.0” franchise model imposed high fees, delivered poor support, and led to high attrition, while some “1.0” franchisees claimed they were forced out of the system unexpectedly, leaving them no choice but to start their own businesses. A franchisee association was formed, and many franchisees sent rescission notices and pursued arbitration. Fetch! responded by filing suit for breach of contract, trademark infringement, and misappropriation of trade secrets, and sought injunctive relief to prevent the franchisees from operating competing businesses or using its intellectual property.The United States District Court for the Eastern District of Michigan held evidentiary hearings and granted Fetch!’s motion for a temporary restraining order and preliminary injunction in part, ordering defendants to stop using Fetch!’s trademarks and cease communication with current Fetch! franchisees, but denied broader injunctive relief. The court reasoned that a full injunction could harm ongoing arbitration proceedings and found sufficient evidence to invoke the doctrine of unclean hands against Fetch!, based on allegedly deceptive conduct in selling franchises. Fetch! timely appealed the district court’s order.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s application of the unclean hands doctrine for abuse of discretion and affirmed. The appellate court held that the district court acted within its discretion in denying broad injunctive relief based on Fetch!’s bad faith and deceptive marketing practices as an underlying cause of franchisee conduct. The court clarified standards for irreparable harm and affirmed the partial denial of preliminary injunction, relying on the doctrine of unclean hands rather than other defenses. View "Fetch! Pet Care, Inc. v. Atomic Pawz Inc." on Justia Law