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

Brown claimed that he injured his shoulder while paving a road for his employer Ajax Paving, and sought workers’ compensation. Ajax introduced medical testimony suggesting that the injury occurred outside of work. While the case remained pending before the Michigan administrative agency, Brown and Ajax settled. Brown, however, thought that Ajax had introduced false medical testimony and that it had done the same to other employees, and sued Ajax and its insurers, claims administrators and the doctor, under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c). The district court dismissed. The Sixth Circuit affirmed. Under the Act, Brown must show that illegal racketeering activities have “injured [him] in his business or property.” The Sixth Circuit has held that “loss or diminution of benefits the plaintiff expects to receive under a workers’ compensation scheme does not constitute an injury to ‘business or property’ under RICO.” View "Brown v. Ajax Paving Indus., Inc." on Justia Law

Trusts established by James Cartwright before his death have resulted in litigation in several jurisdictions involving his adopted children and others. The cases involve spendthrift trusts, Crummey Trusts, limited partnerships, and other entities, and tort claims of conversion, conspiracy, self-dealing, and manipulation of trust fund assets. The federal district court held that it lacked jurisdiction, reasoning that both state and federal court actions alleged claims involving administration of the trusts and were quasi in rem and that the Tennessee state court first asserted jurisdiction over the property at issue. The Sixth Circuit affirmed. View "Cartwright v. Garner" on Justia Law

The bankruptcy court held that real property transferred in error to the debtor by his father pre-petition was impressed with a constructive trust as a matter of law, and that the bankruptcy estate had no interest in the real property. The Sixth Circuit Bankruptcy Appellate Panel affirmed.View "In re: Thomas III" on Justia Law

The bankruptcy court voided the transfer of $74,102.60 to 1st National Cash Refund pursuant to 11 U.S.C. 549 and ordered recovery of transferred property from 1st National Cash Refund and Woodford pursuant to 11 U.S.C. 550. The Sixth Circuit Bankruptcy Appellate Panel affirmed, upholding determinations that the statutes of limitation found in sections 549 and 550 were equitably tolled and that the trustee had power to avoid and recover the transferred property. View "In re: Anderson" on Justia Law

Hi-Lex has about 1,300 employees. Blue Cross Blue Shield of Michigan (BCBSM) served as a third-party administrator (TPA) for Hi-Lex’s Health and Welfare Benefit Plan since 1991. Under the Administrative Services Contracts (ASCs) between the parties, BCBSM agreed to process healthcare claims for Hi-Lex employees and grant those employees access to BCBSM’s provider networks. BCBSM received an “administrative fee” set forth in ASC Schedule A on a per-employee, per month basis. In 1993, BCBSM implemented a new system, “retention reallocation,” to retain additional revenue. Regardless of the amount BCBSM was required to pay a hospital for a given service, it reported a higher amount that was then paid by the self-insured client. Hi-Lex allegedly was unaware of the retention reallocation until 2011, when BCBSM disclosed the fees in a letter and described them as “administrative compensation.” Hi-Lex sued, alleging breach of fiduciary duty under the Employee Retirement Income Security Act, 29 U.S.C. 1104(a). The court awarded Hi-Lex $5,111,431 in damages and prejudgment interest of $914,241. The Sixth Circuit affirmed that: BCBSM was an ERISA fiduciary and breached its fiduciary duty under ERISA section 1104(a), that BCBSM conducted “self-dealing” in violation of section 1106(b)(1), and that Hi-Lex’s claims were not time-barred. View "Hi-Lex Controls, Inc. v. Blue Cross Blue Shield of MI" on Justia Law

American Satellite, a third party retailer of Dish Network satellite television services, received a call from a potential customer. A woman, who identified herself as “Dickley,” provided what she claimed to be her social security number. In actuality, the number belonged to a man named Bickley. Dickley was an identity thief. The agent entered Dickley’s name and social security number into an interface that connects to credit reporting agencies. Unable to verify the information, American Satellite informed Dickley that her attempt to open an account was declined. Bickley later received a credit report indicating that Dish had made an inquiry on his name. Dish informed him that someone had attempted to open an account in his name, providing a recording of the conversation between the agent and the identity thief. A year later, despite knowing that the inquiry had prevented the theft of his identity, Bickley filed suit under the Fair Credit Reporting Act, 15 U.S.C. 1681b, alleging request and use of his credit report without a “permissible purpose” and sought emotional distress damages. The district court entered summary judgment for Dish, including a counterclaim for abuse of process. The Sixth Circuit affirmed, referring to the conspicuous underdevelopment of key factual detail in Bickley’s complaint and in briefs as “bordering on deceitful” and to the adage that no good deed goes unpunished. View "Bickley v. Dish Network LLC" on Justia Law

Ice House manufactures ice-vending machines. Cardin’s machines generated about $264,000 in income in 2012. In 2004, Cardin also agreed to be the exclusive distributor of Ice House’s machines in Tennessee. Four years later Ice House sued for breach, obtaining judgments totaling $1,301,900, without interest. Cardin filed for bankruptcy as an individual debtor under Chapter 11. A Chapter 11 plan of reorganization must identify any claims it will “impair,” 11 U.S.C. 1123(a)(3). The bankruptcy court generally cannot confirm a plan if any impaired creditor votes to reject it. Section 1129(b) permits confirmation of nonconsensual plans (cramdown plan) if the plan is fair and equitable with respect to each class of claims or interests that is impaired and has not accepted the plan. To be “fair and equitable” a plan must satisfy the absolute-priority rule, which provides that every unsecured creditor must be paid in full before the debtor can retain “any property.” The rule was not satisfied with respect to Cardin. Cardin’s plan allowed him to retain several assets after paying off loans they secured, to make a single payment of $124,000 towards Ice House’s unsecured claim of $1.545 million, and to “remit” to Ice House any disposable income that he earns during the five years following confirmation. The bankruptcy court confirmed the plan, construing the 2005 Bankruptcy Code amendments to eliminate the absolute-priority rule for individual debtors. The Sixth Circuit reversed, agreeing with other circuits that the absolute priority rule continues to apply to pre-petition property of individual debtors in Chapter 11 cases. View "Ice House Am., LLC v. Cardin" on Justia Law

On January 13, 2009, Jackson was in a car accident with an agent of the Immigration and Customs Enforcement Agency (ICE) within the U.S. Department of Homeland Security (DHS). Jackson suffered damage to her head and spinal cord. Jackson retained the services of Shaffer, an attorney with the firm “Michigan Autolaw.” On March 5, 2009, Shaffer erroneously submitted Jackson’s administrative claim for Damage, Injury, or Death, to DHS, which forwarded Jackson’s claim to ICE. On June 17, ICE received Jackson’s claim. The cover letter listed Shaffer’s address in Southfield, Michigan. The claim form included Jackson’s mailing address. On July 7, ICE confirmed receipt of Jackson’s claim in correspondence, sent to the Southfield address, stating that ICE would process Jackson’s claim pursuant to the Federal Tort Claim Act, which allows an agency “up to six months to adjudicate a damage claim, beginning from the date the agency receives the claim.” On March 8, 2011, ICE sent to the Southfield address a “final determination” denying Jackson’s claim, stating that Jackson could file suit no later than six months after the date of mailing. On March 23, the Postal Service returned the denial as “Not Deliverable…Unable to Forward.” Autolaw had changed locations in May, 2010. Jackson contends that Autolaw had a one-year forwarding order for its mail. The parties also disagree whether the information about changing locations was conveyed to ICE. Despite receiving the undelivered mail, ICE took no further action. On January 11, 2012, Jackson filed suit. The district court dismissed, finding that the mailing of the denial letter triggered the six-month limitation and declining to apply equitable tolling. The Sixth Circuit affirmed. View "Jackson v. United States" on Justia Law

Minnesota-based Everest breeds and races thoroughbreds. Crestwood is a thoroughbred farm in Kentucky. The businesses began working together in 1993. The parties entered a more definite arrangement in 2008, for sale of Everest’s horses. Everest would transfer ownership of more than 100 horses to Crestwood, which would pay the horses’ day-to-day costs and would sell the horses at a public auction or a private sale. The agreement prohibited Crestwood from setting a “reserve” on any horse, a price floor below which the sale would not go. Crestwood was to keep 25-50 percent of the proceeds from each sale. The agreement provided that Island Fashion and its unnamed filly would be sold at auction, but remained Everest’s property. Crestwood tried to sell several horses, including the Island Fashion filly. There were bids of $850,000 and $875,000 for the filly. Everest had planted a separate agent at the auction without Crestwood’s knowledge, who tried to drive the selling price higher by placing a $900,000 bid. The sale failed. After learning what Everest had done, Crestwood kept $219,513.89, 25 from selling other horses based on the failed high bid for the filly (plus auction fees). Everest sued and Crestwood counterclaimed. The district court granted summary judgment to Crestwood and awarded $272,486.30 in attorney’s fees. The Sixth Circuit affirmed. View "Nielsen v. McLean" on Justia Law

The Employee Retirement Income Security Act prohibits an employer from retaliating against an employee “because he has given information or has testified or is about to testify in any inquiry or proceeding relating to [the Act],” 29 U.S.C. 1140. Sexton made a one-time unsolicited internal complaint to his employer about alleged violations of the ERISA, with respect to seating employees on the company’s board of directors. About six months later, the company fired Sexton from his job as a general manager. Sexton sued in Michigan state court for violating the state Whistleblower Protection Act and for breaching his employment contract. The company invoked complete preemption under ERISA and removed the case to federal court. Sexton did not challenge the company’s removal of the case or its use of complete preemption. The district court granted the company summary judgment on the ERISA claim and declined supplemental jurisdiction over Sexton’s breach-of-contract claim. The Sixth Circuit affirmed, holding that Sexton’s complaint did not amount to “giv[ing] information ... in any inquiry” under ERISA. View "Sexton v. Panel Processing, Inc." on Justia Law