Justia U.S. 6th Circuit Court of Appeals Opinion SummariesArticles Posted in Business Law
St. Luke’s Hospital v. ProMedica Health System, Inc.
The Sixth Circuit previously affirmed the Federal Trade Commission’s decision to block a merger of ProMedica and St. Luke’s Hospital in Lucas County, Ohio. As part of the unwinding of the merger, ProMedica and St. Luke’s signed an agreement in which ProMedica’s insurance subsidiary, Paramount, agreed to maintain St. Luke’s as a within-network provider; Paramount could drop St. Luke’s if ownership of the hospital changed. A large healthcare company based in Michigan, McLaren, subsequently merged with St. Luke’s. Paramount ended its relationship with St. Luke’s, removing the hospital from its provider network. St. Luke’s then alleged that ProMedica’s refusal to do business with it violated the antitrust laws. The district court preliminarily enjoined ProMedica from ending the agreement. The Sixth Circuit vacated. Because ProMedica had a legitimate business explanation for ending the relationship, St. Luke’s is unlikely to show that ProMedica unlawfully refused to continue doing business with it. St. Luke’s has little likelihood of establishing an irreparable injury given the option of money damages. View "St. Luke's Hospital v. ProMedica Health System, Inc." on Justia Law
Adamo Demolition Co. v. International Union of Operating Engineers
Adamo filed several tort claims, alleging that it requested the Union to provide 47 operators for a demolition job, indicating that the project was time-sensitive and that the Union willfully refused to provide Adamo contact information for proposed workers, refused to give reasonable assurances that operators were experienced, trained and qualified, and refused to fulfill Adamo’s request to verify their qualifications. Adamo alleged that the Union sent unqualified workers, who created unsafe working conditions and caused damage for which Adamo was liable. Adamo partially staffed the project with its own workers; the Union allegedly ordered these workers to stop work and used “intimidation” to displace the experienced workers with unqualified workers. As a result of the Union’s interference, Adamo claims it breached its contractual obligations. Adamo also contends that the Union and its president have been “intentionally and maliciously" made "unprivileged, injurious, false and defamatory statements concerning Adamo,” which are affecting Adamo’s good reputation in the community.The district court concluded that section 301 of the Labor Management Relations Act, 29 U.S.C. 185, preempted all Adamo’s claims and dismissed them. The Sixth Circuit affirmed. Whether the defendants’ conduct was justified or improper is inextricably intertwined with and dependent upon the terms of the collective bargaining agreement. The only allegedly defamatory statements were published in the context of a labor dispute, and required a showing of actual malice; the falsity of those statements defends on the terms of the agreement. View "Adamo Demolition Co. v. International Union of Operating Engineers" on Justia Law
Ingram Barge Co., LLC v. Zen-Noh Grain Corp.
Zen-Noh purchased grain shipments. Sellers were required to prepay barge freight and deliver the product to Zen-Noh’s terminal but were not required to use any specific delivery company. Ingram, a carrier, issued the sellers negotiable bills of lading, defining the relationships of the consignor (company arranging shipment), the consignee (to receive delivery), and the carrier. Printed on each bill was an agreement to "Terms” and a link to the Terms on Ingram’s website. Those Terms purport to bind any entity that has an ownership interest in the goods and included a forum selection provision selecting the Middle District of Tennessee.Ingram updated its Terms and alleges that it notified Zen-Noh through an email to CGB, which it believed was “closely connected with Zen-Noh,” often acting on Zen-Noh's behalf in dealings related to grain transportation. Weeks after the email, Zen-Noh sent Ingram an email complaining about invoices for which it did not believe it was liable. Ingram replied with a link to the Terms. Zen-Noh answered that it was “not party to the barge affreightment contract as received in your previous email.” The grains had been received by Zen-Noh, which has paid Ingram penalties related to delayed loading or unloading but has declined to pay Ingram's expenses involving ‘fleeting,’ ‘wharfage,’ and ‘shifting.’” Ingram filed suit in the Middle District of Tennessee. The Sixth Circuit affirmed the dismissal of the suit. Zen-Noh was neither a party to nor consented to Ingram’s contract and is not bound to the contract’s forum selection clause; the district court did not have jurisdiction over Zen-Noh. View "Ingram Barge Co., LLC v. Zen-Noh Grain Corp." on Justia Law
Vitolo v. Guzman
The American Rescue Plan Act of 2021 allocated $29 billion for grants to help restaurant owners. The Small Business Administration (SBA) processed applications and distributed funds on a first-come, first-served basis. During the first 21 days, it gave grants only to priority applicants--restaurants at least 51% owned and controlled by women, veterans, or the “socially and economically disadvantaged,” defined by reference to the Small Business Act, which refers to those who have been “subjected to racial or ethnic prejudice” or “cultural bias” based solely on immutable characteristics, 15 U.S.C. 637(a)(5). A person is considered “economically disadvantaged” if he is socially disadvantaged and he faces “diminished capital and credit opportunities” compared to non-socially disadvantaged people who operate in the same industry. Under a pre-pandemic regulation, the SBA presumes certain applicants are socially disadvantaged including: “Black Americans,” “Hispanic Americans,” “Asian Pacific Americans,” “Native Americans,” and “Subcontinent Asian Americans.” After reviewing evidence, the SBA will consider an applicant a victim of “individual social disadvantage” based on specific findings.Vitolo (white) and his wife (Hispanic) own a restaurant and submitted an application. Vitolo sued, seeking a preliminary injunction to prohibit the government from disbursing grants based on race or sex. The Sixth Circuit ordered the government to fund the plaintiffs’ application, if approved, before all later-filed applications, without regard to processing time or the applicants’ race or sex. The government failed to provide an exceedingly persuasive justification that would allow the classification to stand. The government may continue the preference for veteran-owned restaurants. View "Vitolo v. Guzman" on Justia Law
Carhartt, Inc. v. Innovative Textiles, Inc.
In 2009, Carhartt contracted with Innovative to create a flame-resistant fleece fabric for use in its line of flame-resistant garments. The fabric that Innovative developed for Carhartt, “Style 2015," contained a modacrylic fiber, “Protex-C.” Innovative agreed that it would conduct flame-resistance testing on the Style 2015 fabric before shipping it to Carhartt, using the industry-standard test, ASTM D6413. Carhartt sent Innovative emails in 2008, 2010, 2011, 2012, and 2013 stating that Carhartt would do “regular, random testing on the product that is received.” Carhartt performed visual inspections but did not conduct flame-resistance testing until 2016. The Style 2015 fabric failed the D6413 test. Carhartt notified Innovative, which then conducted its own testing and concluded that Style 2015 fabrics dating back to 2014 did not pass flame-resistance testing. In 2013, Innovative stopped using Protex-C and began using a different modacrylic fiber without notice to Carhartt.The district court granted Innovative summary judgment on Carhartt’s negligence, fraud, misrepresentation, false advertising claims. breach of contract and warranty claims. The court reasoned that Carhartt did not notify Innovative of the suspected breach within a reasonable amount of time after Carhartt should have discovered the defect, as required by Michigan’s Uniform Commercial Code. The Sixth Circuit reversed. Reasonable minds could differ as to whether Carhartt should have discovered the breach sooner by performing regular, destructive fire-resistance testing on the fabric. View "Carhartt, Inc. v. Innovative Textiles, Inc." on Justia Law
Lyngaas v. Curaden AG
Curaden AG, a Swiss entity, manufactures toothbrushes. Curaden USA, an Ohio corporation headquartered in Arizona, is a Curaden AG subsidiary and promotes Curaden AG products throughout the U.S. The two companies had not executed the standard written distribution agreement that typically governs the practices of Curaden AG’s subsidiary distributors. Curaden USA never presented its advertising materials to Curaden AG for review. Curaden USA purchased a list of thousands of dental professionals’ fax numbers and created the fax advertisements at issue, which displayed Curaden USA’s contact information without mention of Curaden AG. Curaden USA hired companies to send the faxes and paid for the transmission. Lyngaas, a Livonia dentist who had received two Curaden USA faxes, filed a purported class action under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227. The Sixth Circuit affirmed that Lyngaas could not pierce the corporate veil to hold Curaden AG liable for Curaden USA’s action, that faxes received by a computer over a telephone line violated the TCPA, that it had personal jurisdiction over both Curaden entities, that Curaden USA violated the TCPA but that Curaden AG was not liable as a “sender,” and that Lyngaas’s evidence and expert-witness testimony concerning the total number of faxes successfully sent were inadmissible due to unauthenticated fax records. A claims-administration process was established for class members to verify their receipt of the unsolicited fax advertisements. View "Lyngaas v. Curaden AG" on Justia Law
The Ohio State University v. Redbubble, Inc.
Redbubble operates a global online marketplace. Around 600,000 independent artists, not employed by Redbubble, upload images onto Redbubble’s interface. Consumers scroll through those images and order customized items. Once a consumer places an order, Redbubble notifies the artist and arranges the manufacturing and shipping of the product with independent third parties. Redbubble never takes title to any product shown on its website and does not design, manufacture, or handle these products. The shipped packages bear Redbubble's logo. Redbubble handles customer service, including returns. Redbubble markets goods listed on its website as Redbubble products; for instance, it provides instructions on how to care for “Redbubble garments.” Customers often receive goods from Redbubble’s marketplace in Redbubble packaging.Some of Redbubble’s artists uploaded trademark-infringing images that appeared on Redbubble’s website; consumers paid Redbubble to receive products bearing images trademarked by OSU. Redbubble’s user agreement states that trademark holders, and not Redbubble, bear the burden of monitoring and redressing trademark violations. Redbubble did not remove the offending products from its website. OSU sued, alleging trademark infringement, counterfeiting, and unfair competition under the Lanham Act, and Ohio’s right-of-publicity law. The district court granted Redbubble summary judgment. The Sixth Circuit reversed. Redbubble’s marketplace involves creating Redbubble products and garments that would not have existed but for Redbubble’s enterprise. The district court erred by entering summary judgment under an overly narrow reading of the Lanham Act. View "The Ohio State University v. Redbubble, Inc." on Justia Law
Smith v. General Motors LLC
In 2005-2006, GM changed the dashboard used for GMT900 model cars from a multi-piece design to a single-piece design, which made the dashboard prone to cracking in two places. Plaintiffs, from 25 states, alleged that GMT900 vehicles produced in 2007-2014 contained a faulty, dangerous dashboard and that GM knew of the defective dashboards before GTM900 vehicles hit the market. The complaint contained no allegation that any of the plaintiffs have been hurt by the allegedly defective dashboards. The complaint, filed on behalf of a nationwide class, alleged fraudulent concealment, unjust enrichment, and violations of state consumer protection statutes and the Magnusson-Moss Warranty Act.The Sixth Circuit affirmed the dismissal of the case. At worst, Plaintiffs suffered only cosmetic damage and a potential reduced resale value from owning cars with cracked dashboards. Although the plaintiffs claimed that routine testing, customer complaints, and increased warranty claims alerted GM to the defective dashboards and accompanying danger, that is not enough to survive a motion to dismiss without specifics about how and when GM learned about the defect and its hazards, and concealed the allegedly dangerous defect from consumers. Even accepting that GM produced defective vehicles, under the common legal principles of the several states, the plaintiffs must show that GM had sufficient knowledge of the harmful defect to render its sales fraudulent. View "Smith v. General Motors LLC" on Justia Law
Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC
Through several corporations, members of the Boersen family have farmed in Michigan for several generations. After 2016's poor crop, their corporate entities could not cover their debts. One creditor, Helena, obtained a nearly 15-million-dollar judgment against the Boersen entities and family members who ran them. Much of the farm equipment was repossessed and, unable to obtain financing, the Boersens discontinued farming until 1999, when family members Stacy and Nick formed new entities, secured financing to lease the land and remaining equipment, and resumed farming. Because the original defendants could not pay their debt, Helena sued Stacy and Nick and their new companies.The Sixth Circuit affirmed summary judgment in favor of the defendants. The leases do not transfer the debtors’ assets; none of the involved entities owes any money to Helena. Stacy and Nick’s use of the family farm’s production history to obtain crop insurance does not constitute a “transfer of assets.” Neither Stacy nor Nick was an owner, manager, or shareholder of any of the Boersen entities covered by the judgment; no Boersen legacy owner or guarantor serves as an officer of or is otherwise employed by, either new company. No original Boersen defendant received anything of value from the new companies other than fair market value payments on leases. Nor was either new company used to commit a wrong against Helena. View "Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC" on Justia Law
EPLET, LLC v. DTE Pontiac North, LLC
In 2007, GM sold a power plant to DTEPN, which leased the land under the plant for 10 years. DTEPN agreed to sell utilities produced at the plant to GM, to maintain the plant according to specific criteria, and to address any environmental issues. DTEPN’s parent company, Energy, guaranteed DTEPN’s utility, environmental, and maintenance obligations. Two years later, GM filed for bankruptcy. GM and DTEPN agreed to GM’s rejection of the contracts. DTEPN exercised its right to continue occupying the property. An environmental trust (RACER) assumed ownership of some GM industrial property, including the DTEPN land. DTEPN remained in possession until the lease expired. RACER then discovered that DTEPN had allowed the power plant to fall into disrepair and contaminate the property.The district court dismissed the claims against Energy, reasoning that RACER’s allegations did not support piercing the corporate veil and Energy’s guaranty terminated after GM rejected the contracts in bankruptcy.The Sixth Circuit reversed. Michigan courts have held that a breach of contract can justify piercing a corporate veil if the corporate form has been abused. By allegedly directing its wholly-owned subsidiary to stop maintaining the property, Energy exercised control over DTEPN in a way that wronged RACER. DTEPN is now judgment-proof because it was not adequately capitalized by Energy. RACER would suffer an unjust loss if the corporate veil is not pierced. Rejection in bankruptcy does not terminate the contract; the contract is considered breached, 11 U.S.C. 365(g). The utility services agreement and the lease are not severable from each other. Energy guaranteed DTEPN’s obligations under the utility agreement concerning maintenance, environmental costs, and remediation, so Energy’s guaranty is joined to DTEPN’s section 365(h) election. View "EPLET, LLC v. DTE Pontiac North, LLC" on Justia Law