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

Fakhouri, a resident of Michigan who uses a wheelchair, traveled to Tennessee for a vacation in summer, 2012. She visited Ober Gatlinburg, a ski resort that also has a year-round amusement park, restaurant, lounge, and shopping center alongside the ski paths and mountain trails. To bring visitors to and from the ski area and associated attractions, Ober Gatlinburg operates a tramway, which Fakhouri rode without incident up the mountain when she arrived at the site. When she tried to enter the tram for her return trip, her wheelchair caught on the tram, breaking one of the wheels and causing her leg to buckle underneath the chair. She sought medical treatment for injuries to her leg and neck, and she continues to experience swelling, weakness, poor blood flow, and discoloration in the affected leg. The district court rejected her negligence suit on summary judgment, relying on a Tennessee statute that precludes liability for ski resort operators under certain conditions. The Sixth Circuit affirmed. Fakhouri’s lawsuit was precluded because she was a “skier or passenger,” Ober Gatlinburg is a “ski area operator,” and her injuries “aris[e] out of” her “use of any passenger tramways associated with Alpine or downhill skiing.” View "Fakhouri v. Ober Gatlinburg, Inc." on Justia Law

Plaintiff and her companies, Tri-Serve and Capital Concepts, brought a claim for improper use of trade name and false designation of origin under the Lanham Act, 15 U.S.C. 1125, against Sheakley Entity Defendants on the basis of e-mails and mailings Angelia Strunk-Zwick, a manager for plaintiffs and a consultant for Defendant Sheakley HR Solutions, sent to Tri-Serve clients. The court concluded that plaintiffs have stated a claim for improper use of trade name and false designation of origin for which the Sheakley Entity Defendants may be held vicariously liable. Taken together, the representations at issue could not only sow confusion but also strongly imply affiliation - and affiliation not endorsed by plaintiffs. Because the Sheakley Entity Defendants may be held vicariously liable for Strunk-Zwick’s e-mail, plaintiffs have stated a claim for false advertising against Strunk-Zwick and the Sheakley Entity Defendants. Plaintiffs further allege that Strunk-Zwick and all Sheakley Defendants violated the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962, for failure to state a claim. The court concluded that plaintiffs’ RICO conspiracy claim fails because plaintiffs failed to allege a substantive RICO violation in the first place. Accordingly, the court reversed the district court's dismissal of plaintiffs' Lanham Act claims for failure to state a claim; affirmed the dismissal of plaintiffs' RICO claims; and remanded for further proceedings where the district court may, in its discretion, reexamine whether to reinstate any of plaintiffs' state law claims. View "Grubbs v. Sheakley Group, Inc." on Justia Law

For some time, Broad Street Energy has owned many Ohio oil-and-gas leases. The market has changed to use of shale-drilling (fracking) to extract oil and gas from shale formations deeper than the formations from which Broad Street has extracted oil. Fracking requires leases of at least 640 acres, as opposed to the 20-to-40-acre leases that Broad Street required for conventional wells. Endeavor agreed to pay $35 million for many of Broad Street’s leases, plus wells, pipelines, and related property. Endeavor put $3.5 million in escrow. Broad Street delivered a list of assets and title limitations. Before closing, Endeavor conducted due diligence and told Broad Street that it found title defects affecting 40% of the leases and reducing the value of the assets by 55%. Endeavor did not seek more information or invoke the agreement’s dispute-resolution process, but terminated on the ground that the title defects reduced value by at least 30%. Broad Street responded several times, disputing those statements and insisting on at least implementing dispute-resolution procedures With no response, it sued. A jury awarded Broad Street the $3.5 million escrow, plus interest. The Sixth Circuit affirmed, noting the relative sophistication of the parties and that the contract did not permit Endeavor to terminate unilaterally based on its own assessment of title defects and their value. View "Broad St. Energy Co. v. Endeavor Ohio, LLC" on Justia Law

Exel, a shipping broker, sued SRT, an interstate motor carrier, after SRT lost a shipment of pharmaceutical products it had agreed to transport for Exel on behalf of Exel’s client, Sandoz. On summary judgment, the district court awarded Exel the replacement value of the lost goods pursuant to the transportation contract between Exel and SRT, rejecting SRT’s argument that its liability was limited under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 14706. The Sixth Circuit reversed. Whether SRT had limited its liability was a question of fact for a jury. To limit its liability under the Carmack Amendment, a carrier must: provide the shipper with a fair opportunity to choose between two or more levels of liability obtain the shipper’s written agreement as to its choice of liability; and issue a receipt or bill of lading prior to moving the shipment. SRT did not meet its burden on summary judgment of establishing that it provided Sandoz with the opportunity to choose between two or more levels of liability. SRT did not explain what “classification or tariff . . . govern[ed]” the shipment, nor indicate whether it made this information available to Sandoz. View "Exel, Inc. v. S. Refrigerated Transp., Inc." on Justia Law

Allied, founded in 1973 by Ramun, competes with Genesis in the field of industrial dismantling and scrap processing, including the design, development, and manufacture of related specialized equipment. From 1992-2001, Ramun’s son Mark worked at Allied. By 1999, Allied developed innovative multi-use demolition machine attachments, called MT. Various sizes and types of jawsets, including a steel beam cutter and a concrete crusher, were available, allowing the MT operator to perform different tasks with just one tool. The jawset could be changed without removing the main pin, saving time and enhancing productivity. Mark had detailed information regarding the design and function of the attachment, which was highly confidential. In 2001 Mark left Allied, taking a laptop containing 15,000 pages of Allied documents, including detailed technical information about the MT. Mark joined Genesis in 2003. Genesis later released its own multiuse tool. Genesis brought trade secret claims, based on similarity to the MT. A jury rendered a verdict in favor of Allied. The court awarded damages but refused to enter an injunction. The Sixth Circuit affirmed dismissal of a subsequent suit under the Ohio Uniform Trade Secrets Act, alleging misappropriation after that verdict, citing issue preclusion. View "Allied Erecting & Dismantling Co. Inc. v. Genesis Equip. & Mfg., Inc." on Justia Law

In 2005, the Harrises bought tens of thousands of shares in Bancorp through a TD Ameritrade account. Six years later, the Harrises sought to hold some of their Bancorp stock in another form, registered in their name and reflected in a physical copy of a certificate signifying their ownership. TD Ameritrade refused to convert the Harrises’ form of ownership, stating that all Bancorp stock was in a “global lock,” prohibiting activity in the stock, including changing the Harrises’ form of ownership. The lock was created because someone had fraudulently created hundreds of millions of invalid shares of Bancorp stock. The Harrises sued, alleging that TD Ameritrade had violated SEC Rule 15c3-3 and Nebraska’s version of the Uniform Commercial Code. The Sixth Circuit affirmed dismissal.. Neither the SEC Rule nor Nebraska’s Commercial Code creates a private right of action to vindicate the alleged problem. View "Harris v. TD Ameritrade, Inc." on Justia Law

Max Trucking transports freight throughout the United States, maintaining a staff of six dispatchers at its Michigan headquarters. The dispatchers find jobs on websites and contact one of 76 truck drivers, including about 20 drivers based in Michigan, to offer the load to that driver. The Michigan Worker’s Disability Compensation Act (WDCA) requires employers to maintain worker’s compensation insurance coverage for their employees. Liberty Mutual issued Max a policy, which it renewed annually for several years. In 2011, Liberty audited Max and determined that 16–18 Michigan-based drivers, who leased trucks from Max through a lease-to-buy program, were employees, not independent contractors, and increased Max’s policy premium. Max has not paid the premium increase and sought a declaratory judgment that drivers operating under the lease-to-buy program are not employees but are independent contractors under the WDCA. Liberty filed a counterclaim, seeking unpaid premiums totaling $101,592. The Sixth Circuit affirmed judgment in favor of Liberty Mutual, agreeing that the truckers are employees, despite evidence that that they may decline to work, can incur a financial loss, made a significant financial investment in the vehicle purchase, and receive all tax deductions and depreciation of the vehicles on their personal tax returns. View "Max Trucking, LLC v. Liberty Mut. Ins. Corp." on Justia Law

In 1998, Eggersten's law office, an S corporation, established an employee stock ownership plan (ESOP), a retirement plan that primarily owns securities of the sponsoring employer. Eggertsen transferred his ownership to the ESOP. S corporations pass their income through to shareholders who pay any tax due on that income. 26 U.S.C. 1366, and, in the mid-1990s, it was possible for ESOPs, then exempt from taxes at the plan level, to own shares in S corporations, 26 U.S.C. 501(a), 512(e)(3), 1361(b)(1)(B), 1361(c)(6)(B). ESOP participants, such as Eggertsen, were not taxed on income attributable to stock held in the ESOP until that stock was distributed, typically at retirement. The law office, therefore, did not pay tax on its income; the ESOP would not owe tax at the plan level. Eggertsen, who ultimately owned the shares, would not owe tax on the income until retirement. In 2001, Congress amended the provisions, giving affected taxpayers a grace period to come into compliance. The law firm did not comply within the grace period. The IRS waited until 2011 to try to collect the excise tax (over $200,000) that resulted from delayed compliance. The Sixth Circuit upheld the imposition of the tax and held that the limitations period remained open. View "Law Office of John H Eggertsen, P.C. v. Comm'r of Internal Revenue" on Justia Law

Best designs and markets exit signs and emergency lighting. Pace manufactured products to Best’s specifications. Best’s founder taught Pace how to manufacture the necessary tooling. There was no contract prohibiting Pace from competing with Best. By 2004, Best was aware that Pace was selling products identical to those it made for Best to Best’s established customers. Several other problems arose between the companies. When they ended the relationship, Pace was in possession of all of the tooling used to manufacture Best’s products and the cloned products, and Best owed Pace almost $900,000 for products delivered. Pace filed a breach of contract suit. Best requested a setoff of damages for breach of warranty and counterclaimed for breach of contract, tortious interference, misappropriation of trade secrets, conversion, and fraud. Pace claimed that Best had misappropriated Pace’s trade secrets and had tortiously interfered with Pace’s contracts. The district court found that Best had breached its contractual obligations by failing to pay, but that Pace was liable for breach of warranties, breach of contract, tortious interference, misappropriation of trade secrets, conversion, and false designation of origin and false advertising under the Lanham Act. The Sixth Circuit affirmed that Pace is liable for breach of contract and tortious interference, but reversed or vacated as to the trade secrets, Lanham Act, conversion, and warranties claims. View "Kehoe Component Sales Inc. v. Best Lighting Prods., Inc." on Justia Law

Pharmacy benefit manager Medco is an intermediary between health plan sponsors (often employers) and prescription drug companies, enabling plans to offer less expensive prescription drug benefits to their members. Medco keeps an updated list of available medicines (formulary) available and sends that list to prescribers and to plan sponsors so they can keep costs down for members. Sandusky provides chiropractic services and prescribes medications to patients who are members of prescription drug plans contracted with Medco. Medco faxed part of its formulary to Sandusky in June 2010, asking Sandusky to “consider prescribing plan-preferred drugs” to “help lower medication costs. Other than listing Medco’s name and number, the fax did not promote Medco’s services and did not solicit business. Three months later, Medco sent Sandusky another fax that informed Sandusky that a certain respiratory drug brand was preferred over another brand, and could save patients money. Sandusky, on behalf of a proposed class, sued Medco, claiming that the faxes were “unsolicited advertisements” prohibited by the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(1)(C). The Sixth Circuit affirmed summary judgment in favor of Medco, finding that the faxes were not advertisements as a matter of law because their primary purpose was informational rather than promotional. View "Sandusky Wellness Ctr., LLC v. Medco Health Solutions, Inc." on Justia Law