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

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

Section 747 of the Consolidated Appropriations Act of 2010 created an arbitration procedure for automobile dealerships to seek continuation or reinstatement of franchise agreements that had been terminated by Chrysler during bankruptcy proceedings, with the approval of the bankruptcy court. After an arbitral decision favoring the dealer, the manufacturer was required to provide the dealer a “customary and usual letter of intent” to enter into a sales and service agreement. After arbitrations, a trial was held to determine whether Chrysler supplied each prevailing dealer with such a letter. Most of the rejected dealers reached settlements with New Chrysler. The court determined that the remaining dealers had received “customary and usual” letters. The Sixth Circuit agreed that section 747 does not constitute an unconstitutional legislative reversal of a federal court judgment and that the only relief it provides to successful dealers is the issuance of a letter of intent. The letters at issue were “customary and usual,” except one contractual provision that required reversal. Contrary to the district court’s conclusion application Michigan and Nevada state dealer acts is preempted by section 747, because those acts provide for redetermination of factors directly addressed in federally-mandated arbitrations closely related to a major federal bailout. View "Chrysler Grp. LLC v. Sowell Auto., Inc." on Justia Law

In 2010, GM sold its subsidiary Saab to Spyker: Spyker acquired a majority interest in Saab, and GM retained a minority interest through preferred shares. The parties entered into an agreement under which GM granted Saab a license to make certain Saab models using GM intellectual property. It prohibited Saab from assigning or transferring its rights without GM’s prior written consent until 2024. In 2010-2011, Saab faced financial hardship and attempted to enter into investment arrangements with Youngman, a Chinese automobile manufacturer. GM refused to approve any agreements that involved Chinese ownership or control of its licensed technology. Saab filed for voluntary reorganization under Swedish law. Saab and Youngman negotiated an agreement and circulated an unexecuted copy: Youngman would provide Saab an immediate cash infusion as a loan, which would be converted into an equity interest in Saab after Saab ceased using GM technology. A GM spokesperson made statements indicating that the agreement was not materially different than what was previously proposed. Based on GM’s position, Youngman backed out; Saab went into bankruptcy. Saab sued for tortious interference with economic expectancy. The district court dismissed, finding that Plaintiffs failed to establish a valid business expectancy and intentional interference by GM. The Sixth Circuit affirmed. View "Saab Automobile AB v. General Motors Co." on Justia Law

Daily Services, owned by Mason, provided short-term temporary employment services. Mason also owned I-Force, which provided longer-term temporary employment services. After losing coverage under the Ohio Bureau of Workers’ Compensation group insurance rating plan, I-Force unsuccessfully applied for self-insurance status. I-Force owed $3 million in premiums. Unable to make payments, I-Force closed. Daily acquired some of its customers and began offering longer-term temporary employment services. Ohio law provides the employer with notice and an opportunity to be heard before the Bureau may file a judgment or lien against it and allows the Bureau to deem one company the successor of another for purposes of an experience rating to calculate premiums, and, if an employer “wholly succeeds another in the operation of a business,” to transfer the obligation to pay unpaid premiums. The Bureau decided that Daily wholly succeeded I-Force, but did not provide notice of its assessment or an opportunity to be heard before it filed judgments and liens against Daily for more than $54 million. A state court vacated the judgments. The Bureau tried again and provided prior notice, but filed a lien before hearing an appeal. The court again vacated. The Bureau’s efforts to recover continue. Daily sued under 42 U.S.C. 1983, alleging violations of procedural due process. The district court concluded that the defendants were entitled to qualified immunity, recognizing that under the Supreme Court decision Parratt v. Taylor, a state may sometimes satisfy due process without providing notice or an opportunity to be heard pre-deprivation. The Sixth Circuit affirmed, holding that the Parratt doctrine does apply, and Daily did not plead that Ohio provided inadequate post- deprivation remedies . View "Daily Services, LLC v. Valentino" on Justia Law