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

Articles Posted in Business Law
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Legacy, a small family-owned business, provides nonemergency ambulance services in several Ohio counties that border Kentucky. After receiving many inquiries from Kentucky hospitals and nursing homes, Legacy sought to expand into the Commonwealth. Kentucky required Legacy to apply for a “certificate of need” with the Kentucky Cabinet for Health and Family Services. Existing ambulance providers objected to Legacy’s request. The Cabinet denied Legacy’s application partly on the ground that these providers offered an adequate supply. Legacy sued, alleging that Kentucky’s certificate-of-need law violated the “dormant” or “negative” part of the Commerce Clause.The district court granted the defendants summary judgment. The Sixth Circuit affirmed with respect to Legacy’s request to offer intrastate ambulance transportation in Kentucky. Under the modern approach to the dormant Commerce Clause, a law’s validity largely depends on whether it discriminates against out-of-state businesses in favor of in-state ones. Legacy’s evidence suggests that the state’s limits will harm Kentucky’s own “consumers.” It has not shown a “substantial harm” to interstate commerce. The court reversed with respect to Legacy’s request to offer interstate ambulance transportation between Kentucky and Ohio. States may not deny a common carrier a license to provide interstate transportation on the ground that the interstate market contains an “adequate” supply. The bright-line rule barring states from obstructing interstate “competition” does require a finding that a state has discriminated against out-of-state entities. View "Truesdell v. Friedlander" on Justia Law

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In 1965, the predecessors of the Louisville and Jefferson County Metropolitan Government established the Riverport Authority, which constructed and owns a 300-acre Ohio River port facility. In 2009, the Authority leased the facility to “Port of Louisville.” In 2016, the parties extended the lease, potentially until 2035. According to Port, in 2018, Bouvette, the Authority’s director, started secret negotiations with its competitor, Watco. Port alleges that Bouvette and Watco needed a pretext to terminate the existing agreement and hired outside advisors to inspect the facility. These allegedly biased advisors found the facility “mismanaged, unsafe, and in disrepair.” The Authority asserted that Port had breached the lease and filed suits to remove it from the facility while conducting public bidding and awarding a lease to Watco, contingent on Port’s removal from the site. In one suit, Kentucky courts upheld a decision in favor of Port.In another suit, Port alleged tortious interference with contractual and business relationships, civil conspiracy, and defamation against Watco and Bouvette. The district court rejected Bouvette’s defenses under state-law sovereign immunity, governmental immunity, and Kentucky’s Claims Against Local Governments Act, noting the Authority’s status as a corporation and that it performed a proprietary (not governmental) function. The Sixth Circuit reversed. Under Kentucky law, a “state agency” cannot receive “automatic” immunity but the Authority is under the substantial control of an immune “parent.” The development of “transportation infrastructure” is a government task; the Authority does not act with a “profit” motive and alleviates a statewide concern. View "New Albany Main Street Props. v. Watco Co., LLC" on Justia Law

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Columbus-based financial advisors developed a financial product seemingly unique to the annuities market: the Transitions Beneficiary Income Rider, which would guarantee that, following a life insurance policyholder’s death, an insurance company would pay death-benefit proceeds to beneficiaries throughout their lifetimes. They founded Novus to launch the product. Novus contracted with Genesis and Annexus, financial product developers, to handle the eventual pitch to Novus’s target customer, Nationwide. Each agreement contained a confidentiality provision. Nationwide would not sign a nondisclosure agreement (NDA) and cautioned Novus not to disclose any confidential information about the Rider. An Annexus executive shared the Rider concept by email with Nationwide VP Morrone. Nationwide chose not to pursue the concept. After Novus’s unsuccessful pitch, Branch, Morrone’s supervisor, left Nationwide to join its competitor, Prudential. Branch convinced Ferris, also in Branch’s chain-of-command, and who had allegedly attended the in-person pitch, to leave Nationwide for Prudential. Prudential subsequently launched Legacy “eerily similar to” Rider.In Novus’s suit, alleging that Prudential engaged in trade secrets misappropriation, in violation of Ohio’s Uniform Trade Secrets Act, the district court granted summary judgment to Prudential. The Sixth Circuit affirmed. There is no reference to a confidential relationship through which Prudential acquired information about the Rider concept. View "Novus Group, LLC v. Prudential Financial, Inc." on Justia Law

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Miller, who describes himself as “an active wine consumer,” asserts that he wants to order wine from out-of-state retailers and would like to be able to buy wine in other states and transport that wine back into Ohio for his personal use. House of Glunz is an Illinois wine retailer and alleges that it wishes to ship wine directly to Ohio consumers but cannot. Miller and Glunz challenged the constitutionality of Ohio liquor laws preventing out-of-state wine retailers from shipping wine directly to Ohio consumers and prohibiting individuals from transporting more than 4.5 liters of wine into Ohio during any 30-day period.The district court held that the Direct Ship Restriction is constitutional under binding Sixth Circuit precedent; the Director of the Ohio Department of Public Safety is entitled to Eleventh Amendment immunity from the claims; and the plaintiffs lack standing to challenge the Transportation Limit. The Sixth Circuit affirmed the Director of the Ohio Department of Public Safety’s Eleventh Amendment immunity, reversed with respect to the Direct Ship Restriction and the plaintiffs’ standing to challenge the Transportation Limit. On remand, the district court shall determine whether the challenged statutes “can be justified as a public health or safety measure or on some other legitimate nonprotectionist ground,” and whether their “predominant effect” is “the protection of public health or safety,” rather than “protectionism.” View "Block v. Canepa" on Justia Law

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You, a U.S. citizen of Chinese origin, worked as a chemist, testing the chemical coatings used in Coca-Cola’s beverage cans. You was one of only a few Coca-Cola employees with access to secret BPA-free formulas. You secretly planned to start a company in China to manufacture the BPA-free chemical and received business grants from the Chinese government, claiming that she had developed the world’s “most advanced” BPA-free coating technology. On her last night as a Coca-Cola employee, You transferred the formula files to her Google Drive account and then to a USB drive. You certified that she had not kept any confidential information. You then joined Eastman, where she copied company files to the same account and USB drive. Eastman fired You and became aware of her actions. Eastman retrieved the USB drive and reported You to the FBI.You was convicted of conspiracy to commit theft of trade secrets, 18 U.S.C. 1832(a)(5), possessing stolen trade secrets, wire fraud, conspiracy to commit economic espionage, and economic espionage. The Sixth Circuit remanded for resentencing after rejecting You’s claims that the district court admitted racist testimony and gave jury instructions that mischaracterized the government’s burden of proof as to You’s knowledge of the trade secrets and their value to China. In calculating the intended loss, the court clearly erred by relying on market estimates that it deemed speculative and by confusing anticipated sales of You’s planned business with its anticipated profits. View "United States v. You" on Justia Law

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Acuity operates a website that connects people looking to buy or sell homes with a local real estate agent. Acuity’s services are free to home buyers and sellers but realtors pay a fee for referrals. The real-estate broker that employed Lewis, a real estate agent, signed up to receive Acuity’s referrals. The broker required its agents (including Lewis) to pay Acuity’s fee out of their commissions from home sales. Lewis sued, alleging that Acuity makes false claims to home buyers and sellers on its website and that this false advertising violates the Lanham Act, 15 U.S.C. 1125(a)(1)(B).The Sixth Circuit affirmed the dismissal of the suit. The Lanham Act provides a cause of action only for businesses that suffer commercial injuries (such as lost product sales) from the challenged false advertising. The Act does not provide a cause of action for customers who suffer consumer injuries (such as the cost of a defective product) from false advertising. Lewis alleges that type of consumer harm as his injury from Acuity’s allegedly false advertising: He seeks to recover the referral fee (that is, the price) he paid for Acuity’s services. View "Lewis v. Acuity Real Estate Services, LLC" on Justia Law

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Maryville College leased a building to Ruby Tuesday, which used it for corporate retreats. In financial trouble years later, Ruby Tuesday decided to sell its interest in the lease. BNA, a real estate developer, and Ruby Tuesday signed an agreement. Ruby Tuesday had previously secured a loan from Goldman Sachs that prevented Ruby Tuesday from selling its interest in the lease without Goldman’s consent. The agreement with BNA stated that Ruby Tuesday “must obtain approval from [Goldman] for the transaction.” Goldman refused to approve. Goldman later acquired the lease, after Ruby Tuesday’s bankruptcy.BNA sued Goldman under Tennessee law for intentional interference with business relations (IIBR). The Sixth Circuit affirmed the dismissal of the suit. To establish a viable IIBR claim, BNA had to adequately plead an existing business relationship with Ruby Tuesday, Goldman’s knowledge of that relationship, Goldman’s intent to cause a breach or termination of the relationship, Goldman’s improper motive or improper means, and damages from the tortious interference. BNA’s pleading did not satisfy the tort’s fourth prong: improper motive or means. The court also noted the lack of an existing business relationship between BNA and Ruby Tuesday. View "BNA Associates LLC v. Goldman Sachs Specialty Lending Group, L.P." on Justia Law

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Stryker develops, manufactures, and sells spinal implants and products, and employed Abbas from 2013-2022. Abbas purports to have worked exclusively within Stryker’s finance department. Stryker claims that Abbas worked in various roles, including in sales. Abbas regularly used significant amounts of Stryker’s confidential information and trade secrets and supported Stryker’s litigation efforts. Abbas entered into confidentiality, noncompetition, and nonsolicitation agreements with Stryker when he commenced his employment, and again in 2022.Alphatec competes with Stryker. Stryker alleges that Alphatec "systematically misappropriate[s] Stryker[’s] confidential information, trade secrets, customer goodwill, and talent” and is litigating against Alphatec and former Stryker employees in several cases. Abbas resigned from Stryker to take a newly-developed position with Alphatec, a sales role, “crafted to protect Stryker’s confidential information.” Stryker sued for breach of contract and misappropriation of trade secrets.The Sixth Circuit affirmed the issuance of a preliminary injunction on behalf of Stryker. The district court crafted the injunction to preserve the status quo, reserving the possibility that other prospective jobs might be consistent with Abbas's employment agreement. It is not an impermissible industry-wide ban. Stryker is likely to succeed on the merits, based on findings that Abbas worked for Stryker in both sales and finance; Abbas had unfettered access to Stryker’s most sensitive sales and financial information, Stryker’s sales representatives, and key customer decision-makers; the Alphatec position involved work similar to the work Abbas performed for Stryker; and Abbas supported Stryker on litigation matters. View "Stryker Employment Co., LLC v. Abbas" on Justia Law

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Dream purchased university systems with locations across the country: South University, Argosy University, and the Art Institutes. States had recently brought consumer-protection lawsuits against the seller. Dream had to close 30 campuses. Unpaid creditors filed multiple lawsuits. Students at the Illinois Institute of Art brought a class-action fraud suit.Dream feared that filing bankruptcy would cut off its access to federal student loans. In 2019 Digital sued Dream for $252,737. The court appointed a receiver to manage Dream’s property and stayed pending lawsuits. The Receiver decided that potential claims greatly exceeded potential assets. The federal government had discharged the student-loan debts of many of Dream's students.Existing suits had already depleted the payout available from Dream's insurance policies covering its directors and officers. The policies did not protect Dream itself. The Receiver believed that Dream had legal claims against the directors and officers and eventually brought the proceeds from the policies into Dream’s receivership estate ($8.5 million). The settlement hinged on the entry of an order that would “bar” third parties (including the Art Students) from pursuing claims against Dream, its parent, the directors and officers, and the insurer. The district court approved the settlement and Bar Order. The Sixth Circuit reversed. The district court lacked authority to issue the bar order. Historical principles of equity do not allow a court to issue an injunction that protects the non-receivership assets of non-receivership parties; that type of non-debtor relief amounts to a remedy “previously unknown to equity jurisprudence.” View "Digital Media Solutions, LLC v. South University of Ohio, LLC" on Justia Law

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In 2014, EMS entered into a payment processing agreement with Procom, a business owned by Gaal that sold historical tours. The Agreement was executed by Gaal, who signed a personal-guaranty provision. It contained terms relating to “chargebacks,” which occurred when a Procom customer’s transaction was declined or canceled after EMS had credited Procom’s account for the purchase; EMS repaid the money to the Procom customer, then charged Procom for that money plus a fee. In 2019, EMS and Procom executed a second agreement, which contained an explicit integration clause; the guaranty provision was not signed by Gaal but by another Procom employee. During the COVID-19 pandemic, many customers canceled purchases with Procom, resulting in $10 million in chargebacks. Procom is involved in Chapter 7 bankruptcy proceedings. EMS filed a creditor’s proof of claim and sued Gaal. The district court dismissed for failure to state a claim, finding that the 2019 Agreement superseded the 2014 agreement “in all material respects,” including replacing Gaal’s guaranty.The Sixth Circuit affirmed in part, upholding the district court’s consideration of the bankruptcy filing for purposes of determining when chargebacks occurred and its finding that the 2019 Agreement replaced the 2014 Agreement rather than merely supplementing it. The court reversed in part, holding that any chargeback related to transactions occurring before the execution of the 2019 Agreement arose under the 2014 Agreement. View "Electronic Merchant Systems LLC v. Gaal" on Justia Law