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

Simpson's insurer, the Fund, paid Simpson’s medical costs ($16,225) arising from a car accident. Simpson hired the Firm to represent her in a personal injury suit. The Fund maintained a right of subrogation and reimbursement. Simpson settled her suit for $30,000. After depositing the settlement funds in a trust account, the Firm paid $9,817.33 to Simpson, $1,000.82 to other lienholders, and $10,152.67 to its own operating account for fees and expenses, offering the Fund $9,029.18. The Fund sued under the Employee Retirement Income Security Act (ERISA) section 502(a)(3), claiming an equitable lien of $16,225. The Firm issued a $9,029.18 check to the Fund, exhausting the settlement funds.The district court issued a TRO requiring the Firm to maintain $7,497.99 in its operating account. The Firm argued that the Fund sought a legal remedy because the Firm no longer possessed the settlement funds; ERISA 502(a)(3) only authorizes equitable remedies. The Fund argued that it sought an equitable remedy because the settlement funds were in the Firm’s possession pursuant to the TRO and cited the lowest intermediate balance test: a defendant fully dissipates a plaintiff’s claimed funds (by spending money from the commingled account to purchase untraceable items) only if the balance in the commingled account dipped to $0 between the date the defendant commingled the funds and the date the plaintiff asserted its right to the funds. The district court granted the Firm summary judgment, reasoning that the Firm dissipated the settlement funds before the TRO issued; the Fund could not point to specific recoverable funds held by the Firm and sought a legal remedy. The Sixth Circuit affirmed, concluding that no issues had been preserved for review. View "Sheet Metal Workers' Health & Welfare Fund of North Carolina v. Law Office of Michael A. DeMayo, LLP" on Justia Law

McCall, who pleaded guilty to a conspiracy charge involving heroin possession and distribution in 2015 and was sentenced to 235 months’ imprisonment, moved for compassionate release. He cited as“extraordinary and compelling circumstances” warranting his release: the COVID-19 pandemic, his rehabilitation efforts, and the Sixth Circuit’s 2019 decision, “Havis” that “attempted” controlled substance offenses do not qualify as predicate offenses for the purpose of the Sentencing Guidelines’ career-offender enhancement and a subsequent holding applying the decision to convictions for conspiracy to distribute controlled substances. He argued that his prior convictions for drug trafficking and assault no longer qualify as predicate offenses for career-offender status, that he has rehabilitated himself, and that the 18 U.S.C. 3553(a) factors favored granting compassionate release. The government argued that McCall raised “generalized fears of contracting COVID-19, without more,” that post-sentence legal developments are not extraordinary, and that McCall poses a danger to the community.The district court denied McCall’s motion in a form order. The Sixth Circuit reversed. The district court suggested that it thought itself unable to rely on nonretroactive changes in sentencing law and abused its discretion by not considering the disparity in McCall’s sentence post-Havis along with his efforts at rehabilitation and the presence of COVID-19. View "United States v. McCall" on Justia Law

Beginning in 1986, Arabian was the sole authorized dealer for Ford brands in Kuwait. In a 2005 Agreement, the companies agreed to use “binding arbitration” as the “exclusive recourse” for any dispute. Ford ended the Agreement in 2016 and applied to the American Arbitration Association for a declaration that it permissibly ended the Agreement. Arabian sued, seeking an injunction prohibiting Ford from proceeding with arbitration and asserting breach of contract and fraud. Arabian argued that the Motor Vehicle Franchise Contract Arbitration Fairness Act, 15 U.S.C. 1226, requires that arbitration between dealers and car manufacturers requires that the parties consent to it after the dispute arises. The district court denied the motion, deciding that the arbitrator must resolve the gateway issue.The arbitral tribunal decided that the Act did not deprive it of authority and held that Ford permissibly terminated the Agreement; it taxed Arabian $1.35 million for fees and costs. Arabian brought counterclaims for breach of contract and fraud but withdrew them before the award. The Sixth Circuit confirmed the award. On remand, Ford moved to stay the federal action to allow the arbitrator to resolve Arabian’s common law claims. The district court dismissed the case without prejudice. The Sixth Circuit reversed. The Act’s command, 9 U.S.C. 3, that a district court “shall on application of one of the parties stay the trial,” conveys a mandatory obligation. Dismissal, unlike a stay, permits an objecting party to file an immediate appeal; a dismissal order undercuts the Act's pro-arbitration appellate-review provisions. View "Arabian Motors Group W.L.L. v. Ford Motor Co." on Justia Law

Eight named plaintiffs, including two minors, brought a nationwide putative class action against e-commerce provider StockX for allegedly failing to protect millions of StockX users’ personal account information obtained through a cyber-attack in May 2019. Since 2015, StockX’s terms of service included an arbitration agreement, a delegation provision, a class action waiver, and instructions for how to opt-out of the arbitration agreement. Since 2017, StockX's website has stated: StockX may change these Terms without notice to you. “YOUR CONTINUED USE OF THE SITE AFTER WE CHANGE THESE TERMS CONSTITUTES YOUR ACCEPTANCE OF THE CHANGES. IF YOU DO NOT AGREE TO ANY CHANGES, YOU MUST CANCEL YOUR ACCOUNT.The Sixth Circuit affirmed the dismissal of the suit and an order compelling arbitration. The court rejected arguments that there is an issue of fact as to whether four of the plaintiffs agreed to the current terms of service and that the defenses of infancy and unconscionability render the terms of service and the arbitration agreement (including the delegation provision) invalid and unenforceable. The arbitrator must decide in the first instance whether the defenses of infancy and unconscionability allow plaintiffs to avoid arbitrating the merits of their claims. View "I. C. v. StockX, LLC" on Justia Law

In 1955-1976, WPC, a manufacturer of industrial valves, bought primary and excess level liability insurance policies from OneBeacon’s predecessor. In 2001, asbestos lawsuits started coming against WPC. OneBeacon began its defense. The parties reached an impasse over several issues.WPC sought declaratory relief in Ohio state court concerning OneBeacon’s obligations. WPC also sued OneBeacon in federal court, alleging breach of contract. OneBeacon unsuccessfully moved to dismiss or stay the case. The district court rejected OneBeacon’s argument that the federal and state proceedings were parallel. WPC amended its state complaint, adding breach of contract claims. The state court held that OneBeacon had not committed the alleged breaches. OneBeacon again moved to dismiss WPC’s federal lawsuit, arguing that the state court’s ruling precluded WPC’s federal claims. The court acknowledged that the state court judgment likely satisfied the elements of claim preclusion, but declined to dismiss. The court stayed the case, noting that WPC’s amended state court complaint made the state and federal proceedings parallel. After OneBeacon filed its federal notice of appeal, the Ohio Court of Appeals reversed in part, finding that OneBeacon breached some of the policies. Pennsylvania subsequently liquidated OneBeacon and stayed all litigation.The Sixth Circuit reversed, first holding that exercising appellate jurisdiction here will in no way “hinder [the] operation” of Pennsylvania’s claims process and priority scheme. Claim preclusion bars the federal suit. View "William Powell Co. v. National Indemnity Co." on Justia Law

Prevent, a group of European companies that specializes in turning around distressed automotive parts suppliers, organized an effort to halt supplies of their parts to obtain better terms from Volkswagen, based in Germany. Volkswagen responded by not doing business with the affiliated companies. Begun in 2016, this litigation initially involved claims of unfair business practices and anticompetitive behavior under German and European law and was handled by German courts. Volkswagen prevailed in most of the suits.In 2019 two members of Prevent, Eastern, based in the Netherlands, and Prevent's American subsidiary sued Volkswagen and its American subsidiary in Michigan, alleging that the carmaker unfairly prevented them from acquiring distressed automotive-parts manufacturers. The district court dismissed the complaint, citing forum non conveniens. The Sixth Circuit affirmed. Germany is an adequate forum to hear this case. It appears that a Germany-based antitrust lawsuit would reach more conduct and more injuries than an American suit. German and Portuguese are the languages of the relevant documents. Local interest in the dispute, the location of the injury, the fullness of the court’s docket, preference for trying cases in the place of the governing law, hesitance to apply foreign law, and desire to avoid conflict-of-law problems, predict an American court’s potential “administrative and legal problems” with trying the case. View "Prevent USA Corp. v. Volkswagen AG" on Justia Law

In 2008, FTS technicians filed suit alleging that they were unlawfully deprived of overtime compensation for the prior three years. The district court authorized a collective action; 293 technicians opted in to the collective action. In 2011, a jury returned verdicts of liability and determined the average number of unrecorded hours worked per week by each testifying technician. Based on those findings, the court applied a 1.5 multiplier for calculating uncompensated overtime, calculated damages for all technicians in the collective action, and entered a judgment. The Sixth Circuit upheld the certification of the case as a collective action and the jury’s verdicts but held that the district court erred in applying a 1.5 multiplier, and in failing to calculate the hourly rates to reflect the actual hours Plaintiffs worked.After a remand from the Supreme Court, FTS sought to raise new issues that were unrelated to the recalculation of the hourly rate and correcting the multiplier. The district court barred FTS from raising most of those arguments, recalculated damages, and entered judgment. The court also substantially granted Plaintiffs’ counsel’s petition for attorney’s fees. The Sixth Circuit affirmed. The district court was constrained on remand to the specific issues; its mandate rule barred FTS and from raising arguments on judicial estoppel, aggregate judgment, and sufficiency of the evidence. View "Monroe v. FTS USA, LLC" on Justia Law

Card was diagnosed with “chronic lymphocytic leukemia,” which can cause fatigue. Card alleges her worsening fatigue left her unable to perform her job as a night-shift nurse. She applied for disability benefits under an Employee Retirement Income Security Act (ERISA) plan administered by Principal, which denied her requests for short-term, long-term, and total disability benefits. Card sued. The district court granted Principal summary judgment. The Sixth Circuit reversed and remanded the case to Principal for further proceedings. Principal granted Card short-term disability benefits but requested additional information for her other claims. Card then filed motions in the district court, seeking attorney’s fees and asking the court to reopen the case because Principal had not reached a benefits decision for her other claims within the 45 days allegedly required by ERISA . The district court issued a “virtual order” on its docket, denying the motions for lack of jurisdiction.The Sixth Circuit first held that it had jurisdiction to review that order then vacated and remanded to the district court. A district court retains jurisdiction over a beneficiary’s ERISA suit during the remand. "As in every other ERISA case in this procedural posture," the prior decision remanded to the district for it to retain jurisdiction while Principal engaged in the new benefits determination. View "Card v. Principal Life Insurance Co." on Justia Law

Lakeside, a Michigan corporation, fabricates stone countertops in Michigan. Cambria a Minnesota LLC, is a nationwide manufacturer of countertop products. Lakeside buys “solid surface products” from manufacturers like Cambria. In 2011, the two companies executed a Business Partner Agreement (BPA) including a Credit Agreement, a Security Agreement, Order Terms and Conditions, Lifetime Limited Warranty, and a Business Operating Requirements Manual Acknowledgment Form. The BPA’s choice-of-law provision and forum-selection clause, in a single paragraph, state: This agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. Any proceeding involving this Agreement and/or any claims or disputes relating to the agreements and transactions between the parties shall be in the ... State of Minnesota. Pursuant to the BPA, Lakeside opened a fabrication facility in 2017. Discussions about Lakeside becoming Cambria’s sole Michigan fabricator led to Lakeside terminating the relationship.Lakeside filed suit in the Western District of Michigan, alleging breach of contract, violations of the Michigan Franchise Investment Law (MFIL), UCC violations, and promissory estoppel. The Sixth Circuit reversed the dismissal of the suit, finding the forum-selection clause unenforceable. MFIL’s prohibition on forum-selection clauses is a strong Michigan public policy and enforcing the forum-selection clause here would clearly contravene that policy. The MFIL claim is not Lakeside’s only claim, and the choice-of-law provision may be applied, as appropriate, to claims within its scope. View "Lakeside Surfaces, Inc. v. Cambria Co., LLC" on Justia Law

ZF appealed an order granting limited discovery to Luxshare under 28 U.S.C. 1782. Luxshare plans to use the discovery in the parties’ international arbitration. ZF sought a stay pending appeal, citing the Supreme Court’s grant of certiorari in Servotronics (2021), and its own pending motion before the Supreme Court to grant an immediate appeal on the same issues raised in Servotronics.The Sixth Circuit first held that there was an appealable order; the district court’s decision whether to order discovery conclusively resolves the subject matter of the underlying proceeding. Orders under section 1782, including on motions to quash subpoenas, are final, appealable orders under 28 U.S.C. 1291. The court then denied a stay after considering the likelihood of success on the merits, the likelihood of irreparable injury absent a stay, whether issuance of the stay would substantially injure other interested parties, and where the public interest lies. The Supreme Court has since dismissed Servotronics and ZF failed to show that the minimal and nonconfidential discovery would constitute irreparable harm. View "Luxshare, Ltd. v. ZF Automotive US, Inc." on Justia Law