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

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

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

Gordon Auto Body Parts, a Taiwanese company, was one of several early entrants into the U.S. market for replacement truck hoods. PBSI eventually entered the market for certain replacement hoods but found that it could not match the prices of Gordon and other Taiwanese firms, with which Gordon had participated in joint ventures. Believing that Gordon and the other firms were conspiring to drive it out of business with predatory prices, PBSI brought antitrust claims against Gordon. The district court granted Gordon summary judgment. The Sixth Circuit affirmed, finding that PBSI failed to make any showing that Gordon’s prices were below an appropriate measure of cost. View "Superior Prod. P'shp v. Gordon Auto Body Parts Co." on Justia Law

Kopko ran SFS in Michigan, providing financial transaction processing and electronic funds transfers to companies engaged in e-commerce, processing those transactions through its Fifth Third account, Fifth Third discovered that FBD was processing illegal gambling funds through that account and notified SFS that it was closing SFS’s account immediately. Losing this account crippled SFS’s ability to do business. SFS went bankrupt. Kopko telephoned FBD and spoke to Bastable, FBD’s vice-president for e-commerce. According to Kopko, Bastable said FBD did not have an account in SFS’s name. Months later SFS received a grand jury subpoena related to a federal investigation of the gambling transactions done in SFS’s name. When Kopko called Bastable again to discuss the subpoena, Bastable admitted that FBD had an account in SFS’s name and that the board of directors was aware of this account. In 2012, SFS sued FBD, Bastable, and FBD’s individual directors in federal court for negligence and fraud against. The district court dismissed. The Sixth Circuit affirmed that: answering the phone calls did not establish personal jurisdiction over individual defendants; FBD owed no duty of care to SFS because SFS was not a customer; and SFS failed to adequately plead a claim of fraud. View "SFS Check, LLC v. First Bank of De." on Justia Law

Between 2009 and 2012, Sunshine and Purdy, a Kentucky dairy farmer, entered into “Dairy Cow Leases.” Purdy received 435 cows to milk, and, in exchange, paid monthly rent to Sunshine. Purdy’s business faltered in 2012, and he sought bankruptcy protection. Sunshine moved to retake possession of the cattle. Citizens First Bank had a perfected purchase money security interest in Purdy’s equipment, farm products, and livestock, and claimed that its perfected security interest gave Citizens First priority over Sunshine with regard to the cattle. Citizens argued that the “leases” were disguised security agreements, that Purdy actually owned the cattle, and that the subsequently-acquired livestock were covered by the bank’s security interest. The bankruptcy court ruled in favor of Citizens, finding that the leases were per se security agreements. The Sixth Circuit reversed, noting that the terms of the agreements expressly preserve Sunshine’s ability to recover the cattle. Whether the parties strictly adhered to the terms of these leases is irrelevant to determining whether the agreements were true leases or disguised security agreements. Neither the bankruptcy court nor the parties sufficiently explained the legal import of Purdy’s culling practices or put forward any evidence that the parties altered the terms of the leases making them anything but leases.View "In re: Purdy" on Justia Law

Plaintiff is the marketer, distributor, and seller of 5-hour ENERGY (FHE), an “energy shot,” which is an energy drink sold and consumed in small portions. Plaintiff began selling FHE in 2004. FHE was not the first energy shot on the market, but was the first to achieve widespread success and was unique in being marketed FHE to adults as a replacement for an afternoon cup of coffee or a caffeinated soda. Plaintiff submitted “5-hour ENERGY” for trademark registration with the Patent and Trademark Office, which rejected the application in January 2005, deeming the mark too descriptive to be eligible for protection. Plaintiff placed FHE on the Supplemental Register in September 2005 and secured a trademark for “5-hour ENERGY” in August 2011. Plaintiff also protected its mark and market position through litigation. Defendants have marketed dietary supplements since the mid-1990s. In 2008, defendants began to market and sell “6 Hour Energy Shot,” in a bottle resembling the FHE bottle. In a suit under the Lanham Act, 15 U.S.C. 1051, the district court found infringement of plaintiff’s trademark and trade dress, then entered an order of contempt after the defendants violated a permanent injunction entered. The Sixth Circuit affirmed.View "Innovation Ventures, LLC v. N2G Distrib., Inc." on Justia Law

The plaintiffs deal in silver and gold jewelry, ingots, numismatics, and other related items. They challenged the facial constitutionality of the Precious Metals Dealers Act, Ohio Rev. Code 4728, alleging violation of the commercial speech rights of businesses dealing in precious metals, vagueness, and violation of the Fourth Amendment by imposing overly burdensome retention, reporting, and record-keeping requirements. The district court granted a preliminary injunction, finding that the Act violated the First Amendment because only those engaged in commercial speech are subject to its licensing requirement. The injunction prohibited the state from requiring licenses or fining those, like plaintiffs, who previously violated the statute. The Sixth Circuit reversed, applying “rational basis” review. The Act does not burden the commercial speech rights of unlicensed precious metals dealers. Such dealers do not have a constitutional right to advertise or operate a business does not comply with reasonable requirements of Ohio law and cannot “hold themselves out” to the public without a license, regardless of whether they advertise. The issue is not advertising, but whether a business holds itself out to the public, which can occur by posting a sign, placing goods in a window, or simply conducting business in a manner that is visible to the public. The court noted the public interest in the statutory scheme .View "Liberty Coins, LLC v. Goodman" on Justia Law

Corning hired Hyundai, an ocean shipper, to transport thin glass sheets for use in televisions and computer monitors from the U.S. to Asia. Although it is not clear when the damage occurred, damage was noted when Hyundai unloaded the containers from flatcars operated by its subcontractors (Norfolk Southern Railway and BNSF, another rail carrier). Corning had no role in selecting and no relationship with the subcontractors. There were opinions that the damage was caused by movement of the railcars, not by packing, but the actual cause was not established. Corning’s insurer paid Corning $664,679.88 and filed suit. The district court held that the case would proceed solely under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 11706, apparently reasoning that the damage undisputedly occurred while the cargo was in the possession of a rail carrier. The court found that a Subcontracting Clause did not immunize the rail carriers from suit, but obligated Corning to indemnify Hyundai for any resultant claims by a subcontractor against Hyundai arising out of the same facts. The court held that a $500-per-package limit of liability did not apply to the rail carriers or Hyundai. After a jury trial, the court found Hyundai and the railroads liable, but denied prejudgment interest. The Sixth Circuit affirmed the judgment against Hyundai, reversed and vacated judgments against the railroads, and remanded for reconsideration of prejudgment interest.View "CNA Ins. Co. v. Hyundai Merch. Marine Co., Ltd." on Justia Law