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

Minnesota-based Everest breeds and races thoroughbreds. Crestwood is a thoroughbred farm in Kentucky. The businesses began working together in 1993. The parties entered a more definite arrangement in 2008, for sale of Everest’s horses. Everest would transfer ownership of more than 100 horses to Crestwood, which would pay the horses’ day-to-day costs and would sell the horses at a public auction or a private sale. The agreement prohibited Crestwood from setting a “reserve” on any horse, a price floor below which the sale would not go. Crestwood was to keep 25-50 percent of the proceeds from each sale. The agreement provided that Island Fashion and its unnamed filly would be sold at auction, but remained Everest’s property. Crestwood tried to sell several horses, including the Island Fashion filly. There were bids of $850,000 and $875,000 for the filly. Everest had planted a separate agent at the auction without Crestwood’s knowledge, who tried to drive the selling price higher by placing a $900,000 bid. The sale failed. After learning what Everest had done, Crestwood kept $219,513.89, 25 from selling other horses based on the failed high bid for the filly (plus auction fees). Everest sued and Crestwood counterclaimed. The district court granted summary judgment to Crestwood and awarded $272,486.30 in attorney’s fees. The Sixth Circuit affirmed. View "Nielsen v. McLean" on Justia Law

Consumers Energy entered into a Purchase Order, under which DynaSteel, operating in Tennessee and Mississippi, would fabricate ductwork for shipment to an Essexville, Michigan power plant for installation by a third party. The PO contained a Michigan choice-of-law provision. Consumers was to pay $10,634,755. PCI, with locations in Kansas and Tennessee, was to supply the insulation requested by Consumers for $1,842,890. The contract between DynaSteel and PCI contained a Tennessee choice-of-law provision. As the project progressed, Consumers paid DynaSteel $2.9 million, but DynaSteel did not pay PCI $1,542,890 it owed. DynaSteel also owed PCI more than $3.2 million for other projects. DynaSteel allegedly comingled Consumer’s payments with funds from other projects. Under a “Payment Plan Proposal,” DynaSteel was to make payments, which would apply to the unpaid orders in chronological order (the Consumers project came last in this order). The PPP did not contain a choice-of-law provision. DynaSteel paid PCI $2.1 million, which satisfied its obligations concerning the other projects, but did not fulfill its obligation as to the Consumers project. PCI sued in Michigan, alleging that DynaSteel violated the Michigan Builders Trust Fund Act. The district court entered summary judgment for Dynasteel, reasoning that the PO between PCI and DynaSteel was controlling, that the Tennessee choice-of-law provision was binding, and that the Trust Fund Act did not apply extraterritorially by its own force. The Sixth Circuit affirmed. View "Performance Contracting Inc. v. Dynasteel Corp." 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

PTM provided the services of a CEO to the Southwest Ohio Regional Transit Authority (SORTA) to control daily operations, while ultimate management authority remained with SORTA’s Board of Trustees. PTM hired Plaintiff as SORTA’s Chief Operating Officer. Plaintiff, an African American woman, a graduate of West Point and University of Michigan Business School, had no prior industry experience. Two years later, PTM changed hands and Plaintiff became CEO on an at-will basis. Within months, PTM began questioning her allegiance to PTM. Plaintiff repeatedly declined to participate in PTM programs. Tensions escalated during negotiations for renewal of PTM’s management contract, which prohibited PTM employees from working for SORTA within a year of its expiration. Plaintiff’s PTM contract contained the same prohibition. PTM suspected that Plaintiff and SORTA were conspiring to have SORTA hire Plaintiff directly. The contract was extended and the one-year hiring prohibition was removed from the contracts. PTM executives continued to regard Plaintiff as a “prima donna” and exchanged several emails critical of Plaintiff. Following a dispute concerning unionization of SORTA workers, PTM fired Plaintiff, purportedly for lying about the dispute. The district court rejected Plaintiff’s discrimination action under Title VII of the Civil Rights Act, 42 U.S.C. 2000e. The Sixth Circuit reversed and remanded, finding PTM’s investigation inadequate to establish that Plaintiff lied.View "Shazor v. Prof'l Transit Mgmt., Ltd." on Justia Law

In 2006, Plaintiffs entered into a five-year oil and gas lease covering 47 acres in Ross Township, Ohio, and granting Chesapeake exclusive rights to “all oil and gas and their constituents” for $5.00 per mineral acre per year and a royalty on production. The lease provides for extension, if “Operations” are being “conducted on the Leasehold, or on lands pooled, unitized or combined with all or a portion of the Leasehold.” In 2011, Chesapeake submitted drilling-permit applications for property that did not include Plaintiffs’ property. Later, Chesapeake filed a “Declaration and Notice of Pooled Unit,” consisting of 21 properties, including Plaintiffs’ property, and declared that “operations and/or production … anywhere within the Unit shall be deemed to be operations and/or production on each separate tract sufficient to extend and maintain each included lease in the Unit.” It specified that production from the unit would be allocated among all leases in the unit proportional to the surface area of each lease. Plaintiffs sought a declaration that the lease expired; Chesapeake filed a counterclaim. The district court ruled in favor of Plaintiffs, concluding that Chesapeake’s actions did not extend the lease because the lease required that a permit application pertaining to the leased property or a property already unitized with the leased property, be filed before the expiration of the lease. The Sixth Circuit reversed and remanded. View "Henry v. Chesapeake Appalachia, LLC" on Justia Law

Crockett’s former law firm subscribed to a LexisNexis legal research plan that allowed unlimited access to certain databases for a flat fee. Subscribers could access other databases for an additional fee. According to Crockett, LexisNexis indicated that a warning sign would display before a subscriber used a database outside the plan. Years after subscribing, Crockett complained that his firm was being charged additional fees without any warning that it was using a database outside the Plan. LexisNexis insisted on payment of the additional fees. The firm dissolved. Crockett’s new firm entered into a LexisNexis subscription agreement, materially identical to the earlier plan; it contains an arbitration clause. Crockett filed an arbitration demand against LexisNexis on behalf of two putative classes. One class comprised law firms that were charged additional fees. The other comprised clients onto whom such fees were passed. The demand sought damages of more than $500 million. LexisNexis sought a federal court declaration that the agreement did not authorize class arbitration. The district court granted LexisNexis summary judgment. The Sixth Circuit affirmed. “The idea that the arbitration agreement … reflects the intent of anyone but LexisNexis is the purest legal fiction,” but the one-sided adhesive nature of the clause and the absence of a class-action right do not render it unenforceable. The court observed that Westlaw’s contract lacks any arbitration clause.View "Reed Elsevier, Inc. v. Crockett" on Justia Law

After Page and SNAP sued Owl for breach of contract, Owl counterclaimed for breach of the same contract. The district court granted summary judgment in favor of Owl on all claims and the counterclaim. Owl elected not to pursue damages on its counterclaim at that time. The court dismissed with a condition that if any aspect of the rulings are reversed or modified, by any appellate court, Owl can reassert the counterclaim following remand. The plaintiffs agreed not to assert any defense based on the passage of time.” The parties appealed. The Seventh Circuit dismissed for lack of jurisdiction, finding that the conditional dismissal did not create a final order under 28 U.S.C. 1291. An appellate court must be able to determine at the time of appeal whether a final, litigation-ending decision has been entered. View "Page Plus of Atlanta, Inc. v. Owl Wireless, LLC" on Justia Law

YA, a nonprofit corporation serving at-risk youth, transported young people to an event using vans that it owned. After the event four people were unable to board because a van was full. A YA employee requested that 16-year-old Lee, a YA participant who had driven to the event in a separate vehicle, drive them home. Lee agreed. Lee did not possess a valid driver’s license and the car that he was driving had been stolen during a carjacking. Police saw Lee driving erratically, ran a license plate check, and gave chase. Lee lost control and hit a tree. Lee survived, but all four passengers were killed. Their estates filed suit. YA requested defense and indemnification under policies issued by Indemnity: a commercial general liability policy with a $1 million limit and a commercial excess liability policy with a $2 million limit. Indemnity provided a defense, but disputed coverage and sought a federal declaratory judgment. YA counterclaimed that Indemnity breached its duty of good faith and violated the Kentucky Unfair Claims Settlement Practices Act, by misrepresenting coverage and failing to affirm liability within a reasonable time. The district court held that Indemnity was obligated under the CGL policy but not under the excess policy. The state court action settled with Indemnity’s payment of the $1 million limit of the CGL policy, plus $800,000 of the excess policy. The federal court dismissed the bad-faith counterclaims, reasoning that, as a matter of law, Indemnity’s coverage position had not been taken in bad faith. The Sixth Circuit affirmed. View "Philadelphia Indem. Ins. Co. v. Youth Alive, Inc." on Justia Law

The 19th-century steamship S.S. Central America, the “Ship of Gold,” sank in the Atlantic Ocean in 1857, taking many tons of gold with her. The wreckage was discovered more than 130 years later by explorers led by Thompson, in one of the most significant finds in maritime history. Thompson is a fugitive from the law. Those who assisted Thompson in locating the wreckage signed non-disclosure agreements in exchange for a percentage of the net recovery, but none have received payment. In their suit, Thompson’s business entities asserted a two-year statute of limitations for actions in salvage and three counterclaims. The district court rejected the time-bar argument and granted summary judgment against all counterclaims. While an interlocutory appeal was pending, the district court granted prejudgment attachment and an injunction against one of the entities and Thompson, forbidding them from divesting certain assets. The Sixth Circuit agreed that the time bar does not apply, affirmed summary judgment against the counterclaims for failure to raise an issue of fact material to the disposition of the case, and upheld the injunction. View "Williamson v. Recovery Ltd. P'ship" on Justia Law

Bennett was walking her dog in Garfield Heights, Ohio when she was struck on the left knee by a vehicle driven by Pastel. The accident threw Bennett onto the car’s hood. Bennett sued Pastel’s insurer, State Farm, which characterized as “ridiculous” her assertion that she was an “occupant” of the car, as that term is defined by State Farm’s policy, at the time she was on the vehicle’s hood. The district court granted summary judgment to State Farm. The Sixth Circuit reversed. The policy defines “occupying” as “in, on, entering or alighting from.” The court stated that “we have no reason to explore Bennett’s relationship with the car… the policy marks out its zone of coverage in primary colors.” View "Bennett v. State Farm Mut. Auto. Ins." on Justia Law