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

Satyam approached the Trust about forming a joint venture to provide engineering services to the automotive industry. Satyam represented that it was an IT-services provider with a base of automotive customers, that it was publicly-traded, audited, and financially stable. The Trust formed VGE, a separate legal entity; in 2000, VGE and Satyam formed SVES under the laws of India; VGE contributed $735,000. VGE and Satyam signed agreements calling for binding arbitration. In 2005, Satyam initiated arbitration. VGE counterclaimed that Satyam had breached its obligations. The arbitrator rejected VGE’s counterclaims, found that Satyam never competed with SVES, and found an event of default entitling Satyam to purchase VGE’s shares in the joint venture for book value. Satyam filed an enforcement action. The district court ordered VGE to comply with the award. The Sixth Circuit affirmed. Following a 2007 contempt proceeding, VGE complied. In 2010, VGE and the Trust sued, alleging that, starting before the joint venture, Satyam engaged in a massive fraud scheme about its financial stability, and claiming civil violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961–1968. The district court dismissed, based on res judicata defense, and denied leave to amend. The Sixth Circuit reversed. The complaint adequately alleged that Satyam wrongfully concealed the factual predicate to claims, so the defense of claim preclusion does not apply. View "Venture Global Eng'g, LLC v. Satyam Computer Servs., Ltd." on Justia Law

GM provides its salaried retirees with continuing life insurance benefits under an ERISA-governed plan. MetLife issued the group life insurance policy and periodically sent letters to participants advising them of the status of their benefits. The plaintiffs, participants in the plan, allege that those letters falsely stated that their continuing life insurance benefits would remain in effect for their lives, without cost to them. GM reduced their continuing life insurance benefits as part of its 2009 Chapter 11 reorganization. The plaintiffs sued MetLife under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1132(a)(2) & (a)(3) and state law. The district court dismissed. The Sixth Circuit affirmed. MetLife did not tell participants that the benefits were fully paid up or vested upon retirement, but that their benefits would be in effect for their lifetimes, which “was undeniably true under the terms of GM’s then-existing plan.” The court rejected claims of estoppel, of breach of fiduciary duty, unjust enrichment, breach of plan terms, and restitution. View "Merrill Haviland v. Metro. Life Ins. Co." on Justia Law

Aleris supplied aluminum to Behr under a requirements contract until a labor dispute forced Aleris to close its Quebec factory in 2008. After learning of the closure, Behr took delivery of aluminum worth $2.6 million from Aleris without paying for it and scrambled to obtain aluminum from other suppliers, which Behr says increased its costs by $1.5 million. Behr filed suit in Michigan state court. That suit was stayed in 2009 when Aleris’s parent company filed for bankruptcy in the U.S. Aleris filed for bankruptcy in Canada. Aleris sued Behr in federal court seeking recovery of $2.6 million for the aluminum delivery. Behr asserted numerous defenses and counterclaims including a setoff for its increased costs after the factory closure. The district court abstained from adjudication of Behr’s counterclaim, characterizing it as “part and parcel of the stayed state-court proceedings,” then granted summary judgment to Aleris in the amount of $1.1 million and closed the case. Behr satisfied the judgment. The state court declined to lift the stay. The Sixth Circuit reversed, stating that the decision gave Behr full value for its untested counterclaim and has the impact of depriving the Canadian estate of monies to which it might be entitled. View "RSM Richter, Inc. v. Behr America, Inc." on Justia Law

In 1997, Crum, a small company near insolvency, agreed to service Martin’s light-duty vehicles. Martin was a subsidiary of Massey Coal, a publicly-traded corporation. The agreement allowed Crum to enter Martin’s property to pick up vehicles; Martin required Crum to enter into an indemnification agreement and Crum agreed to Martin’s terms. Crum obtained insurance coverage required by the agreement from Universal. Philip, a Crum employee, rode with a Martin employee to pick up a truck from Martin property. A boulder rolled down hill, hit the vehicle, severely injuring Philip. The U.S. Mine Safety and Health Administration cited Martin for having loose rock above the roadway. Philip and Crum sued Martin; Martin counterclaimed based on the indemnification. Universal declined to defend on the counterclaim. After mediation, Martin agreed, without admitting liability, to pay $3,650,000. The parties also entered an “agreed judgment” against Crum for $3,650,000, on Martin’s counterclaim. Martin agreed not to pursue Crum for that judgment and sued Universal. The Sixth Circuit agreed with the district court that Universal had no duty to indemnify Martin because there was enough evidence to show that Crum was not actually liable to Martin. The indemnification was unenforceable as against public policy; it was the product of a significant disparity in bargaining power and attempted to shift liability for compliance with at least one mining-safety statute. View "Martin Cnty. Coal Corp. v. Universal Underwriters Ins. Co." on Justia Law

The Authority was formed under Ga. Code 46-4-82(a) to provide member municipalities with natural gas. It operates as a non-profit, distributing profits and losses to member municipalities: 64 in Georgia, two in Tennessee, 12 in other states. It pays its own operating expenses and judgments; it is exempt from state laws on financing and investment for state entities and has discretion over accumulation, investment, and management of its funds. It sets its governance rules; members elect leaders from among member municipalities. Smyrna, Tennessee has obtained gas from the Authority since 2000, using a pipeline that does not run through Georgia. The Authority entered a multi-year “hedge” contract for gas acquisition, setting price and volume through 2014, and passed the costs on. The market price of natural gas then fell due to increased hydraulic fracturing (fracking), but Smyrna was still paying the higher price. Smyrna sued for breach of contract, violations of the Tennessee Consumer Protection Act, breach of fiduciary duty, and unjust enrichment. The district court denied the Authority’s motion to dismiss based on sovereign immunity under Georgia law and the Eleventh Amendment. The Sixth Circuit affirmed, stating that the Authority’s claim that any entity referred to as a state “instrumentality” in a Georgia statute is entitled to state-law sovereign immunity “requires quite a stretch of the imagination.” View "Town of Smyrna, TN v. Mun. Gas Auth. of GA" on Justia Law

The Fund is a multi-employer trust fund under the Taft-Hartley Act, 29 U.S.C. 186, and the Employee Retirement Income Security Act, 29 U.S.C. 1001. Blue Cross is a Michigan non-profit corporation; its enabling statute authorizes the State Insurance Commissioner to require it to pay a cost transfer of one percent of its “earned subscription income” to the state for use to pay costs beyond what Medicare covers. In 2002 the Fund converted to a self-funded plan, and entered into an Administrative Services Contract with Blue Cross, which states that Blue Cross is not the Plan Administrator, Plan Sponsor, or fiduciary under ERISA; its obligations are limited to processing and paying claims. In 2004 the Fund sued, claiming that Blue Cross breached ERISA fiduciary duties by imposing and failing to disclose a cost transfer subsidy fee to subsidize coverage for non-group clients. The fee was regularly collected from group clients. Self-insured clients were not always required to pay it. Following a first remand, the district court granted class certification and granted the Fund summary judgment. On a second remand, the court again granted judgment on the fee imposition claim and awarded damages of $284,970.84 plus $106,960.78 in prejudgment interest. The Sixth Circuit affirmed. View "Pipefitters Local 636 Ins. Fund v. Blue Cross & Blue Shield of MI" on Justia Law

In 1990 Plummer, a recognized expert in horse-breeding and the tax consequences of related investments, created the Mare Lease Program to enable investors to participate in his horse-breeding business and take advantage of tax code provision classification of horse-breeding investments as farming expenses, with a five-year net operating loss carryback period instead of the typical two years, 26 U.S.C. 172(b)(1)(G). Plummer’s investors would lease a mare, which would be paired with a stallion, and investors could sell resulting foals, deducting the amount of the initial investment while realizing the gain from owning a thoroughbred foal. If they kept foals for at least two years, the sale qualified for the long-term capital gains tax rate, 26 U.S.C. 1231(b)(3)(A). Between 2001 and 2005, the Program generated more than $600 million. Law and accounting firms hired by defendants purportedly vetted the Program. Plummer and other defendants began funneling Program funds into an oil-and-gas lease scheme. It was later discovered that the Program’s assets were substantially overvalued or nonexistent. Investors sued under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(c), also alleging fraud and breach of contract. The district court granted summary judgment and awarded $49.4 million with prejudgment interest of $15.6 million. The Sixth Circuit affirmed, stating that there was no genuine dispute over any material facts. View "West Hills Farms, LLC v. ClassicStar Farms, Inc." on Justia Law

Advance installs and services signs. It alleges that it entered into a contract to sell Optec’s electronic messaging signs to foodservice customers. Advance claims that Optec agreed not to sell directly to the foodservice companies. Rogers, a franchisee of Sonic Restaurants, was a long-time Advance customer. Advance and Optec undertook a pilot project to install signs at Sonic corporate-owned locations and Rogers’s franchises. Advance claimed that Optec violated the agreement by negotiating with Sonic directly. Advance and Optec entered a second agreement by phone, with Optec to pay Advance 12 percent of net on sales made by Optec to customers introduced by Advance. Advance sent a letter memorializing the terms; Optec made a minor change, unrelated to commission; Advance incorporated the change and returned the letter. Optec refused to sign. Following additional negotiations, Optec signed a two-year agreement with Sonic and installed signs at 1,400 locations, without Advance being involved. A jury found in favor of Advance on breach-of-contract claims and a claim for tortious interference and awarded damages of $3,444,000 for breach of the telephone agreement. The Sixth Circuit affirmed, rejecting claims that: there was no meeting of the minds for the telephone agreement; Ohio’s Statute of Frauds precluded enforcement; Advance did not prove its tortious interference claim; and that the evidence did not support the damages awards. View "Advance Sign Grp., LLC v. Optec Displays, Inc." on Justia Law

Triple A, a Michigan corporation, has offices in Dearborn, Michigan, the Congo (previously known as Zaire), and Sierra Leone. In 1993, Zaire ordered military equipment worth $14,070,000 from Triple A. A South Korean manufacturer shipped the equipment to Zaire at Triple A’s request. For 17 years, Triple A sought payment from Zaire and then the Congo without success. In 2010, Triple A sued the Congo for breach of contract. The district court dismissed the case, citing lack of jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. 1602. The Sixth Circuit affirmed, citing the language of the Act, under which federal courts have jurisdiction “in any case in which the action is based upon” the following: [1] a commercial activity carried on in the United States by the foreign state; or [2] upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or [3] upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States. View "Triple A Int'l, Inc. v. Democratic Republic of the Congo" on Justia Law

Plaintiffs, the owners and lessors of royalty rights to natural gas produced in Trumbull and Mahoning Counties in Ohio, filed a putative class-action lawsuit, alleging that three interrelated energy companies that entered into oil and gas leases with plaintiffs deliberately and fraudulently underpaid gas royalties over more than a decade. Plaintiffs asserted breach of contract and five additional tort and quasi-contract claims and sought compensatory and punitive damages. The district court dismissed, holding that the contract claim was time-barred by Ohio’s four-year statute of limitations and that none of the tort and quasi-contract claims were separate and distinct from the underlying contract action because they did not allege any obligations apart from those imposed by the leases. The Sixth Circuit reversed in part, finding that the district court failed to consider plaintiffs’ fraudulent concealment argument and that allegations regarding due diligence were sufficient to require further analysis. View "Lutz v. Chesapeake Appalachia, L.L.C." on Justia Law