Justia Contracts Opinion Summaries

WorldVue Connect, LLC, a company specializing in in-room entertainment and technology for hotels, purchased the domestic assets of Hospitality WiFi, LLC from Jason Szuch for $9,450,000 in 2022. Szuch retained interests in international affiliates and received a minority stake in a new entity, WorldVue Global, LLC. The transaction included the transfer of goodwill, trade secrets, and a valuable technical support team. In 2024, after the business relationship soured, WorldVue bought out Szuch’s minority interest and entered into a settlement agreement with Szuch and his companies, as well as a separation agreement with a key employee, Shan Griffin. These agreements, governed by Texas law, contained non-compete, non-solicitation, and confidentiality provisions effective for one year.Following the agreements, evidence emerged that the Szuch Parties recruited WorldVue’s employees and independent contractors, including those providing remote support to clients in the contractually defined “Restricted Area.” WorldVue filed suit in Texas state court for breach of contract and tortious interference, seeking injunctive relief. The state court issued a temporary restraining order, and after removal to the United States District Court for the Southern District of Texas, the TRO was extended. The district court found that the Szuch Parties breached the agreements by soliciting WorldVue’s workers and using confidential information, and granted a preliminary injunction prohibiting further solicitation and use of confidential information.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the preliminary injunction for abuse of discretion. The court affirmed the injunction, holding that the non-solicitation provision applied to workers performing services in the Restricted Area, regardless of their physical location, and that customer service agents were covered as independent contractors. The court modified the injunction to clarify that “confidential information” does not include Szuch’s personal knowledge of worker identities acquired prior to the asset sale. View "WorldVue Connect v. Szuch" on Justia Law

Two former employees of a large technology company, along with a real estate developer and related individuals and entities, were alleged to have engaged in a kickback scheme involving real estate transactions in Northern Virginia. The employees, responsible for managing real estate deals for the company, allegedly steered contracts to the developer’s firm in exchange for secret payments funneled through a network of trusts and entities. The scheme purportedly inflated the company’s costs for both leasing and purchasing properties, with millions of dollars in kickbacks distributed among the participants. The company discovered the scheme after a whistleblower report, conducted an internal investigation, and reported the matter to federal authorities.The United States District Court for the Eastern District of Virginia granted summary judgment in favor of the defendants on several claims, including those under the Racketeer Influenced and Corrupt Organizations (RICO) Act, fraud, unjust enrichment, and conversion, and partially on a civil conspiracy claim. The district court found that the company failed to establish the existence of a RICO enterprise, did not show injury to its business or property, and that equitable claims were precluded by the availability of legal remedies or the existence of contracts. The court also ruled that an attorney defendant could not be liable for conspiracy with his clients.The United States Court of Appeals for the Fourth Circuit reversed the district court’s summary judgment. The appellate court held that genuine disputes of material fact existed regarding the existence of a RICO enterprise, whether the company suffered financial harm, and the viability of the fraud, unjust enrichment, conversion, and civil conspiracy claims. The court clarified that the company was entitled to pursue legal and equitable remedies in the alternative and that the attorney’s potential liability for conspiracy could not be resolved on summary judgment. The case was remanded for further proceedings. View "Amazon.com, Inc. v. WDC Holdings LLC" on Justia Law

Yellow Corporation, a major trucking company, ceased operations and filed for bankruptcy in 2023. As a result, it withdrew from several multiemployer pension plans, triggering withdrawal liability—an amount owed to the pension plans to cover unfunded vested benefits for employees. The pension plans, which had received substantial federal funds under the American Rescue Plan Act of 2021 (ARPA) to stabilize their finances, filed claims against Yellow’s bankruptcy estate for withdrawal liability. The dispute centered on how much of the ARPA funds should be counted as plan assets when calculating Yellow’s liability, as well as whether certain contractual terms could require Yellow to pay a higher withdrawal liability than statutory minimums.The United States Bankruptcy Court for the District of Delaware reviewed the claims. It upheld two regulations issued by the Pension Benefit Guaranty Corporation (PBGC): the Phase-In Regulation, which requires ARPA funds to be counted as plan assets gradually over time, and the No-Receivables Regulation, which bars plans from counting ARPA funds as assets before they are actually received. The Bankruptcy Court found these regulations to be valid exercises of PBGC’s authority and not arbitrary or capricious. It also ruled that two pension plans could enforce a contractual provision requiring Yellow to pay withdrawal liability at a higher, agreed-upon rate, rather than the rate based solely on its actual contributions.On direct appeal, the United States Court of Appeals for the Third Circuit affirmed the Bankruptcy Court’s order. The Third Circuit held that the PBGC’s regulations were valid under ARPA and ERISA, as Congress had expressly delegated authority to the PBGC to set reasonable conditions on the allocation of plan assets and withdrawal liability. The court also held that pension plans could enforce contractual terms requiring higher withdrawal liability, as the statutory scheme sets a floor, not a ceiling, for such liability. View "In re: Yellow Corporation" on Justia Law

After Hurricane Laura damaged an offshore platform owned by Genesis Energy, Genesis contracted with Danos, LLC to perform repairs. To support the project, Genesis also chartered a vessel from a third party to house and transport the repair crew and equipment. During the course of repairs, a Danos employee was injured while being transferred from the platform to the vessel and subsequently sued Danos, Genesis, and the vessel owner. Genesis filed a crossclaim against Danos, seeking defense and indemnification under a 2008 Master Services Agreement, arguing that the contract required Danos to indemnify Genesis for such claims.The United States District Court for the Southern District of Texas reviewed cross-motions for summary judgment from Genesis and Danos. The district court determined that the contract between Genesis and Danos was not a “maritime contract” under the Outer Continental Shelf Lands Act (OCSLA) and relevant Fifth Circuit precedent, specifically In re Larry Doiron, Inc. As a result, Louisiana law applied, which rendered the indemnification provision unenforceable. The district court granted summary judgment in favor of Danos, denied Genesis’s motion, and dismissed Genesis’s crossclaim with prejudice. The court’s order was designated as a final judgment under Federal Rule of Civil Procedure 54(b), and Genesis appealed.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s grant of summary judgment de novo. The Fifth Circuit held that the contract was not a maritime contract because the parties did not expect the vessel to play a substantial role in the completion of the repair work; its functions were limited to transportation, housing, and ancillary support, which are insufficient under the applicable legal standard. The Fifth Circuit affirmed the district court’s judgment, holding that Louisiana law applied and the indemnification provision was unenforceable. View "Genesis Energy v. Danos" on Justia Law

A former congressman created personalized videos for paying customers through the Cameo platform. A late-night television host, using fictitious names, requested and purchased several of these videos. The host then broadcast some of the videos on his show as part of a recurring segment that mocked the congressman by highlighting his willingness to say unusual things for money. The congressman claimed that this use of his videos infringed his copyrights and also violated state law through breach of contract and fraudulent inducement.The United States District Court for the Southern District of New York reviewed the case and dismissed the complaint. The court found that the copyright claims were barred by the fair use doctrine, reasoning that the television host’s use was transformative and did not harm the market for the original videos. The court also held that the state law claims were either preempted by the Copyright Act or failed to state a claim under applicable state law. Specifically, the court determined that the congressman was not a party to the relevant contract, failed to allege the essential terms of any implied contract, and did not plead any actual out-of-pocket loss for the fraudulent inducement claim.The United States Court of Appeals for the Second Circuit affirmed the District Court’s judgment. The appellate court agreed that the copyright claims were barred by the fair use doctrine, emphasizing the transformative nature of the use and the lack of market harm. The court also concluded that the state law claims failed to state a claim for relief, either because the congressman was not a party to the contract, did not allege an implied contract, or failed to allege actual damages. The judgment of the District Court was affirmed in full. View "Santos v. Kimmel" on Justia Law

Sylvia Noland was hired by the defendants to work as a leasing agent and sales representative for two properties in Los Angeles. She was promised compensation for administrative work, commissions for securing tenants and booking events, and a monthly draw against earnings. Noland alleged that defendants failed to pay her the agreed amounts, including a substantial commission, minimum wage, overtime, and proper wage statements. She also claimed she was constructively terminated after refusing to participate in leasing activities she believed were unlawful. Her complaint included 25 causes of action, ranging from wage and hour violations to breach of contract and emotional distress.The Superior Court of Los Angeles County first denied defendants’ initial motion for summary judgment on procedural grounds. After a trial continuance due to defense counsel’s medical issues, defendants refiled their summary judgment motion. The trial court overruled plaintiff’s objections to the successive motion, finding it permissible since the prior denial was not on the merits. After considering the parties’ arguments, the court granted summary judgment for defendants, finding Noland was an independent contractor, not entitled to wage protections, and not owed the claimed commission. The court also denied plaintiff’s motion for sanctions and her requests to reopen discovery, finding no evidence of bad faith or procedural error.The California Court of Appeal, Second Appellate District, Division Three, reviewed the case. It affirmed the trial court’s judgment, holding that the court had discretion to consider the renewed summary judgment motion and that plaintiff’s substantive arguments lacked merit. The appellate court also imposed a $10,000 sanction on plaintiff’s counsel for filing briefs containing fabricated legal citations generated by AI, directed counsel to serve the opinion on his client, and ordered the clerk to notify the State Bar. Respondents were awarded appellate costs. View "Noland v. Land of the Free, L.P." on Justia Law

A group of plaintiffs, including a medical practice, individual physicians, a medical society, and two patients, brought various claims against a health insurer, alleging that the insurer interfered with doctor-patient relationships, denied or delayed coverage for medical services, and caused significant harm to patients. The claims included tortious interference with contractual rights, unfair competition, RICO violations, and emotional distress, with specific factual allegations that the insurer’s actions led to worsened medical outcomes for the patients involved.The Circuit Court of the Third Circuit reviewed the insurer’s motion to compel arbitration based on arbitration clauses in provider agreements and member handbooks. Instead of determining whether the claims were subject to arbitration, the circuit court focused on the alleged unconscionability of the contracts as a whole, finding them to be contracts of adhesion and unconscionable, and denied the motion to compel arbitration. The court also denied summary judgment as to one patient’s claims and did not stay the medical society’s claims pending arbitration.The Supreme Court of the State of Hawaiʻi reviewed the case and held that the circuit court erred by not following the required analytical framework for arbitrability. The Supreme Court vacated the lower court’s order in part, holding that claims arising under the Participating Physician Agreement must be referred to arbitration because the agreement delegated the question of arbitrability to the arbitrator. Claims under the Medicare and QUEST Agreements were also subject to arbitration, as the arbitration clauses were not shown to be substantively unconscionable. However, the Court held that the claims of one patient and the physician as a patient were not subject to mandatory arbitration, and another patient’s claims were not subject to a grievance and appeals clause. The case was remanded for further proceedings consistent with these holdings. View "Frederick A. Nitta, M.D., Inc. v. Hawaii Medical Service Association." on Justia Law

The dispute arose between two longtime business partners who co-owned interests in several companies, including a parking facility management business. During the COVID-19 pandemic, the business faced financial difficulties, prompting the partners to seek a federal loan. One partner, who was in a position to influence the loan’s approval, allegedly pressured the other to sell his business interests at a reduced price, threatening to block the loan if the sale did not proceed. The sale was formalized through several transfer agreements containing broad releases of claims. The selling partner later sued, alleging he signed the agreements under duress and as a result of fraud.The case was first heard in the Minnesota District Court, which dismissed the complaint in its entirety, finding that the releases in the transfer agreements barred all claims. The district court also awarded costs and attorney fees to the defendants as prevailing parties under the agreements. The district court further held that the plaintiff was required to return the consideration received to void the releases, and, in the alternative, found that some claims failed on their own merits. The Minnesota Court of Appeals affirmed the dismissal, but on different grounds, holding that the plaintiff’s complaint failed to allege sufficient facts to invalidate the releases and thus the claims were barred. The appellate court also affirmed the award of costs and attorney fees.The Minnesota Supreme Court reviewed the case and clarified the pleading standard for motions to dismiss based on affirmative defenses. The court held that a plaintiff’s complaint does not need to anticipate and rebut an affirmative defense to survive a motion to dismiss; dismissal is only appropriate if the complaint’s allegations, construed in the plaintiff’s favor, establish an unrebuttable defense. The court reversed the lower courts’ dismissal of the complaint and the award of costs and attorney fees, and remanded the case for further proceedings. View "Hoskin vs. Krsnak" on Justia Law

Plaintiffs initiated a lawsuit against eleven defendants, alleging a scheme involving breach of employment agreements, misappropriation of funds, embezzlement, and fraud. The suit was originally filed in the Circuit Court of Harrison County, Mississippi. Defendants removed the case to the United States District Court for the Southern District of Mississippi, citing diversity jurisdiction. Plaintiffs sought to remand the case to state court, relying on a provision in three defendants’ contracts that specified venue in Harrison County, Mississippi, and included language about consent to personal jurisdiction and venue solely within those forums, along with a waiver of objections to those forums.The United States District Court for the Southern District of Mississippi interpreted the contractual provision as a waiver of the defendants’ right to remove the case to federal court. The district court reasoned that the provision gave the first-filing party the sole right to choose the court, and that by waiving objections to venue and personal jurisdiction, the defendants had also waived their removal rights. Consequently, the district court remanded the case to state court.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s interpretation of the contractual waiver de novo, applying Mississippi law. The Fifth Circuit held that the contract provision did not constitute a clear and unequivocal waiver of the defendants’ right to remove the case to federal court. The court found that the language regarding venue and jurisdiction could reasonably refer to geographic location and did not explicitly or implicitly waive removal rights, especially since the contract contemplated litigation in both state and federal courts in Harrison County. The Fifth Circuit reversed the district court’s remand order. View "Gulf Coast Pharmaceuticals Plus, L.L.C. v. RFT Consulting" on Justia Law

The founder and former CEO of a national pizza company brought suit against a public relations firm that had previously provided services to the company. The dispute arose after the plaintiff alleged that the firm leaked confidential and damaging information about him to the press, in violation of a nondisclosure agreement (NDA) that included an arbitration clause. The NDA was executed after the company requested the firm sign it, anticipating close work with the plaintiff during a period of reputational crisis. The relationship between the parties deteriorated following a conference call in which the plaintiff made controversial remarks, which were later reported in the media, leading to his resignation from the company’s board.The case was initially filed in state court and then removed to the United States District Court for the Western District of Kentucky. Over several years, the litigation involved multiple amended complaints, extensive discovery, and dispositive motions. The defendant did not move to compel arbitration until after the district court denied summary judgment on the NDA claim. The district court held a bench trial and found that the NDA was enforceable and contained a binding arbitration provision. However, the court concluded that the defendant had defaulted on its right to arbitrate by actively litigating the case for years before seeking arbitration, and thus denied the motion to compel arbitration.On appeal, the United States Court of Appeals for the Sixth Circuit determined it lacked jurisdiction to review the district court’s contract formation ruling but had jurisdiction to review the default determination. The Sixth Circuit affirmed the district court’s finding that the defendant defaulted on its arbitration rights by seeking a merits resolution in court before moving to compel arbitration. The court dismissed the appeal in part for lack of jurisdiction, otherwise affirmed the district court’s judgment, and denied the plaintiff’s request for sanctions. View "Schnatter v. 247 Group, LLC" on Justia Law