Justia Contracts Opinion Summaries

The case involves eight multiemployer benefit plans (the "Funds") seeking to recover delinquent contributions from Stromberg Metal Works, Inc. for health, pension, and other benefits for sheet metal workers. The Funds allege that Stromberg underpaid contributions owed under a collective bargaining agreement (CBA) with the Sheet Metal, Air, Rail and Transportation Union (SMART Union) by hiring temporary workers through staffing agencies without making the required contributions.Initially filed in the Middle District of Tennessee, the case was transferred to the Eastern District of North Carolina. The district court denied Stromberg’s motion for summary judgment, granted the Funds’ cross-motion for summary judgment, and awarded the Funds over $823,000 in delinquent contributions and more than $430,000 in liquidated damages and interest. Stromberg appealed, challenging both the liability and damages rulings.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court affirmed the district court’s liability ruling, agreeing that the 2019 Settlement between Stromberg and Local 5 did not preclude the Funds from seeking delinquent contributions. The court emphasized that multiemployer benefit plans have distinct interests from local unions and are not bound by settlements to which they are not parties.However, the Fourth Circuit vacated the district court’s damages ruling. The appellate court concluded that while the Funds could rely on the CBA’s default staffing ratio to approximate damages due to Stromberg’s failure to maintain adequate records, Stromberg had presented sufficient evidence to cast doubt on the accuracy of the Funds’ damages calculation. The case was remanded for further proceedings to address the disputed damages issue. View "Sheet Metal Workers' Health & Welfare Fund of North Carolina v. Stromberg Metal Works, Inc." on Justia Law

Thomas Mooney, the plaintiff, was employed as the Chief Operating Officer (COO) for Dr. Douglas Fife, Heather Fife, and Fife Dermatology, PC, doing business as Vivida Dermatology. Mooney raised concerns about improper billing practices at Vivida. After a conversation with Dr. Ken Landow, a dermatologist from another practice, Vivida terminated Mooney's employment, citing unauthorized disclosure of confidential information in violation of his employment agreement.The United States District Court for the District of Nevada granted summary judgment in favor of Vivida on all three of Mooney's claims: False Claims Act (FCA) retaliation, breach of contract, and breach of the implied covenant of good faith and fair dealing. The district court concluded that Mooney's reporting of billing irregularities did not put Vivida on notice of potentially protected conduct under the FCA. It also found that Mooney had violated the confidentiality provision of his employment agreement and that his claim for breach of the implied covenant of good faith and fair dealing failed because he did not argue that Vivida literally complied with the contract.The United States Court of Appeals for the Ninth Circuit reversed the district court's summary judgment. The appellate court held that the district court erred in applying the relevant substantive law for Mooney's FCA retaliation claim and failed to view the evidence in the light most favorable to Mooney for his breach of contract and breach of the covenant of good faith and fair dealing claims. The Ninth Circuit clarified that the McDonnell Douglas burden-shifting framework applies to FCA retaliation claims and that the Moore test for protected conduct continues to apply following the 2009 amendment to the FCA. The court concluded that Mooney engaged in protected conduct, satisfied the notice requirement, and established genuine issues of material fact regarding whether Vivida's reasons for his termination were pretextual. The court reversed and remanded the case for further proceedings. View "MOONEY V. FIFE" on Justia Law

Michael Hermalyn, a former employee of DraftKings, left his position to join a rival company, Fanatics, based in California. DraftKings, headquartered in Massachusetts, claimed that Hermalyn's new role violated a noncompete agreement he had signed, which included a Massachusetts choice-of-law provision and a one-year noncompete clause. DraftKings sued Hermalyn in the U.S. District Court for the District of Massachusetts for breach of the noncompete agreement.The district court sided with DraftKings, applying Massachusetts law to determine the enforceability of the noncompete agreement. The court found the noncompete enforceable and issued a preliminary injunction preventing Hermalyn from competing against DraftKings in the United States for one year. Hermalyn appealed, arguing that California law, which generally bans noncompetes, should apply instead of Massachusetts law. Alternatively, he argued that if Massachusetts law applied, the injunction should exclude California.The United States Court of Appeals for the First Circuit reviewed the case. The court examined whether the district judge abused her discretion in granting the preliminary injunction and whether she made any legal errors in applying Massachusetts law. The appellate court found that Massachusetts law was correctly applied, noting that Massachusetts generally respects choice-of-law provisions unless they violate a fundamental policy of another state with a materially greater interest. The court concluded that Hermalyn failed to demonstrate that California's interest in banning noncompetes was materially greater than Massachusetts's interest in enforcing them.The First Circuit also upheld the scope of the preliminary injunction, rejecting Hermalyn's argument to exclude California. The court reasoned that excluding California would undermine the effectiveness of the injunction, as Hermalyn's role involved interacting with clients in states where online sports betting is legal. Consequently, the appellate court affirmed the district court's decision and awarded costs to DraftKings. View "DraftKings Inc. v. Hermalyn" on Justia Law

Dignity Health, operating as French Hospital Medical Center, filed a complaint against orthopedic surgeon Troy I. Mounts, M.D., and his corporation to recover an advance paid under their Physician Recruitment Agreement. Mounts filed a cross-complaint alleging retaliation for his complaints about patient care quality, interference with his economic opportunities, and unlawful business practices. Dignity responded with an anti-SLAPP motion to strike the cross-complaint, which the trial court initially denied. The appellate court reversed this decision and remanded the case for further consideration.Upon remand, the trial court concluded that Mounts had not demonstrated a probability of prevailing on his claims. The court found that Dignity's actions were protected by the litigation privilege, the common interest privilege, and were barred by the statute of limitations. Consequently, the court granted Dignity's motion to strike the cross-complaint and ordered Mounts to pay Dignity's attorney fees and costs.The California Court of Appeal, Second Appellate District, Division Six, reviewed the case. The court affirmed the trial court's decision, holding that all of Mounts' claims were based on conduct protected by the litigation privilege (Civil Code § 47, subd. (b)) and the common interest privilege (Civil Code § 47, subd. (c)). The court also found that Dignity's actions were immune under federal law (42 U.S.C. § 11137) and that some claims were barred by the statute of limitations. The appellate court upheld the trial court's orders granting the motion to strike and awarding attorney fees to Dignity. View "Dignity Health v. Mounts" on Justia Law

The plaintiff, a manufacturer of resinous flooring systems, sued a former employee, the defendant, for breaching a noncompete agreement, violating the Connecticut Uniform Trade Secrets Act (CUTSA), and breaching a common-law duty of confidentiality. The defendant, who had signed a noncompete agreement as a condition of continued employment, later established his own floor coating business and used the plaintiff’s proprietary information to develop competing products. The plaintiff alleged that the defendant also assisted competitors in developing their products.In a separate but related case, the trial court found the noncompete agreement unenforceable due to lack of consideration and ruled that the common-law duty of confidentiality claim was preempted by CUTSA. The court also determined that a payment made to the defendant after his resignation was severance pay, not compensation for reaffirming the noncompete agreement. Based on these findings, the trial court in the present case granted summary judgment for the defendant, applying collateral estoppel to preclude further consideration of the issues.The Connecticut Supreme Court reviewed the case and concluded that the trial court had incorrectly determined the noncompete agreement was unenforceable for lack of consideration. The Supreme Court reversed the trial court’s judgment on the breach of the noncompete agreement claim and remanded the case for further proceedings to determine whether the agreement was supported by adequate consideration. The court upheld the trial court’s findings that the severance payment was not consideration for reaffirming the noncompete agreement and that the common-law duty of confidentiality claim was preempted by CUTSA. These rulings were binding in the present case. The judgment was reversed in part and affirmed in part, with further proceedings required to determine the enforceability and potential breach of the noncompete agreement. View "Dur-A-Flex, Inc. v. Dy" on Justia Law

In 2018, North American Senior Benefits, LLC (NASB) entered into employment contracts with Ryan and Alisha Wimmer, which included a restrictive covenant prohibiting them from recruiting NASB employees for two years post-termination. In 2021, after the Wimmers left NASB and allegedly started a competing business, NASB sued to enforce the covenant. The Wimmers argued that the covenant was unenforceable due to the lack of an express geographic term.The Statewide Business Court agreed with the Wimmers and granted their motion for judgment on the pleadings, finding the covenant unenforceable without an express geographic term. The Court of Appeals affirmed this decision, relying on its prior ruling in CarpetCare Multiservices v. Carle, which held that a restrictive covenant must include an express geographic term to comply with OCGA § 13-8-53 (a). One judge dissented, arguing that the GRCA does not require an express geographic term for non-recruitment provisions.The Supreme Court of Georgia reviewed the case and concluded that the Court of Appeals erred. The Supreme Court held that OCGA § 13-8-53 (a) does not mandate an express geographic term for a restrictive covenant to be enforceable. Instead, the statute requires that the restrictions be reasonable in time, geographic area, and scope of prohibited activities. The Court emphasized that the reasonableness of a covenant's geographic scope should be assessed based on the totality of the circumstances, not solely on the presence of an express geographic term.The Supreme Court reversed the judgment of the Court of Appeals and remanded the case for further proceedings to determine the reasonableness of the non-recruitment provision under the GRCA. View "NORTH AMERICAN SENIOR BENEFITS, LLC v. WIMMER" on Justia Law

American Building Innovation LP (ABI) was hired by Balfour Beatty Construction, LLC (Balfour Beatty) as a subcontractor for a school construction project. ABI had a workers’ compensation insurance policy when it began work, but the policy was canceled due to ABI’s refusal to pay outstanding premiums from a previous policy. This cancellation led to the automatic suspension of ABI’s contractor’s license. Despite knowing it was unlicensed and uninsured, ABI continued working on the project.The Superior Court of Orange County found that ABI was not duly licensed at all times during the performance of its work, as required by California law. ABI’s license was suspended because it failed to maintain workers’ compensation insurance. ABI later settled its premium dispute and had the policy retroactively reinstated, but the court found this retroactive reinstatement meaningless because it occurred long after the statute of limitations for any workers’ compensation claims had expired. The court ruled that ABI could not maintain its action to recover compensation for its work due to its lack of proper licensure.The California Court of Appeal, Fourth Appellate District, Division Three, affirmed the lower court’s judgment. The court held that ABI was not entitled to retroactive reinstatement of its license because the failure to maintain workers’ compensation insurance was not due to circumstances beyond ABI’s control. ABI’s decision not to pay the premiums and its false representations to the Contractors’ State License Board were within its control. Consequently, ABI was barred from bringing or maintaining the action under section 7031 of the Business and Professions Code. The court also affirmed the award of attorney fees to Balfour Beatty under the subcontract’s prevailing party attorney fee provision. View "American Building Innovations v. Balfour Beatty Construction" on Justia Law

In August 2020, Kimberly Strable, who was under 18, inquired about a managerial position at Arby’s in Great Falls but was told she could not apply due to her age. Strable filed an age discrimination claim with the Montana Human Rights Bureau (HRB), which issued a reasonable cause determination. The parties entered into a conciliation process, and Strable’s attorney and Arby’s attorney reached an agreement in principle for a $25,000 settlement, subject to a mutually agreeable settlement agreement. However, the parties did not finalize or sign the draft conciliation agreement, which included affirmative relief provisions required by the HRB.The First Judicial District Court, Lewis and Clark County, granted summary judgment in favor of Arby’s, finding that no enforceable contract existed between the parties. The court noted that the negotiations were part of an ongoing HRB case and that Arby’s had not consented to the affirmative relief provisions, which were essential terms of the conciliation agreement.The Supreme Court of the State of Montana reviewed the case and affirmed the District Court’s decision. The court held that the essential element of consent was lacking because the parties had not agreed on all essential terms, including the HRB’s affirmative relief provisions. The court emphasized that a binding contract requires mutual consent on all essential terms, and in this case, Arby’s could not consent to terms it was unaware of. Therefore, the court concluded that no enforceable contract existed, and summary judgment in favor of Arby’s was appropriate. View "Strable v. Carisch" on Justia Law

Covenant Construction Services, LLC was the prime contractor on a federal construction project for a U.S. Department of Veterans Affairs facility in Iowa City, Iowa. Covenant subcontracted with Calacci Construction Company, Inc. to supply carpentry labor and materials. Calacci had a collective bargaining agreement (CBA) with two regional unions, requiring it to pay fringe-benefit contributions to the Five Rivers Carpenters Health and Welfare Fund and Education Trust Fund (the Funds). Despite multiple demands, Calacci failed to remit the required contributions.The Funds filed a lawsuit under the Miller Act to collect the unpaid contributions, liquidated damages, interest, costs, and attorneys' fees from Covenant and its surety, North American Specialty Insurance Company. The United States District Court for the Southern District of Iowa granted summary judgment in favor of the Funds, concluding that the Funds had standing to sue and that the Miller Act notice was properly served and timely.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The court affirmed the district court's decision, holding that the Funds sufficiently complied with the Miller Act's notice requirements by sending the notice to Covenant's attorney, who confirmed receipt. The court also held that the notice was timely as it was filed within 90 days of the last day of labor on the project. Additionally, the court upheld the award of liquidated damages and attorneys' fees, finding that the CBA obligated Calacci to pay these amounts and that Covenant, as the prime contractor, was liable for the amounts due under the payment bond.The Eighth Circuit concluded that the Funds were entitled to recover the unpaid contributions, liquidated damages, and attorneys' fees from Covenant and its surety, affirming the district court's judgment. View "Five Rivers Carpenters v. Covenant Construction Services" on Justia Law

Krishna P. Sharma Poudel and Binod Dhakal worked as Nepalese-English interpreters for Mid Atlantic Professionals, Inc. (MAPI), serving the U.S. Department of State in Kabul, Afghanistan. They alleged that MAPI failed to pay them all contracted-for and promised wages, including overtime, per diem allowances, and reimbursement for annual trips home. Their employment agreements, executed in Maryland, included a choice-of-law provision specifying Maryland law.The plaintiffs filed their complaint in the United States District Court for the District of Maryland, asserting violations of the Maryland Wage and Hour Law (MWHL) and the Maryland Wage Payment and Collection Law (MWPCL). MAPI moved to dismiss the complaint, arguing that Maryland’s Wage Laws do not apply extraterritorially, and since the plaintiffs performed no work in Maryland, their claims were barred. The district court granted MAPI’s motion to dismiss, holding that the Wage Laws lacked an express extraterritorial provision and that the plaintiffs did not perform any work in Maryland.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s decision de novo. The appellate court affirmed the district court’s dismissal, agreeing that Maryland’s Wage Laws do not apply extraterritorially without some work being performed in Maryland. The court also rejected the plaintiffs’ argument that the choice-of-law provision in their employment agreements allowed them to bring claims under Maryland’s Wage Laws, noting that Maryland precedent does not support such an extension. The court concluded that the plaintiffs could not maintain their claims under the Wage Laws because they did not perform any work in Maryland. View "Poudel v. Mid Atlantic Professionals, Inc." on Justia Law