Justia Contracts Opinion Summaries

A same-sex married couple, one a U.S. citizen residing in California and the other a Saudi citizen, spent part of each year living together in Saudi Arabia, where homosexuality is punishable by death. In 2021, after U.S. travel restrictions eased, they booked tickets with a German airline to fly from Saudi Arabia to San Francisco. The airline, which operates extensively in California, required them to confirm their marital status for entry into the U.S. During check-in in Riyadh, a senior airline employee publicly disclosed and questioned their relationship, and copies of their marriage certificate and passports were sent electronically to airline headquarters despite their concerns about Saudi government surveillance. After the trip, the Saudi government updated one plaintiff’s official status to “married,” and he feared returning to Saudi Arabia due to potential severe penalties. The couple alleged that the airline’s actions led to significant personal, financial, and health consequences.The couple filed suit in California state court against the airline and its U.S. subsidiary, alleging breach of contract and several torts. The defendants removed the case to the United States District Court for the Northern District of California, asserting diversity and federal question jurisdiction. The district court dismissed the case for lack of personal jurisdiction. On appeal, the United States Court of Appeals for the Ninth Circuit initially remanded for clarification of the subsidiary’s citizenship, after which the district court allowed amendment of the removal notice to reflect the correct citizenship.Upon renewed review, the Ninth Circuit held that the district court had both specific personal jurisdiction over the defendants and subject matter jurisdiction based on diversity. The court found that the airline purposefully availed itself of California’s market, the claims arose from the airline’s California-related activities, and exercising jurisdiction was reasonable. The court reversed the district court’s dismissal and remanded for further proceedings. View "DOE V. DEUTSCHE LUFTHANSA AKTIENGESELLSCHAFT" on Justia Law

A company based in the Commonwealth of the Northern Mariana Islands (CNMI), which provides computer and networking services, entered into a contract with a California-based distributor of Microsoft products. The CNMI company sought to purchase Microsoft software to fulfill a government contract. After a series of communications and assurances that the software would meet the CNMI government’s specifications, the CNMI company paid over $800,000 to the distributor, which then delivered the software directly to the CNMI government. The software did not conform to the required specifications, leading the government to cancel its contract with the CNMI company and request a refund. The CNMI company, in turn, sought a refund from the distributor, which offered a partial refund minus a cancellation fee. The CNMI company objected and filed suit alleging fraud, breach of contract, promissory estoppel, and unjust enrichment.The United States District Court for the Northern Mariana Islands dismissed the case for lack of personal jurisdiction over the California distributor. The district court relied on a then-binding Ninth Circuit panel decision, which was later vacated and replaced by an en banc decision. The district court did not address whether the claims arose out of the distributor’s contacts with the CNMI or whether exercising jurisdiction would be reasonable.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The Ninth Circuit held that the CNMI company alleged sufficient facts to establish specific personal jurisdiction over the California distributor. The court found that the distributor purposefully availed itself of the privilege of doing business in the CNMI and purposefully directed its actions toward the CNMI. The court also concluded that the claims arose out of the distributor’s contacts with the CNMI and that exercising jurisdiction would not be unfair or unjust. View "SUPERTECH, INC. V. MY CHOICE SOFTWARE, LLC" on Justia Law

A dispute arose over the ownership of a 2021 Mercedes-Benz G63. Phoenix Motor Company (PMC), operating as Mercedes-Benz of Scottsdale, purchased the vehicle through a wholesaler, but the intermediary, Fredrick Aljundi, diverted the car to another dealership instead of delivering it to PMC. Subsequently, Zakia J. Rajabian and Dulceria La Bonita Wholesale (collectively, Dulceria) acquired the car from the second dealership and took steps to conceal its location. PMC, with assistance from Mercedes-Benz USA, located the car using tracking technology.Litigation began in the Maricopa County Superior Court, where PMC sued Dulceria and others for breach of contract and related claims, and Dulceria counterclaimed. The state court initially granted PMC possession of the car and, after further proceedings, found PMC to be the rightful owner. While the state case was ongoing, Dulceria filed a federal lawsuit in the United States District Court for the District of Arizona, asserting claims including invasion of privacy and violations of federal and state statutes. PMC moved to dismiss or stay the federal case under the Colorado River doctrine, which allows federal courts to stay proceedings in favor of parallel state litigation. The district court granted a stay in November 2023 and formalized it in a minute order in December 2023. Dulceria later moved to lift the stay, but the district court denied the motion in April 2024.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the December 2023 minute order constituted a final, appealable order, starting the 30-day appeal period. Because Dulceria did not appeal the initial stay within that period, the court dismissed that portion of the appeal as untimely. The Ninth Circuit affirmed the district court’s denial of the motion to lift the stay, holding that the district court did not abuse its discretion in maintaining the stay under the Colorado River doctrine, as there were no material changes in law or fact to warrant lifting it. View "RAJABIAN V. MERCEDES-BENZ USA, LLC" on Justia Law

A family leased a home within military housing at the Naval Amphibious Base Coronado in California. Shortly after moving in, they experienced persistent water intrusion and mold contamination, which they alleged damaged their property and affected their health. The family reported these issues to the property manager and the public-private entity responsible for the housing, but claimed that remediation efforts were inadequate and that their concerns were dismissed. After further testing confirmed hazardous mold, the family vacated the property and brought state law claims, including negligence and breach of contract, against the property manager, the public-private housing entity, and a mold remediation company.The defendants removed the case from California state court to the United States District Court for the Southern District of California, asserting federal enclave, federal officer, and federal agency jurisdiction. The district court denied the defendants’ motion to dismiss based on derivative sovereign immunity and, after further proceedings, found that it lacked subject matter jurisdiction on all asserted grounds. Specifically, the court determined there was no evidence that the United States had accepted exclusive jurisdiction over the property, that the defendants failed to show a causal nexus between their actions and federal direction, and that the public-private entity was not a federal agency. The district court remanded the case to state court.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed the remand order under an exception allowing appellate review when federal officer removal is asserted. The Ninth Circuit held that the district court correctly found no federal enclave jurisdiction because there was no evidence of federal acceptance of exclusive jurisdiction over the property. The court also held that the defendants did not meet the requirements for federal officer or agency jurisdiction. The Ninth Circuit affirmed the district court’s remand to state court. View "CHILDS V. SAN DIEGO FAMILY HOUSING, LLC" on Justia Law

Several former members of the rock band Supertramp entered into a 1977 publishing agreement with their bandmates and manager, allocating specific percentages of songwriting royalties among themselves. These royalties were distributed according to the agreement for decades. In 2018, two of the principal songwriters and their publishing company stopped paying royalties to the plaintiffs, prompting the plaintiffs to file a breach of contract action. The dispute centered on whether the agreement could be unilaterally terminated or whether the obligation to pay royalties continued as long as the songs generated income.After the case was removed to the United States District Court for the Central District of California, the court ruled as a matter of law that the defendants could terminate the agreement after a “reasonable time,” finding no express or implied duration in the contract. The case proceeded to a jury trial, which found in favor of the defendants, concluding that the contract had been terminated after a reasonable time. The plaintiffs appealed this decision.The United States Court of Appeals for the Ninth Circuit reviewed the case and applied California contract law, which requires courts to first look for an express duration in the contract, then to determine if a duration can be implied from the contract’s nature and circumstances, and only if neither is found, to construe the duration as a reasonable time. The Ninth Circuit agreed there was no express duration but held that the contract’s nature implied a duration: the obligation to pay royalties continues as long as the songs generate publishing income, ending only when the copyrights expire and the works enter the public domain. The court reversed the district court’s judgment and remanded with instructions to enter judgment for the plaintiffs on liability. View "Thompson v. Hodgson" on Justia Law

Lisa Bodenburg, an Apple customer, purchased a 200 GB iCloud data storage plan, expecting it to add to the 5 GB of free storage she already had, resulting in a total of 205 GB. When she discovered that the plan only provided 200 GB in total, she filed a putative class action against Apple, alleging breach of contract and violations of California’s consumer protection laws due to Apple’s allegedly deceptive representations about its iCloud storage plans.The United States District Court for the Northern District of California dismissed Bodenburg’s action with prejudice. The court found that Bodenburg could not state a claim for breach of contract because Apple had fulfilled its contractual obligations by providing the additional storage as described in the iCloud Legal Agreement. The court also found that Bodenburg’s claims under California’s consumer protection laws did not satisfy the “reasonable consumer” test or the heightened pleading standard of Fed. R. Civ. P. 9(b).The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The panel held that Bodenburg could not state a claim for breach of contract because the iCloud Legal Agreement did not promise an additional 200 GB of storage but rather additional storage, which Apple provided. The court also held that Bodenburg’s claims under California’s consumer protection laws failed the reasonable consumer test, as Apple’s statements were not misleading when considered in context. Additionally, the claims did not meet Rule 9(b)’s heightened pleading requirements because Bodenburg could not demonstrate that Apple’s statements were false or deceptive. Thus, the dismissal of Bodenburg’s action was affirmed. View "Bodenburg v. Apple, Inc." on Justia Law

Carroll Shelby Licensing, Inc. and Carroll Hall Shelby Trust filed a lawsuit against Denice Halicki and her associated entities, alleging that Halicki's copyright claims over the "Eleanor" Ford Mustangs were invalid. Halicki counterclaimed, asserting that Shelby's "GT-500CR" Mustangs infringed her copyright in Eleanor, a collection of Mustangs featured in four films. The dispute also involved claims of breach of a prior settlement agreement between the parties.The United States District Court for the Central District of California held that Eleanor was not entitled to character copyright protection and dismissed Halicki’s breach of contract claim based on the settlement agreement. The court also denied Shelby’s request for a declaration that the GT-500CR did not infringe any of Halicki’s rights.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court’s summary judgment that Eleanor was not entitled to character copyright protection. The Ninth Circuit applied the Towle test and concluded that Eleanor did not have conceptual qualities, consistent traits, or distinctive elements necessary for character copyright protection. The court also affirmed the district court’s judgment that Shelby did not violate the settlement agreement, which prohibited Shelby from copying only Eleanor’s distinctive hood and inset lights.However, the Ninth Circuit reversed the district court’s denial of declaratory relief and remanded the case for the purpose of issuing the appropriate declaration. The appellate court held that a declaration would clarify and settle the legal relations between Shelby and Halicki and provide Shelby relief from the uncertainty that led to the proceedings. View "CARROLL SHELBY LICENSING, INC. V. HALICKI" on Justia Law

Plaintiffs created accounts on justanswer.com and paid to ask questions. According to JustAnswer's Terms of Service, paying for answers automatically enrolled plaintiffs in a recurring monthly subscription. Plaintiffs alleged that JustAnswer violated the Electronic Funds Transfer Act and various state consumer protection laws by enrolling them in the subscription service without their consent and making cancellation difficult. JustAnswer sought to compel arbitration based on a provision in its Terms of Service, asserting that plaintiffs were put on inquiry notice of those terms and agreed to arbitrate any claims arising from their use of the site.The United States District Court for the Northern District of California denied JustAnswer's motion to compel arbitration. The court held that plaintiffs did not receive sufficient notice of JustAnswer's Terms of Service containing the arbitration clause, and thus no contract was formed. The court found that the payment pages and other advisals presented to plaintiffs were not sufficiently conspicuous to put them on inquiry notice of the terms, and the advisals did not explicitly inform users that clicking a button would constitute assent to the terms.The United States Court of Appeals for the Ninth Circuit affirmed the district court's order. The Ninth Circuit concluded that no contracts were formed between plaintiffs and JustAnswer under an inquiry theory of notice. The court held that the website did not provide reasonably conspicuous notice of the terms, and the advisals did not unambiguously manifest the plaintiffs' assent to those terms. Therefore, plaintiffs were not bound by the arbitration provision in JustAnswer's Terms of Service, and the motion to compel arbitration was denied. View "GODUN V. JUSTANSWER LLC" on Justia Law

A Texas attorney, Robert M. Roach, claimed to have an oral agreement with Fred Schrader, the former owner of Schrader Cellars, LLC, regarding the creation of another company, RBS LLC, which Roach asserted had an ownership interest in Schrader Cellars. After Fred Schrader sold Schrader Cellars to Constellation Brands, Roach sued Fred and Constellation in Texas state court, claiming the sale was improper. Schrader Cellars then filed the current action, seeking declaratory relief that Roach had no ownership interest in Schrader Cellars, and Roach counterclaimed.The United States District Court for the Northern District of California granted summary judgment in favor of Schrader Cellars on its claim for declaratory relief and dismissed Roach’s counterclaims. The court concluded that the oral agreement violated California Rule of Professional Responsibility 3-300 and that Roach did not rebut the presumption of undue influence. The case proceeded to trial on Schrader Cellars’s claim for breach of fiduciary duty, where the jury found that Roach’s breach caused harm but did not award damages due to the litigation privilege defense.The United States Court of Appeals for the Ninth Circuit reversed the district court’s summary judgment in favor of Schrader Cellars on its claim for declaratory relief and Roach’s counterclaims, finding triable issues of fact regarding whether Roach rebutted the presumption of undue influence. The appellate court also held that the district court erred in concluding and instructing the jury that Roach breached his fiduciary duties. However, the Ninth Circuit affirmed the district court’s judgment after trial, concluding that the erroneous jury instruction had no effect on the outcome because the jury found that the gravamen of the breach of fiduciary duty claim was based on Roach’s filing of the Texas lawsuit, which was barred by the California litigation privilege. View "SCHRADER CELLARS, LLC V. ROACH" on Justia Law

Aquarian Foundation, Inc., a non-profit religious organization, alleged that Bruce Lowndes infringed on its copyrights by uploading spiritual teachings of its late founder, Keith Milton Rhinehart, to various websites. Lowndes claimed he had a license from Rhinehart, granted in 1985, to use the materials. Rhinehart passed away in 1999, bequeathing his estate, including the copyrights, to Aquarian.The United States District Court for the Western District of Washington granted partial summary judgment, confirming that Rhinehart's copyrights were properly transferred to Aquarian via his will. After a bench trial, the court ruled against Aquarian on its claims of copyright infringement, trademark infringement, and false designation of origin. The court found that Rhinehart created the works as his own, not as works for hire, and that he had validly licensed them to Lowndes. The court also determined that Lowndes did not breach the licensing agreement and that Aquarian could not terminate the license under 17 U.S.C. § 203(a). The court denied attorneys’ fees to both parties.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s findings that Rhinehart’s works were not created as works for hire, that he validly licensed the works to Lowndes, and that Lowndes did not breach the licensing agreement. The court also affirmed the decision not to award Lowndes attorneys’ fees under the Lanham Act. However, the Ninth Circuit reversed the district court’s determination regarding the termination of the license, holding that Aquarian’s termination letter in May 2021 was effective. The case was remanded for further proceedings to address any infringement that may have occurred after the license termination, as well as the denial of injunctive relief and attorneys’ fees under the Copyright Act. View "AQUARIAN FOUNDATION, INC. V. LOWNDES" on Justia Law