Justia Contracts Opinion Summaries

Several states challenged Executive Order 14026, which mandated a $15 minimum wage for federal contractors, and the Department of Labor (DOL) rule implementing it. The states argued that the executive order and the DOL rule violated the Federal Property and Administrative Services Act (FPASA) and the major questions doctrine, and that the DOL rule violated the Administrative Procedure Act (APA).The United States District Court for the District of Arizona dismissed the states' complaint and denied their request for a preliminary injunction. The district court concluded that the wage mandate did not violate the FPASA, the major questions doctrine did not apply, and the rule was not subject to arbitrary-or-capricious review under the APA because the DOL had to adopt the policy by executive order.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court's dismissal of the complaint, vacated the denial of the preliminary injunction, and remanded for further proceedings. The Ninth Circuit held that the minimum wage mandate exceeded the authority granted to the President and DOL under the FPASA because the FPASA’s purpose statement does not authorize the President to impose a wage mandate without other operative language in the FPASA. The court also held that the major questions doctrine did not apply because the executive order was not a transformative expansion of authority. Finally, the court found that the DOL acted arbitrarily or capriciously by failing to consider alternatives to the $15 per hour minimum wage mandate, thus violating the APA. View "STATE OF NEBRASKA V. SU" on Justia Law

Plaintiffs Jay and Siv Bennett, along with their corporation Kesha Marketing, Inc., were long-time associates of Isagenix International LLC, a multi-level marketing company. In May 2023, Isagenix informed the Bennetts that it would not renew their accounts, which were set to expire in June 2023. The Bennetts, whose sole income came from Isagenix commissions, sued the company and obtained a preliminary injunction to prevent the termination of their business relationship.The United States District Court for the District of Arizona granted the preliminary injunction, finding that the Bennetts were likely to succeed on the merits of their claims. The court concluded that the contracts between the Bennetts and Isagenix were likely bilateral and that the modifications allowing Isagenix to terminate the contracts at will were not valid under Arizona law. The district court also found that the Bennetts would suffer irreparable harm due to the contractual limitation on consequential damages.The United States Court of Appeals for the Ninth Circuit reviewed the case and agreed with the district court that the Bennetts had shown a likelihood of success on the merits. The Ninth Circuit held that the contracts were likely bilateral and that the modifications were not validly executed under Arizona law. However, the Ninth Circuit found that the district court erred in its analysis of irreparable harm. The appellate court held that a contractual limitation on consequential damages does not constitute irreparable harm for purposes of equity. Consequently, the Ninth Circuit vacated the preliminary injunction and remanded the case for further proceedings to address the Bennetts' other theories of irreparable injury. View "BENNETT V. ISAGENIX INTERNATIONAL LLC" 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 Terpin, a cryptocurrency investor, sued AT&T Mobility, LLC after hackers gained control over his phone number through a fraudulent "SIM swap," received password reset messages for his online accounts, and stole $24,000,000 of his cryptocurrency. Terpin alleged that AT&T failed to adequately secure his account, leading to the theft.The United States District Court for the Central District of California dismissed some of Terpin's claims for failure to state a claim and later granted summary judgment against him on his remaining claims. The court dismissed Terpin's fraud claims and punitive damages claim, holding that he failed to allege that AT&T had a duty to disclose or made a promise with no intent to perform. The court also held that Terpin failed to allege facts sufficient to support punitive damages. On summary judgment, the court ruled that Terpin's negligence claims were barred by the economic loss rule, his breach of contract claim was barred by the limitation of liability clause in the parties' agreement, and his claim under Section 222 of the Federal Communications Act (FCA) failed because the SIM swap did not disclose any information protected under the Act.The United States Court of Appeals for the Ninth Circuit affirmed the district court's dismissal of Terpin's fraud claims and punitive damages claim, agreeing that Terpin failed to allege a duty to disclose or an intent not to perform. The court also affirmed the summary judgment on Terpin's breach of contract claim, holding that consequential damages were barred by the limitation of liability clause. The court affirmed the summary judgment on Terpin's negligence claims, finding them foreclosed by the economic loss rule. However, the Ninth Circuit reversed the summary judgment on Terpin's claim under Section 222 of the FCA, holding that Terpin created a triable issue over whether the fraudulent SIM swap gave hackers access to information protected under the Act. The case was remanded for further proceedings on this claim. View "TERPIN V. AT&T MOBILITY LLC" on Justia Law

In 2020, Milos Product Tanker Corporation transported approximately 40,000 tons of jet fuel belonging to Valero Marketing and Supply Company. Milos had a maritime transportation contract (Charter Party) with GP Global PTE Ltd., which arranged the voyage. Valero purchased the fuel from Koch Refining International PTE Ltd. on "cost and freight" terms, meaning Koch paid for the transportation. Upon delivery, Valero refused to pay Milos, arguing it had already paid Koch. GP Global, facing financial difficulties, also did not pay Milos, leading Milos to sue Valero for breach of contract.The United States District Court for the Central District of California granted summary judgment in favor of Milos, concluding that Valero breached an express or implied contract to pay Milos for the transportation. The court reasoned that Valero's conduct showed its consent to be bound by the Charter Party between Milos and GP Global. The court also found that Valero was alternatively liable under an implied promise to pay, based on its acceptance of the fuel.The United States Court of Appeals for the Ninth Circuit reversed the district court's decision. The appellate court held that under maritime law, the shipper (GP Global) is primarily liable for freight charges, even if a bill of lading suggests otherwise. The court found no express contract between Milos and Valero that would rebut this presumption. The Charter Party specifically stated that GP Global would pay the freight. The court also determined that Valero's conduct did not imply an agreement to be bound by the bills of lading or to pay freight. Additionally, the court found no basis for an implied obligation for Valero to pay under the principles established in States Marine International, Inc. v. Seattle-First National Bank. The court concluded that Valero was not unjustly enriched, as it had paid Koch for the freight charges. The case was remanded for further proceedings consistent with this opinion. View "MILOS PRODUCT TANKER CORPORATION V. VALERO MARKETING AND SUPPLY COMPANY" on Justia Law

C.R. Bard, Inc. (Bard), a medical device company, held patents on a vascular graft and entered into a licensing agreement with Atrium Medical Corporation (Atrium) to settle a patent infringement lawsuit. The agreement required Atrium to pay Bard a 15% per-unit royalty on U.S. sales until the U.S. patent expired in 2019 and on Canadian sales until the Canadian patent expired in 2024. Additionally, Atrium was to pay a minimum royalty of $3.75 million per quarter until the FDA approved the iCast stent for vascular use or rescinded its approval for all uses. Atrium ceased minimum royalty payments after the U.S. patent expired, leading Bard to sue for breach of contract.The United States District Court for the District of Arizona held a bench trial and found that the minimum royalty provision was primarily intended to compensate Bard for U.S. sales, thus constituting patent misuse under Brulotte v. Thys Co. The court concluded that the provision violated Brulotte because it effectively extended royalties beyond the patent's expiration based on the parties' motivations during negotiations.The United States Court of Appeals for the Ninth Circuit reversed the district court's judgment. The appellate court clarified that the Brulotte rule requires examining whether a contract explicitly provides for royalties on the use of a patented invention after the patent's expiration. The court held that the licensing agreement did not violate Brulotte because it provided for U.S. royalties only until the U.S. patent expired and Canadian royalties until the Canadian patent expired. The minimum royalty payments were not tied to post-expiration use of the U.S. patent but were instead based on Canadian sales, which continued to be valid under the Canadian patent. The Ninth Circuit concluded that the district court erred by considering the parties' subjective motivations and reversed the judgment for Atrium on Bard’s breach of contract claim. View "C.R. BARD, INC. V. ATRIUM MEDICAL CORPORATION" on Justia Law

The case involves a challenge to Arizona's voter registration law, specifically A.R.S. § 16-121.01(C), which requires documentary proof of citizenship (DPOC) for voter registration. Plaintiffs, including various advocacy groups and individuals, argued that this law conflicts with a prior consent decree (LULAC Consent Decree) that allows voter registration without DPOC for federal elections. The district court issued an injunction barring the enforcement of the law, leading to an appeal by the Intervenors-Defendants-Appellants, including the Republican National Committee and Arizona state legislators.The United States District Court for the District of Arizona ruled in favor of the plaintiffs, finding that the new law violated the LULAC Consent Decree. The court issued an injunction preventing the enforcement of A.R.S. § 16-121.01(C). The Intervenors-Defendants-Appellants filed an emergency motion to stay the district court's judgment, which was partially granted by a motions panel of the Ninth Circuit Court of Appeals. The motions panel stayed the injunction concerning A.R.S. § 16-121.01(C) but left the rest of the district court's judgment intact.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court granted the plaintiffs' emergency motion for reconsideration of the partial stay. The Ninth Circuit vacated the motions panel's order that had stayed the district court's injunction against enforcing A.R.S. § 16-121.01(C). The court found that the Intervenors-Defendants-Appellants did not demonstrate a strong likelihood of success on the merits or a high degree of irreparable injury. The court emphasized the importance of maintaining the status quo in election cases to avoid voter confusion and potential disenfranchisement, citing the Supreme Court's decision in Purcell v. Gonzalez. The court concluded that the balance of hardships and public interest favored vacating the stay. View "MI FAMILIA VOTA, V. MAYES" on Justia Law

Plaintiff, a Bank of America (BOA) accountholder, was charged two separate out-of-network (OON) balance inquiry fees when using a non-BOA ATM. She claimed that only the first fee was permissible under the contract, arguing that a "balance inquiry" should be defined as a customer-initiated request for balance information. BOA contended that it could charge a fee whenever an ATM transmitted a balance inquiry request, regardless of the customer's actions.The United States District Court for the Southern District of California granted summary judgment in favor of BOA on both the breach of contract and breach of the implied covenant of good faith and fair dealing claims. The court also denied class certification, reasoning that individual issues predominated over common ones, particularly concerning the subjective intent of each class member and variations in ATM prompts.The United States Court of Appeals for the Ninth Circuit reversed the district court's summary judgment on the breach of contract claim, agreeing with the plaintiff that a "balance inquiry" should be defined as a customer-initiated transaction. The court found that BOA's interpretation, which allowed fees based on ATM transmittals, was unreasonable and not supported by the contract's language. The court affirmed the summary judgment on the implied covenant of good faith and fair dealing claim, as it was indistinguishable from the breach of contract claim. The court also affirmed the district court's decision that the plaintiff's failure to follow pre-dispute procedures did not bar her claim.The Ninth Circuit vacated the denial of class certification and remanded the case for reconsideration, noting that the court's interpretation of "balance inquiry" alleviated concerns about the need to probe the subjective intent of individual class members. View "Schertzer v. Bank of America, NA" on Justia Law

AGK Sierra De Montserrat, L.P. (AGK) entered into a Purchase and Sale Agreement (PSA) with Comerica Bank (Comerica) for the purchase of lots in a residential subdivision. The PSA included an indemnity provision requiring Comerica to indemnify AGK against claims arising from Comerica's position as the declarant. After the sale, Westwood Montserrat, Ltd. (Westwood) initiated several lawsuits against AGK, claiming declarant rights. Comerica refused to indemnify AGK, leading AGK to sue Comerica for breach of the indemnity provision.The United States District Court for the Eastern District of California found that Comerica breached the indemnity agreement and awarded AGK attorney fees incurred in the underlying lawsuits with Westwood. Additionally, the district court, relying on the Ninth Circuit's decision in DeWitt v. Western Pacific Railroad Co., awarded AGK attorney fees for the present breach of contract suit against Comerica. Comerica appealed the award of attorney fees for the present litigation.The United States Court of Appeals for the Ninth Circuit reviewed the case and reversed the district court's award of attorney fees for the present litigation. The Ninth Circuit held that DeWitt was only binding in the absence of subsequent indications from California courts that the interpretation was incorrect. Since DeWitt, California appellate courts have uniformly indicated that first-party attorney fees are not recoverable under an indemnity provision unless explicitly stated. The Ninth Circuit remanded the case for the district court to determine whether the attorney fees were otherwise recoverable under the PSA's attorney fees provision. The court emphasized that indemnity provisions generally cover third-party claims, not first-party litigation costs, unless specific language indicates otherwise. View "AGK SIERRA DE MONTSERRAT, L.P. V. COMERICA BANK" on Justia Law

The case involves a putative class action of approximately 2,000 payees who received structured settlement annuities to resolve personal injury claims. The plaintiffs, Renaldo White and Randolph Nadeau, alleged that defendants Symetra Life Insurance Company and Symetra Assigned Benefits Service Company wrongfully induced them to cash out their annuities in individualized “factoring” arrangements, whereby they gave up their rights to periodic payments in return for discounted lump sums.The district court certified two nationwide classes under Federal Rule of Civil Procedure 23. The first class consisted of all persons who were annuitants of a structured settlement annuity (SSA) issued by Symetra and who subsequently sold to a Symetra affiliate the right to receive payments from that SSA in a factoring transaction. The second class was a subclass of the first, consisting of all members of the class whose contract defining the annuity at issue included language explicitly stating that the annuitants lack the power to transfer their future SSA payments.The United States Court of Appeals for the Ninth Circuit reversed the district court’s certification of the two nationwide classes. The court held that individual issues of causation will predominate over common ones when evaluating whether defendants’ acts and omissions caused the plaintiffs to enter factoring transactions and incur their alleged injuries. The court also held that the district court erred in certifying the nationwide subclass of plaintiffs whose original settlement agreements with their personal injury tortfeasors contained structured settlement annuity (SSA) anti-assignment provisions. The record indicates that the annuitants hail from a wide array of different states, and some of the settlement agreements have choice of law provisions denoting the law of a state other than the location where the contract was executed. The apparent variations in state law on the enforceability of anti-assignment provisions in SSAs and the need to apply multiple state laws to the subclass raised a substantial question of whether individual issues predominate and how the matter can be fairly managed as a class action. View "WHITE V. SYMETRA ASSIGNED BENEFITS SERVICE COMPANY" on Justia Law