Justia Contracts Opinion Summaries

In early 2020, following the outbreak of COVID-19, Los Angeles County passed the “Resolution of the Board of Supervisors of the County of Los Angeles Further Amending and Restating the Executive Order for an Eviction Moratorium During Existence of a Local Health Emergency Regarding Novel Coronavirus (COVID-19)” (the “Moratorium”). The Moratorium imposed temporary restrictions on certain residential and commercial tenant evictions. It provided tenants with new affirmative defenses to eviction based on nonpayment of rent, prohibited landlords from charging late fees and interest, and imposed civil and criminal penalties to landlords who violate the Moratorium. Id. Section V (July 14, 2021). Plaintiff, a commercial landlord, sued the County, arguing that the Moratorium impaired his lease, in violation of the Contracts Clause of the U.S. Constitution. The district court found that Plaintiff had not alleged an injury in fact and dismissed his complaint for lack of standing.   The Ninth Circuit reversed the district court’s dismissal. The panel held that Plaintiff had standing to bring his Contracts Clause claim. Plaintiff’s injury for Article III purposes did not depend on whether Plaintiff’s tenant provided notice or was otherwise excused from doing so. Those questions went to the merits of the claim rather than Plaintiff’s standing to bring suit. Plaintiff alleged that the moratorium impaired his contract with his tenant because it altered the remedies the parties had agreed to at the time they entered into the lease. The panel held that these allegations were sufficient to plead an injury in fact and to state a claim under the Contracts Clause, and remanded to the district court. View "HOWARD ITEN V. COUNTY OF LOS ANGELES" on Justia Law

The City and County of San Francisco (the City) owns and operates San Francisco International Airport (SFO or the Airport). Airlines for America (A4A) represents airlines that contract with the City to use SFO. In 2020, in response to the COVID-19 pandemic, the City enacted the Healthy Airport Ordinance (HAO), requiring the airlines that use SFO to provide employees with certain health insurance benefits. A4A filed this action in the Northern District of California, alleging that the City, in enacting the HAO, acted as a government regulator and not a market participant, and therefore the HAO is preempted by multiple federal statutes. The district court agreed to the parties’ suggestion to bifurcate the case to first address the City’s market participation defense. The district court held that the City was a market participant and granted its motion for summary judgment. A4A appealed.   The Ninth Circuit reversed the district court’s grant of summary judgment. The court concluded that two civil penalty provisions of the HAO carry the force of law and thus render the City a regulator rather than a market participant. The court wrote that because these civil penalty provisions result in the City acting as a regulator, it need not determine whether the City otherwise would be a regulator under the Cardinal Towing two-part test set forth in LAX, 873 F.3d at 1080 View "AIRLINES FOR AMERICA V. CITY AND COUNTY OF SAN FRANCISCO" on Justia Law

Plaintiff Ernest Bock, LLC (“Bock”) initially obtained an $11.8 million judgment for breach of contract against Defendants in New Jersey state court. Bock then filed this federal suit in the District of Nevada, alleging that Defendants, assisted by other named Defendants, engaged in an elaborate series of allegedly improper asset transfers to insulate those assets from the New Jersey judgment. While the federal suit was pending, a New Jersey appellate court vacated the underlying judgment and remanded for further proceedings, including discovery, to determine whether Defendants were liable to Bock. The district court then stayed this case pursuant to Colorado River Water Conservation District v. United States (Colorado River), 424 U.S. 800 (1976).   The Ninth Circuit reversed the district court’s order staying. The panel first concluded that Bock had standing to bring the suit because Bock raised a question of fact as to whether it was injured by the defendants’ asset transfers. Noting that a Colorado River stay is proper only in exceptional circumstances, the panel held that a Colorado River stay cannot issue when, as here, there was substantial doubt as to whether the state proceedings would resolve the federal action. Because Colorado River did not support a stay, neither could the district court’s docket management authority. View "ERNEST BOCK, LLC V. PAUL STEELMAN, ET AL" on Justia Law

Epic Games, Inc. sued Apple, Inc. pursuant to the Sherman Act and California’s Unfair Competition Law (UCL). Epic contends that Apple acted unlawfully by restricting app distribution on iOS devices to Apple’s App Store, requiring in-app purchases on iOS devices to use Apple’s in-app payment processor, and limiting the ability of app developers to communicate the availability of alternative payment options to iOS device users. Apple counter-sued for breach of contract and indemnification for its attorney fees arising from this litigation.   The Ninth Circuit affirmed in part and reversed in part the district court’s judgment, after a bench trial, against Epic Games on its Sherman Act claims for restraint of trade, tying, and monopoly maintenance against Apple, Inc.; in favor of Epic on its UCL claim; against Epic on Apple’s claim for breach of contract; and against Apple on its claim for attorney fees. The panel affirmed except for the district court’s ruling respecting attorney fees, where it reversed and remanded for further proceedings.   The panel affirmed the district court’s denial of antitrust liability and its corresponding rejection of Epic’s illegality defense to Apple’s breach of contract counter-claim. The panel held that the district court erred as a matter of law in defining the relevant antitrust market, but those errors were harmless. The panel held that independent of the district court’s errors, Epic failed to establish, as a factual matter, its proposed market definition and the existence of any substantially less restrictive alternative means for Apple to accomplish the procompetitive justifications supporting iOS’s walled garden ecosystem. View "EPIC GAMES, INC. V. APPLE, INC." on Justia Law

Plaintiff provided tax- and estate-planning services. Plaintiff filed a claim in Baltimore County Orphans’ Court against Defendant’s Estate for fees allegedly due under contracts. After the Estate disallowed the claim, Plaintiff sued in federal court. After the Estate disallowed the claim, Plaintiff sued in federal court. The district court dismissed Plaintiff’s suit for lack of subject matter jurisdiction, finding that the suit was barred by the “probate exception” to federal court jurisdiction.   The Ninth Circuit reversed the district court’s judgment dismissing for lack of personal jurisdiction Plaintiff’s suit alleging breach of contract. The panel held that none of the Goncalves categories applied to Plaintiff’s suit against the Estate. First, neither party contends that Plaintiff was seeking to annul or probate Bond’s will. Second, this suit does not require the federal courts to administer Defendant’s Estate. Valuing an estate to calculate contract damages is not administering an estate. Third, this suit does not require the federal courts to assume in rem jurisdiction over property in the custody of the probate court. If Plaintiff were to prevail at trial, he would be awarded an in personam judgment for money damages. The panel held that Plaintiff made out a prima facie case of personal jurisdiction. The panel held that the district court erred in holding that Plaintiff’s suit was barred by the probate exception to federal jurisdiction. View "ROGER SILK V. BARON BOND, ET AL" on Justia Law

This case involves an insured who sued for breach of contract and for breach of the implied duty of good faith and fair dealing when its insurer denied coverage for business income losses that the insured incurred during the COVID19 pandemic. The insured alleged that the COVID-19 virus was present on its premises and that state government closure orders prevented it from fully making use of its insured property due to infections and prohibitions on elective medical procedures. The district court dismissed the insured’s suit for failure to state a claim.   The Ninth Circuit certified the following question to the Oregon Supreme Court: Can the actual or potential presence of the COVID-19 virus on an insured’s premises constitute “direct physical loss or damage to property” for purposes of coverage under a commercial property insurance policy? View "THE OREGON CLINIC, PC V. FIREMAN'S FUND INS. CO." on Justia Law

Honey Bum, a rival fast-fashion retailer, alleged that Fashion Nova organized a per se unlawful group boycott by threatening to stop purchasing from certain clothing vendors unless they, in turn, stopped selling to Honey Bum. The district court granted summary judgment on Honey Bum’s Sherman Act § 1 group boycott claim, concluding that Honey Bum failed to create a material dispute as to the existence of a horizontal agreement between the vendors themselves, to boycott Honey Bum. The district court also granted summary judgment on Honey Bum’s California business tort claims.   The Ninth Circuit affirmed the district court’s summary judgment in favor of Fashion Nova, Inc., et al. in an antitrust action brought by Honey Bum, LLC. The panel held that Sherman Act Section 1 prohibits contracts, combinations, and conspiracies that unreasonably restrain trade. In determining the reasonableness of a restraint, two different kinds of liability standards are considered. Some restraints are unreasonable per se because they always or almost always tend to restrict competition and decrease output. Most restraints, however, are subject to the so-called Rule of Reason, a multi-step, burden-shifting framework. The panel held that a group boycott is an agreement among multiple firms not to deal with another firm (the target). Some group boycotts are per se unlawful, while others are not. The panel affirmed the district court’s grant of summary judgment on Honey Bum’s claim for tortious interference with prospective economic relations because that claim required a showing of independent unlawfulness. View "HONEY BUM, LLC V. FASHION NOVA, INC., ET AL" on Justia Law

Plaintiff brought this products-liability suit against LG Chem, Ltd. (“LGC”) and LG Chem America, Inc. (“LGCA”), claiming that they negligently manufactured and distributed a battery that he used to power an electronic cigarette until the battery, and electronic cigarette both exploded in his mouth. Plaintiff sued LGC and LGCA in Hawaii state court, bringing various state-law claims related to the design, manufacture, labeling, advertising, and distribution of the subject battery. LGC and LGCA were timely removed from Hawaii state court to the District Court for the District of Hawaii and then moved to dismiss Yamashita’s complaint for lack of personal jurisdiction. Yamashita opposed the motions and moved for jurisdictional discovery. The district court denied Yamashita’s motion for jurisdictional discovery.   The Ninth Circuit affirmed the district court’s dismissal for lack of personal jurisdiction. The court held that Ford modified, but did not abolish, the requirement that a claim must arise out of or relate to a forum contact in order for a court to exercise specific personal jurisdiction. The panel explained that while LGC and LGCA’s Hawaii contacts clearly showed that they purposefully availed themselves of Hawaii law, they can only be subject to specific personal jurisdiction if Plaintiff’s injuries arose out of or related to those contacts. The panel held that Plaintiff had not shown that his injuries arose out of any contacts because he had not shown but-for causation. The panel concluded that the district court’s denial of jurisdictional discovery was not an abuse of discretion. View "MATT YAMASHITA V. LG CHEM, LTD., ET AL" on Justia Law

The certified a question to the Supreme Court of California in a case where an insured who sued for declaratory judgment that its insurance policy provides coverage for its losses arising from the COVID-19 pandemic. At issue here is whether the policy’s virus exclusion is enforceable and precludes coverage.   The Ninth Circuit certified the following question to the Supreme Court of California: Is the virus exclusion in French Laundry’s insurance policy unenforceable because enforcing it would render illusory a limited virus coverage provision allowing for the possibility of coverage for business losses and extra expenses allegedly caused by the presence and impacts of COVID-19 at an insured’s properties, including the loss of business due to a civil authority closure order? View "FRENCH LAUNDRY PARTNERS, LP, ET AL V. HARTFORD FIRE INSURANCE CO., ET AL" on Justia Law

Appellee worked at a Xerox Business Services, LLC (“XBS”) call center and was compensated according to a proprietary system of differential pay rates known as Achievement Based Compensation (“ABC”). Section 4 of the 2002 Dispute Resolution Plan ("DRP") required XBS and its agents to submit “all disputes” to binding arbitration for final and exclusive resolution. Appellee never signed the 2002 DRP. XBS issued an updated DRP (“2012 DRP”). XBS filed a motion to compel individual arbitration by 2,927 class members who had signed the 2002 DRP. The district court found that XBS had waived its right to compel arbitration.   The Ninth Circuit affirmed the district court’s order denying XBS's motion to compel. The panel noted that following Morgan v. Sundance, 142 S. Ct. 1708 (2022), the Ninth Circuit’s test for waiver of the right to compel arbitration consists of two elements: (1) knowledge of an existing right to compel arbitration; and (2) intentional acts inconsistent with that existing right. XBS challenged both prongs of the test. The panel held that XBS was correct that the district court could not compel nonparties to the case to arbitrate until after a class had been certified and the notice and opt-out period were complete. However, XBS failed to appreciate that waiver was a unilateral concept. The panel held that further undercutting XBS’s position was its own actions throughout the course of the litigation, in which XBS raised the 2012 DRP as to putative class members before the class had been certified and before it had the ability to move to enforce that agreement against them. View "TIFFANY HILL V. XEROX BUSINESS SERVICES, LLC, ET AL" on Justia Law