Justia Contracts Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
ECIMOS, LLC v. Carrier Corp.
Carrier manufactures residential Heating, Ventilation, and Air Conditioning (HVAC) systems. ECIMOS produced the quality-control system that tested completed HVAC units at the end of Carrier’s assembly line. ECIMOS alleged that Carrier infringed on its copyright on its database-script source code—a part of ECIMOS’s software that stores test results. ECIMOS alleges that Carrier improperly used the database and copied certain aspects of the code to aid a third-party’s development of new testing software that Carrier now employs in its Collierville, Tennessee manufacturing facility.ECIMOS won a $7.5 million jury award. The court reduced Carrier’s total damages liability to $6,782,800; enjoined Carrier from using its new database, but stayed the injunction until Carrier could develop a new, non-infringing database subject to the supervision of a special master; and enjoined Carrier from disclosing ECIMOS’s trade secrets while holding that certain elements of ECIMOS’s system were not protectable as trade secrets (such as ECIMOS’s assembled hardware). The Sixth Circuit affirmed in part and reversed in part. There are sufficient reasons to conclude that Carrier did infringe on ECIMOS’s copyright, but Carrier’s liability to ECIMOS based on its copyright infringement and its breach of contract can total no more than $5,566,050. The district court did not err when it crafted its post-trial injunctions. View "ECIMOS, LLC v. Carrier Corp." on Justia Law
Bay Shore Power Co. v. Oxbow Energy Solutions, LLC
In 1998, Bay and Oxbow entered into a limestone supply contract, agreeing to resolve any disputes according to specified “Dispute Resolution Procedures.” Oxbow began to provide lower quality limestone that posed a danger to Bay’s equipment. Bay agreed to pay—under protest—a price in excess of that permitted by the contract for adequate limestone. Negotiations and mediation failed. Bay filed a demand for arbitration. An arbitration panel unanimously held that Oxbow had breached the contract and awarded nearly $5 million in damages, costs, and interest. The panel did not award attorneys’ fees, concluding that the Dispute Procedures expressly deny it the jurisdiction to do so. The district court confirmed the award, agreeing that the contract did not permit the prevailing party to recover its attorneys’ fees.The Sixth Circuit reversed. The Procedure authorizing the allocation of costs states,“(but excluding attorneys’ fees which shall be borne by each party individually). The provision immediately following that grants the prevailing party a right to attorneys’ fees and another provision refers to attorneys’ fees. Those provisions can either be read together to permit the recovery of attorneys’ fees in court but not before an arbitration panel, or they are hopelessly contradictory and unenforceable. Bay presents a reasonable construction of the terms to harmonize them. View "Bay Shore Power Co. v. Oxbow Energy Solutions, LLC" on Justia Law
Cook v. Ohio National Life Insurance Co.
Cook sold variable annuities on behalf of Ohio National, under a contract between Ohio National and a broker-dealer, Triad. Ohio National paid commissions on the previously sold annuities to Triad, which in turn paid commissions to Cook pursuant to a separate agreement between Cook and Triad. After Ohio National terminated its agreement with Triad, Ohio National refused to pay further commissions on annuities sold during the term of the agreement. Cook sued Ohio National for breach of its agreement with Triad. Triad is not a party to the suit. Cook claimed that as a “third-party beneficiary” to the agreement between Ohio National and Triad, he had standing to bring suit. The district court found that, under Ohio law, Cook not an “intended” third-party beneficiary and could not maintain an alternative claim of unjust enrichment against Ohio National. The Sixth Circuit affirmed the dismissal of the suit. The plain language of the Selling Agreement makes it clear that plaintiff is not an intended third-party beneficiary under the Agreement. The Agreement unambiguously directs Ohio National to pay commissions to Triad; Cook is precluded from bringing an unjust enrichment claim against Ohio National. View "Cook v. Ohio National Life Insurance Co." on Justia Law
International Union, United Automobile, Aerospace and Agricultural Implement Workers of America v. Honeywell International, Inc.
Beginning in 1965, Honeywell and the labor union negotiated a series of collective bargaining agreements (CBAs). Honeywell agreed to pay “the full [healthcare benefit] premium or subscription charge applicable to the coverages of [its] pensioner[s]” and their surviving spouses. Each CBA contained a general durational clause stating that the agreement would expire on a specified date, after which the parties would negotiate a new CBA. In 2003, the parties negotiated a CBA obligating Honeywell to pay “not . . . less than” a specified amount beginning in 2008. The retirees filed suit, arguing that the pre-2003 CBAs vested lifetime, full-premium benefits for all pre-2003 retirees and that the CBAs of 2003, 2007, and 2011 vested, at a minimum, lifetime, floor-level benefits for the remaining retirees.The Sixth Circuit agreed with the district court that none of the CBAs vested lifetime benefits. Without an unambiguous vesting clause, the general durational clause controls. Reversing in part, the court held that the “not . . . less than” language unambiguously limited Honeywell’s obligation to pay only the floor-level contributions during the life of the 2011 CBA. The court rejected a claim that Honeywell acquired a "windfall" at the retirees' expense. View "International Union, United Automobile, Aerospace and Agricultural Implement Workers of America v. Honeywell International, Inc." on Justia Law
Solo v. United Parcel Service Co.
Plaintiffs purchased liability insurance for packages shipped through UPS before December 30, 2013. The price of that insurance was set by a contract that stated that there is no additional charge for the first $100 of coverage whether or not a shipper purchases additional declared value coverage. When Plaintiffs shipped their packages, they were charged $0.85 for each hundred-dollar increment, including the first. Plaintiffs sued UPS on behalf of a proposed class. UPS argued that the controlling phrase was “total value declared” and that “total” value necessarily includes the first $100. In moving for dismissal, UPS stated that it “reserves its right to move to compel arbitration and does not by this motion in any way waive this contractual right.” UPS referenced an arbitration clause found in an amended contract that became effective December 30, 2013, after the shipments at issue were mailed. The Sixth Circuit reversed the dismissal of the suit, relying on the complaint’s allegations that UPS routinely credits customers who complain about the overcharge and “acknowledges the validity of Solo’s reading of the contractual provision.” On remand, UPS raised the obligation to arbitrate as its first affirmative defense. After discovery, UPS moved to compel arbitration. The district court denied the motion on the basis of waiver. The Sixth Circuit affirmed. The Amended UPS Agreement did not retroactively apply to the transactions at issue and, in any event, UPS waived its right to arbitrate. View "Solo v. United Parcel Service Co." on Justia Law
Faber v. Ciox Health, LLC
Three out of every five hospitals use Ciox, a medical records provider, which processed 4.3 million pages per day in 2018. Ciox is subject to the 1996 Health Insurance Portability and Accountability Act (HIPAA), 110 Stat. 1936. Department of Health and Human Service fee-limit provisions prohibit Ciox from charging patients more than “reasonable, cost-based fee[s]” for their records. Tennessee’s Medical Records Act (TMRA), prevents hospitals from charging patients more than the “reasonable costs for copying and the actual costs of mailing [their] records.” The named Plaintiffs worked with law firms to request their medical records from Tennessee hospitals. Ciox serviced those requests. Plaintiffs filed a class action, accusing Ciox of charging them more than what HIPAA regulations and TMRA allow. HIPAA does not authorize a private cause of action, so the Plaintiffs cited common-law causes of action: negligence, negligence per se, unjust enrichment, and breach of implied-in-law contract. The district court dismissed the TMRA claim but granted class certification and later granted Ciox summary judgment The Sixth Circuit affirmed. Tennessee's common law is no substitute for the private right of action that Congress refused to create in HIPAA. TMRA’s fee limits unambiguously do not apply to medical-records providers. Plaintiffs cannot prove the existence of any common-law duty or legal contract. Because the court did not send notice to absentee class members, the decision binds only the named Plaintiffs. View "Faber v. Ciox Health, LLC" on Justia Law
McGee v. Armstrong
Plaintiff, a management employee of the Summit County Board of Developmental Disabilities, worked under renewable one-year agreements that contained broad arbitration provisions. When Plaintiff joined the Ohio Army National Guard in 2008, his contract provided for “military leave in accordance with Board Policy.” Thereafter, there were several disputes about his entitlement military leave at full pay. Plaintiff refused to sign a proposed 2011–12 contract. Plaintiff filed his first complaint in 2011. In April 2012, shortly after returning from military leave, the Board delivered to Plaintiff a pre-disciplinary hearing notice. The Board subsequently notified Plaintiff of his termination. Plaintiff filed another complaint, alleging wrongful termination of employment, breaches of the employment contract, and discrimination and retaliation based on his military status. The district court granted Defendants’ motion to compel arbitration, excluding two breach of contract claims. An arbitrator determined that all of the claims identified as possibly subject to arbitration were arbitrable, and granted the Defendants summary judgment. The court granted Defendants summary judgment regarding Plaintiff’s breach of contract claims. The Sixth Circuit affirmed. The contract provided that the arbitrators could decide questions of arbitrability and, under Ohio law, the arbitrators did not exceed their powers by entering a decision on Defendants’ motion for summary judgment. Plaintiff failed to show a breach of his contract with respect to military leave. View "McGee v. Armstrong" on Justia Law
Evoqua Water Technologies, LLC v. M.W. Watermark, LLC
The parties manufacture and sell equipment that removes water from industrial waste. Gethin founded Watermark's predecessor, “J-Parts,” after leaving his position at JWI. JWI sued Gethin and J-Parts for false designation of origin, trademark dilution, trademark infringement, unfair competition, unjust enrichment, misappropriation of trade secrets, breach of fiduciary duties, breach of contract, and conversion. The parties settled. A stipulated final judgment permanently enjoined Watermark and Gethin and “their principals, agents, servants, employees, attorneys, successors and assigns” from using JWI’s trademarks and from “using, disclosing, or disseminating” JWI’s proprietary information. Evoqua eventually acquired JWI’s business and trade secrets, technical and business information and data, inventions, experience and expertise, other than software and patents, and JWI’s rights and obligations under its contracts, its trademarks, and its interest in litigation. Evoqua discontinued the J-MATE® product line. Watermark announced that it was releasing a sludge dryer product. Evoqua planned to reintroduce J-MATE® and expressed concerns that Watermark was violating the consent judgment and improperly using Evoqua’s trademarks. Evoqua sued, asserting copyright, trademark, and false-advertising claims and seeking to enforce the 2003 consent judgment. The district court held that the consent judgment was not assignable, so Evoqua lacked standing to enforce it and that the sales agreement unambiguously did not transfer copyrights. A jury rejected Evoqua’s false-advertising claim but found Watermark liable for trademark infringement. The Sixth Circuit vacated in part. The consent judgment is assignable and the sales agreement is ambiguous regarding copyrights. View "Evoqua Water Technologies, LLC v. M.W. Watermark, LLC" on Justia Law
Bisig v. Time Warner Cable
Plaintiffs worked as multi-dwelling unit sales representatives for Insight, a Louisville cable, internet, and phone services provider. In 2011, Time Warner announced it was acquiring Insight. Plaintiffs claim that Time Warner induced them to stay in their jobs although developments at the company would have otherwise caused them to leave. Time Warner allegedly promised them that they would keep their positions and receive better pay. Time Warner acquired Insight in 2012, and allegedly reiterated its promises at meetings. Plaintiffs claim they were shocked to learn in October 2013 that their workforce was being cut in half and that they would need to reapply if they wished to keep their positions. Time Warner argued that Plaintiffs electronically acknowledged and accepted three different at-will employment disclaimers on or before the acquisition date and that, at an August 2013 meeting, Time Warner provided each Plaintiff a copy of a plan that overhauled how they would earn commissions. Plaintiffs each resigned and filed suit, alleging fraud, negligent misrepresentation, and promissory estoppel. The court excluded certain documents that Time Warner allegedly failed to timely disclose, including job offers and electronically-acknowledged at-will disclaimers. The court awarded Plaintiffs attorneys’ fees and costs related to the motion but granted Time Warner summary judgment. The Sixth Circuit affirmed the summary judgment and reversed the sanctions. A party may not rely on oral representations that conflict with contrary written disclaimers that the complaining party earlier specifically acknowledged in writing. View "Bisig v. Time Warner Cable" on Justia Law
Logan v. MGM Grand Detroit Casino
Logan worked as a cook for MGM. As part of her job application, she agreed to a six-month limitation period to bring any lawsuit against her employer. After leaving the job, she sued MGM under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, alleging employment discrimination. Her former employer asserted a statute of limitations defense. Although Logan arguably brought her claim within the Title VII statutory period, she waited longer than the limitation period provided in her employment application. The district court granted MGM summary judgment. The Sixth Circuit reversed. The contractual limitation period cannot supersede the statutory limitation period for bringing suit under Title VII. The Title VII limitation period is part of an elaborate pre-suit process that must be followed before any litigation may commence. Contractual alteration of this process abrogates substantive rights and contravenes Congress’s uniform nationwide legal regime for Title VII lawsuits. View "Logan v. MGM Grand Detroit Casino" on Justia Law