Justia Contracts Opinion Summaries

A medical resident, Dr. Jacquelyn Mares, was dismissed from Wright State University’s (WSU) obstetrics and gynecology residency program due to ongoing complaints and escalating disciplinary actions related to her unprofessional behavior. Following her dismissal, Mares was also terminated from her position at Miami Valley Hospital, where she was employed during her residency. As a result, Mares sued WSU, the hospital, its owner-operator Premier Health Partners, and several WSU employees, alleging violations of her procedural and substantive due process rights, as well as various contract-based state law claims. The district court granted summary judgment to the defendants.In its ruling, the United States Court of Appeals for the Sixth Circuit held that WSU did not violate Mares' procedural due process rights when it dismissed her from the residency program. The court found that WSU had followed its internal procedures closely and that Mares was afforded more than enough process. Also, the court held that WSU did not violate Mares' substantive due process rights. It determined that WSU's decision to dismiss her was not arbitrary or capricious, nor was it conscience-shocking. Finally, the court held that Miami Valley Hospital did not breach its contractual duties when it terminated Mares after her dismissal from WSU’s residency program. The court concluded that the hospital acted within the scope of the employment contract. Therefore, the court affirmed the district court’s decision to grant the defendants' summary judgment. View "Mares v. Miami Valley Hospital" on Justia Law

In the case before the United States Court of Appeals for the Sixth Circuit, State Farm Mutual Automobile Insurance Company ("State Farm") brought a lawsuit against Michael Angelo, alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The lawsuit claimed that Angelo submitted fraudulent bills to the insurance company. Angelo later filed a separate action against State Farm under the False Claims Act ("FCA"), alleging that the insurance company wrongfully avoided paying medical benefits. This action was unknown to State Farm at the time because FCA complaints are required to be filed under seal.The two parties entered into a settlement agreement in February 2021, resolving the RICO action. As part of the agreement, Angelo agreed to take all necessary steps to dismiss certain claims against State Farm. After the settlement agreement was signed, the FCA complaint was unsealed and served on State Farm. State Farm then sought to enforce the settlement agreement, arguing that it required Angelo to dismiss the FCA action as well.Angelo argued that the settlement agreement did not apply to the FCA action because the FCA claims were unrelated to the settled RICO claims. However, the district court disagreed and ordered Angelo to seek the government's consent to dismiss his FCA claims against State Farm. Angelo appealed this decision, claiming it violated his First Amendment rights and the FCA.The Court of Appeals affirmed the district court's decision, stating that the settlement agreement clearly encompassed the FCA action. The court also held that the district court had not erred in requiring Angelo to seek the government's consent to dismiss his FCA claims. Angelo's First Amendment claim was deemed forfeited as it was raised for the first time in a motion for reconsideration and was thus untimely. View "State Farm Mutual Automobile Insurance Co. v. Angelo" on Justia Law

The United States Court of Appeals considered an indemnification case between Nissan, an automobile manufacturer, and Continental, a brake parts supplier. Nissan sought indemnification from Continental for a $24 million jury award and $6 million in attorney fees and costs resulting from a products liability lawsuit in California. The lawsuit arose after an accident involving a Nissan vehicle, with the jury finding that the design of the vehicle’s braking system caused harm to the plaintiffs. Nissan argued that a provision in their contract with Continental obligated Continental to indemnify them for the jury award and litigation costs. Both the district court and the Court of Appeals disagreed, holding that the contract required Nissan to show that a defect in a Continental-supplied part caused the injury, which Nissan failed to do. The Appeals Court affirmed the district court's decision to grant summary judgment in favor of Continental. View "Nissan North America, Inc. v. Continental Automotive Systems, Inc." on Justia Law

In the case before the United States Court of Appeals for the Sixth Circuit, Brandenburg Telephone Company and Sprint Communications were in disagreement over the interest rate on an award that Sprint Communications conceded it owed to Brandenburg Telephone Company. The $2.2 million award was for unpaid fees that Sprint Communications owed for connecting local telephone calls. The dispute centered on Brandenburg's filed utility tariff which set the interest rate. Sprint argued that the tariff set the rate at 8%, and thus owed $4.3 million in interest, while Brandenburg claimed the tariff imposed a rate of 10.66%, which would result in $7.1 million in interest. The district court ruled in favor of Sprint, and the appeals court affirmed this decision.The court reasoned that the 8% rate set by the Kentucky usury statute was applicable. The court noted that while Brandenburg's tariff offered two alternatives for late payment penalty: (1) the highest interest rate (in decimal value) which may be levied by law for commercial transactions, or (2) a rate of .000292 per day (which works out to an annualized rate of 10.66%); the court interpreted the phrase "levied by law for commercial transactions" to refer to the default rate that Kentucky permits to be collected by law, which is 8%.The court rejected Brandenburg's argument that the 10.66% rate was applicable because the tariff could be viewed as an agreement between the parties and Kentucky law allows for parties to agree on higher interest rates. The court pointed out that tariffs are not freely negotiated contracts, but represent the judgment of regulators about what rates and conditions will prove reasonable and uniform for utility customers. Once regulators approve a tariff, the filed-rate doctrine prevents utilities and their customers from contracting around its terms. In this context, the court determined that the tariff's reference to the maximum rate levied by the General Assembly for general commercial transactions aligned with the filed-rate doctrine, and thus, the 8% default rule of interest applied. View "Brandenburg Telephone Co. v. Sprint Comm'ns Co." on Justia Law

In March 2015, Jere Hinman hired BrightView Landscape Development, Inc., to design and construct a pool at her residence. BrightView subcontracted with Georgia Gunite and Pool Company, Inc., to install plumbing and spray shotcrete for the pool shell. In November 2015, Hinman contacted BrightView after receiving an unusually high water bill and discovered that the pool was leaking water due to a missing part that was not included in Georgia Gunite’s scope of work. BrightView and Georgia Gunite worked together to address the issue in April 2016. In 2018, Hinman sued BrightView for defective construction of the pool, and BrightView filed a third-party complaint against Georgia Gunite, seeking indemnification based on the subcontractor agreement. Georgia Gunite moved for summary judgment, arguing that BrightView's claim was barred by Tennessee's four-year statute of repose for actions alleging defective improvements to real estate.The United States Court of Appeals affirmed the decision of the District Court for the Middle District of Tennessee, which granted summary judgment in favor of Georgia Gunite. The court held that, although BrightView's indemnification claim against Georgia Gunite was contractual in nature, it fell within the scope of Tennessee's statute of repose for deficient construction of an improvement to real property because, at its core, it sought to recover damages arising from such deficient construction. The court rejected BrightView's argument that the statute of repose only applies to tort actions. The court also rejected BrightView's argument that the application of the statute of repose in this case would extinguish its claim before it even accrued, noting that this argument is directed at the nature of a statute of repose. The court further held that the repose statute is not mutually exclusive with statutes of limitation. Thus, BrightView's claim against Georgia Gunite was barred because it was not brought within four years after substantial completion of the pool construction. View "Hinman v. ValleyCrest Landscaping Dev." on Justia Law

Bazemore, a Papa John’s delivery driver, sued under the Fair Labor Standards Act, alleging that the company had under-reimbursed his vehicle expenses. Papa John’s moved to compel arbitration, attaching a declaration from its “Director of People Services” that Papa John’s requires all new employees to sign an arbitration agreement as a condition of employment. She asserted that Bazemore signed the agreement electronically on October 10, 2019, by signing in using a user ID and password, then scrolling through the entire agreement and checking a box in order to sign. Bazemore swore under penalty of perjury that he “had never seen” the agreement and that he had seen his manager login for Bazemore and other delivery drivers “to complete training materials” for them. The court denied Bazemore’s request for targeted discovery as to whether he had actually signed the agreement and granted the motion to compel arbitration.The Sixth Circuit reversed. Under the Federal Arbitration Act, 9 U.S.C. 4, the party seeking arbitration must prove that such an agreement exists. Kentucky law governs whether Bazemore entered into an agreement and provides that an electronic signature is legally valid only when “made by the action of the person the signature purports to represent”—which is a question of fact. Bazemore’s testimony that he never saw the agreement was enough to create a genuine issue as to whether he signed it. View "Bazemore v. Papa John's U.S.A., Inc." on Justia Law

A False Claims Act qui tam action was filed under seal against SHH and its nursing facilities, alleging that SHH provided unreasonable and unnecessary services to claim the highest possible Medicare reimbursement. Three co-relators also alleged that SHH retaliated against them for internally reporting fraudulent billing practices. SHH received a Department of Justice notification that it was the subject of a fraudulent claims investigation, requesting information about recent terminations of SHH employees, including the relators. It did not explicitly refer to the retaliation allegations.Two years later, SHH obtained liability coverage. Allied's claims-made policy applies only to claims first made during the policy period. SHH's application checked "none" when asked to “provide full details of all inquiries, investigations, administrative charges, claims, and lawsuits filed” within the last three years. SHH checked “no” to whether “[SHH], any Subsidiary, any Executive or other entity proposed for coverage kn[ew] of any act, error or omission which could give rise to a claim, suit or action.” An application exclusion, incorporated into the policy, stated that if such information existed, any inquiry, investigation, administrative charge, claim, or lawsuit arising therefrom or arising from such violation, knowledge, information, or involvement is excluded from coverage.The qui tam action was unsealed. SHH notified Allied and sought coverage for defense costs. Allied denied coverage. SHH sued. SHH later settled the relators' retaliation claim ($2.2 million) and finalized a $10 million settlement for the claims-submissions violations. The district court granted SHH partial summary judgment, awarding $2,336,786.35. The Sixth Circuit reversed. The plain language of SHH’s policy excluded coverage. View "SHH Holdings, LLC v. Allied World Specialty Ins. Co." on Justia Law

Maryville College leased a building to Ruby Tuesday, which used it for corporate retreats. In financial trouble years later, Ruby Tuesday decided to sell its interest in the lease. BNA, a real estate developer, and Ruby Tuesday signed an agreement. Ruby Tuesday had previously secured a loan from Goldman Sachs that prevented Ruby Tuesday from selling its interest in the lease without Goldman’s consent. The agreement with BNA stated that Ruby Tuesday “must obtain approval from [Goldman] for the transaction.” Goldman refused to approve. Goldman later acquired the lease, after Ruby Tuesday’s bankruptcy.BNA sued Goldman under Tennessee law for intentional interference with business relations (IIBR). The Sixth Circuit affirmed the dismissal of the suit. To establish a viable IIBR claim, BNA had to adequately plead an existing business relationship with Ruby Tuesday, Goldman’s knowledge of that relationship, Goldman’s intent to cause a breach or termination of the relationship, Goldman’s improper motive or improper means, and damages from the tortious interference. BNA’s pleading did not satisfy the tort’s fourth prong: improper motive or means. The court also noted the lack of an existing business relationship between BNA and Ruby Tuesday. View "BNA Associates LLC v. Goldman Sachs Specialty Lending Group, L.P." on Justia Law

Stryker develops, manufactures, and sells spinal implants and products, and employed Abbas from 2013-2022. Abbas purports to have worked exclusively within Stryker’s finance department. Stryker claims that Abbas worked in various roles, including in sales. Abbas regularly used significant amounts of Stryker’s confidential information and trade secrets and supported Stryker’s litigation efforts. Abbas entered into confidentiality, noncompetition, and nonsolicitation agreements with Stryker when he commenced his employment, and again in 2022.Alphatec competes with Stryker. Stryker alleges that Alphatec "systematically misappropriate[s] Stryker[’s] confidential information, trade secrets, customer goodwill, and talent” and is litigating against Alphatec and former Stryker employees in several cases. Abbas resigned from Stryker to take a newly-developed position with Alphatec, a sales role, “crafted to protect Stryker’s confidential information.” Stryker sued for breach of contract and misappropriation of trade secrets.The Sixth Circuit affirmed the issuance of a preliminary injunction on behalf of Stryker. The district court crafted the injunction to preserve the status quo, reserving the possibility that other prospective jobs might be consistent with Abbas's employment agreement. It is not an impermissible industry-wide ban. Stryker is likely to succeed on the merits, based on findings that Abbas worked for Stryker in both sales and finance; Abbas had unfettered access to Stryker’s most sensitive sales and financial information, Stryker’s sales representatives, and key customer decision-makers; the Alphatec position involved work similar to the work Abbas performed for Stryker; and Abbas supported Stryker on litigation matters. View "Stryker Employment Co., LLC v. Abbas" on Justia Law

In 2014, EMS entered into a payment processing agreement with Procom, a business owned by Gaal that sold historical tours. The Agreement was executed by Gaal, who signed a personal-guaranty provision. It contained terms relating to “chargebacks,” which occurred when a Procom customer’s transaction was declined or canceled after EMS had credited Procom’s account for the purchase; EMS repaid the money to the Procom customer, then charged Procom for that money plus a fee. In 2019, EMS and Procom executed a second agreement, which contained an explicit integration clause; the guaranty provision was not signed by Gaal but by another Procom employee. During the COVID-19 pandemic, many customers canceled purchases with Procom, resulting in $10 million in chargebacks. Procom is involved in Chapter 7 bankruptcy proceedings. EMS filed a creditor’s proof of claim and sued Gaal. The district court dismissed for failure to state a claim, finding that the 2019 Agreement superseded the 2014 agreement “in all material respects,” including replacing Gaal’s guaranty.The Sixth Circuit affirmed in part, upholding the district court’s consideration of the bankruptcy filing for purposes of determining when chargebacks occurred and its finding that the 2019 Agreement replaced the 2014 Agreement rather than merely supplementing it. The court reversed in part, holding that any chargeback related to transactions occurring before the execution of the 2019 Agreement arose under the 2014 Agreement. View "Electronic Merchant Systems LLC v. Gaal" on Justia Law