Justia Contracts Opinion Summaries

Nicole Schuster, a mechanical engineer at the Naval Foundry and Propeller Center, led two Navy procurement projects for large machines known as vertical turning centers (VTCs) in 2017 and 2019. In 2017, she favored Company 1, which won the SU22 contract, while Company 2’s bid was rejected as technically unacceptable. In 2019, Schuster again favored Company 1 for the SU25 contract and, after learning Company 2 had bid, she disclosed Company 2’s confidential bid information from the earlier SU22 procurement to an employee of Company 1. This information included cost data and proprietary manufacturing details. Company 1 subsequently won the SU25 contract, with Company 2’s bid deemed too expensive.Schuster was charged in the United States District Court for the Eastern District of Pennsylvania with violating the Procurement Integrity Act, specifically 41 U.S.C. §§ 2102(a) and 2105(a), which prohibit disclosure of contractor bid or proposal information before the award of the procurement to which the information relates. Schuster pled guilty based on a plea agreement, which included a factual basis describing the machines as “virtually identical” but did not detail whether the information she disclosed was the same in substance as that submitted for the pending SU25 procurement. The District Court accepted her guilty plea and sentenced her to one year and one day in prison.The United States Court of Appeals for the Third Circuit reviewed the case, applying plain error review to Schuster’s challenge to the sufficiency of the factual basis for her plea. The Court held that the District Court erred by accepting the guilty plea without sufficient facts to establish that the disclosed information related to the pending procurement as required by statute. The Third Circuit vacated Schuster’s conviction and sentence and remanded the case for repleading, rather than entering judgment of acquittal. View "United States v. Schuster" on Justia Law

A woman with dementia became a resident at a memory care facility in Montana in June 2021. She died in November 2021 after suffering infections and complications. Her son, acting both individually and as personal representative of her estate, filed suit against the facility and related entities in November 2023, alleging claims including wrongful death, negligence, infliction of emotional distress, elder abuse, unjust enrichment, and contract rescission. The claims centered on allegations that the facility’s staff failed to provide adequate care, leading to the woman’s injuries and death. The original complaint, and a subsequent first amended complaint filed in November 2024, were never served on any defendant.The Montana Eleventh Judicial District Court, Flathead County, dismissed all claims with prejudice in March 2025, finding that the son’s claims were medical malpractice actions subject to the two-year statute of limitations and six-month service requirement under Montana law. The court concluded that because the complaints were not timely served, and the amended complaint was filed after the statute of limitations had expired, the claims were time-barred. The court also rejected arguments that the filing of the original complaint tolled the statute or that the amended complaint related back to the original complaint.On appeal, the Supreme Court of the State of Montana held that the care-related claims (Counts I-VI) were medical malpractice claims subject to the statutory time limits and service requirements, and affirmed their dismissal as time-barred. However, the court found that the unjust enrichment and contract rescission claims (Counts VII and VIII) were not medical malpractice claims and were not subject to those limitations. The Supreme Court reversed the dismissal of those two counts and remanded for further proceedings solely on those claims. View "Estate of Athy v. Edgewood" on Justia Law

Matthew Metzler, an undergraduate student at Loyola University Chicago, was expelled in January 2017 after a university hearing board found him responsible for sexual misconduct involving another student, referred to as Jane Roe. The university’s Title IX process began after Roe reported feeling pressured into sexual acts without her consent. Initially, Roe declined to file a formal complaint, but later decided to do so after continuing distress. The university investigated, interviewed both parties, and considered evidence, including text messages and witness names provided by Metzler. The hearing board credited Roe’s account over Metzler’s based on the perceived consistency and credibility of her statements and found him responsible, resulting in expulsion. Metzler’s appeal was unsuccessful.Metzler filed suit in the United States District Court for the Northern District of Illinois, Eastern Division, asserting claims under Title IX for unlawful sex discrimination and breach of contract due to alleged procedural irregularities in the disciplinary process. The district court granted summary judgment for Loyola, finding insufficient evidence that Metzler had been discriminated against based on sex or that contractual standards had been violated in a manner lacking rational basis. The case was briefly remanded for jurisdictional review and to determine anonymity, after which the district court reaffirmed its decision for Loyola.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. It held that Metzler failed to present sufficient evidence for a reasonable factfinder to conclude that Loyola discriminated against him on the basis of sex under Title IX, even when considering generalized public pressure and procedural errors. The court further found that Metzler’s breach of contract claim failed because Loyola had a rational basis for its disciplinary decision. The judgment of the district court was affirmed. View "Metzler v Loyola University Chicago" on Justia Law

Johnson & Johnson acquired Auris Health, a medical robotics company, in a transaction where Auris’s shareholders could earn up to $2.35 billion in additional payments if certain regulatory and sales milestones were met for Auris’s surgical devices. These milestones required Johnson & Johnson to use “commercially reasonable efforts,” defined by the contract as efforts comparable to those used for its own priority devices. All regulatory milestones were expressly conditioned on achieving specific FDA “510(k) premarket notification” approvals. After none of the milestones were met, Fortis Advisors, representing Auris’s former shareholders, sued, alleging that Johnson & Johnson failed to meet its efforts obligations and fraudulently induced Auris into accepting a contingent payment for one milestone by misrepresenting its likelihood.The Delaware Court of Chancery held a trial and found largely in Fortis’s favor. The court ruled that Johnson & Johnson breached the contract by not applying the required level of effort to Auris’s iPlatform system and acted with the intent to avoid earnout payments. For the first milestone, the court relied on the implied covenant of good faith and fair dealing to require Johnson & Johnson to pursue an alternate FDA pathway when the original 510(k) process became unavailable. The court also found that Johnson & Johnson fraudulently induced Auris to accept a contingent payment for the Monarch lung ablation milestone by portraying its achievement as almost certain, despite knowing of a recent patient death and an ongoing FDA investigation.On appeal, the Supreme Court of Delaware agreed with Johnson & Johnson regarding the implied covenant, holding that the merger agreement did not contain a contractual gap and that the risk of an unavailable 510(k) pathway was foreseeable and allocated by the contract. The court reversed the Chancery’s ruling that Johnson & Johnson was required to pursue an alternative regulatory pathway for the first milestone and vacated the related damages. The Supreme Court otherwise affirmed the findings on breach of contract for the remaining milestones, upheld the damages calculation for those, and affirmed the fraud finding and the conclusion that the contract did not bar extra-contractual fraud claims. The case was remanded for recalculation of damages consistent with this opinion. View "Johnson & Johnson v. Fortis Advisors LLC" on Justia Law

The parties in this case entered into a settlement agreement in 2005 to resolve a longstanding water rights dispute between their respective parcels, providing that future disputes would be resolved by mediation and, if necessary, binding arbitration before a retired judge with water law expertise in San Diego County. The agreement included provisions for attorney fees for the prevailing party in certain circumstances. In 2016, a new dispute arose over groundwater resources and the parties proceeded to arbitration. During the arbitration, the arbitrator withdrew after Lodge filed demands for disqualification, leaving the dispute unresolved. While the Barbanell entities sought a replacement arbitrator, Lodge initiated a separate lawsuit asserting the same claims as those in arbitration. The Barbanell entities then filed a distinct action, petitioning the Superior Court of San Diego County to appoint a new arbitrator.The Superior Court of San Diego County granted the Barbanell entities’ petition to appoint a new arbitrator and entered judgment in their favor, designating them as prevailing parties entitled to seek attorney fees. Upon subsequent motion, the court found that the settlement agreement entitled the Barbanell entities to recover reasonable attorney fees incurred in obtaining the appointment of a new arbitrator, and awarded them $68,800 in fees. An amended judgment was issued to reflect this award.The Court of Appeal, Fourth Appellate District, Division One, reviewed only the postjudgment award of attorney fees. It affirmed the Superior Court’s decision, holding that the Barbanell entities were prevailing parties in the discrete action to appoint an arbitrator and were entitled to attorney fees under the settlement agreement and Civil Code section 1717. The appellate court clarified that the presence of related claims pending elsewhere did not preclude a fee award for this separate, concluded action. View "Barbanell v. Lodge" on Justia Law

For many years, one company exclusively provided emergency medical services (EMS) in a California county. Seeking improvements, the county initiated a competitive bidding process, issuing a request for proposals (RFP) and identifying policy goals such as improved service, efficiency, and reinvestment. Two entities submitted proposals. After evaluation by a review committee, one received the highest cumulative score, while the other received higher scores from most individual evaluators. The county determined the scores were substantially equivalent and proceeded to negotiate with both parties, ultimately awarding the contract to the bidder that did not have the highest cumulative score.The company that lost the contract protested the decision, arguing the county was required to negotiate only with the highest-scoring proposer, as set forth in the RFP. After an unsuccessful protest, the losing bidder first sued in federal court, where its federal antitrust claims were dismissed under the Parker immunity doctrine, and the district court declined to address state law claims. The company then filed a new action in San Bernardino County Superior Court, seeking a writ of mandate and a preliminary injunction. The superior court found the county’s selection process was ministerial and that the RFP required negotiations only with the highest-scoring proposer. The court granted a preliminary injunction, halting the contract’s implementation.The California Court of Appeal, Fourth Appellate District, Division One, reviewed the case. It held that neither the governing statute (the EMS Act) nor the RFP imposed a ministerial duty on the county to negotiate exclusively with the highest-scoring proposer. The court further concluded the county acted within its discretionary authority and did not abuse its discretion by considering both proposals. The appellate court reversed the preliminary injunction and remanded the case to the superior court, directing it to deny the motion for a preliminary injunction and reconsider the bond amount. View "American Medical Response of Inland Empire v. County of San Bernardino" on Justia Law

Two individuals who are heirs to the author of a 1983 magazine article about the United States Navy Fighter Weapons School, known as “Top Gun,” brought suit against a film studio. They alleged that a 2022 film, which is a sequel to an earlier movie inspired by the article, unlawfully copied their copyrighted work and breached a contractual obligation to credit the original author.After the 1983 article was published, the author assigned all rights to the studio in exchange for compensation and a promise that he would be credited in any movie “substantially based upon or adapted from” the article. The studio produced an initial film in 1986, which acknowledged the article. Decades later, the heirs terminated the copyright grant under 17 U.S.C. § 203(a)(3)—a statutory right for authors’ heirs. The studio released the sequel without crediting or compensating the heirs. The heirs filed claims for copyright infringement and breach of contract in the United States District Court for the Central District of California. The district court granted summary judgment for the studio, finding that the new film did not share substantial amounts of the article’s original expression and excluded the plaintiffs’ expert’s opinion for failing to filter out unprotectable elements.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The appellate court held that the sequel did not share substantial similarity in protectable expression with the article, as required for copyright infringement. It also found no original and protectable selection and arrangement of elements, and concluded that the district court properly excluded the plaintiffs’ expert and admitted the studio’s expert. The court further held that the studio did not breach the 1983 agreement, because the new film was not produced under the rights conferred by that agreement. The judgment for the studio was affirmed. View "YONAY V. PARAMOUNT PICTURES CORPORATION" on Justia Law

John Doe was a motivational speaker who, for nearly thirty years, was featured, promoted, and endorsed by the California Association of Directors of Activities (CADA) to intermediate and high school audiences. In 2022, CADA received an email from a former church youth group member alleging that Doe, under a different name in the 1990s, had engaged in an inappropriate sexual relationship with a 17-year-old student. After an independent investigation, CADA concluded that Doe was likely the person in question and terminated its association with him. CADA notified its members of the termination without disclosing the nature of the accusation.Doe filed suit in Santa Cruz County Superior Court against both CADA and the accuser, asserting tort and contractual claims. Both defendants filed special motions to strike under California’s anti-SLAPP statute. The trial court granted the accuser’s motion, finding Doe’s claims against her were protected by the common interest privilege and lacked evidence of malice. Regarding CADA, the trial court found the claims arose from protected activity but denied CADA’s motion to strike most of Doe’s claims, concluding Doe showed a sufficient probability of prevailing, particularly on contract-based claims.On appeal, the California Court of Appeal, Sixth Appellate District, reviewed the trial court’s order denying CADA’s anti-SLAPP motion. The appellate court held that all of Doe’s tort claims and contractual claims based on CADA’s communications were subject to the common interest privilege and must be stricken, as Doe did not show CADA acted with malice. However, the court affirmed the denial of the motion as to Doe’s contractual claims based on his termination, concluding Doe demonstrated minimal merit and that public policy did not bar enforcement. The appellate court reversed in part and remanded, directing the lower court to strike the specified claims and allegations. View "Doe v. California Assn. of Directors of Activities" on Justia Law

Joel Ward performed construction work for Bishop Construction, LLC and its sole member, Ren Bishop, in Idaho, Montana, and Wyoming, with an agreed hourly wage and travel compensation. Despite keeping detailed records of his hours, Ward was not paid for work completed between 2017 and 2019, leading him to pursue payment through legal action. The dispute centered on whether Ward should be classified as an employee or an independent contractor and whether he was required to register as a contractor under Idaho law.The case was first heard in the District Court of the Seventh Judicial District of Idaho, Bonneville County. After a bench trial, and based on the parties’ stipulation that Ward was an independent contractor, the court dismissed his wage claims, leaving only breach of contract and unjust enrichment claims. The district court initially awarded Ward full damages for breach of contract. However, after Bishop raised the issue of contractor registration under the Idaho Contractor Registration Act (ICRA) in post-trial motions, the court amended its findings, limited contract damages to out-of-state work, awarded unjust enrichment damages for Idaho work, and granted costs and attorney fees.On appeal, the Supreme Court of the State of Idaho reviewed whether Ward was required to register as a contractor under ICRA and whether the contract was illegal. The Court held that Bishop failed to meet his burden to prove Ward was required to register under ICRA, as the record did not establish Ward’s status as a contractor for those purposes. The Supreme Court vacated the district court’s amended judgment and remanded with instructions to reinstate its original findings and amended judgment, including the previously awarded attorney fees and costs. The Court also awarded Ward attorney fees and costs on appeal as the prevailing party. View "Ward v. Bishop Construction" on Justia Law

LJP Consulting LLC, a New Jersey business, entered into a Referral Agreement with Total Card, Inc. (TCI) under which LJP would receive a 3% referral fee on servicing revenue generated from businesses it referred to TCI. In 2014, LJP referred First Equity Credit Card Corp. to TCI, resulting in a servicing relationship. In late 2020, Vervent, Inc. acquired TCI and its associated obligations, including those under the Referral Agreement. Vervent paid LJP the referral fee for two months post-acquisition, then terminated the Referral Agreement and ceased payments in January 2021. LJP sued, seeking a declaratory judgment confirming the validity of the agreement and its entitlement to ongoing referral fees while Vervent serviced First Equity accounts.The Circuit Court of the Second Judicial Circuit, Minnehaha County, denied Vervent's motion to dismiss and granted partial summary judgment to LJP, finding Vervent liable for breaching the Referral Agreement but leaving damages for trial. After Vervent’s sister company acquired First Equity in March 2022, Vervent argued it no longer owed referral fees. The court initially excluded evidence of this acquisition but later reversed that ruling during trial. A jury awarded LJP over $1 million in damages, including fees post-acquisition, and the court issued a permanent injunction requiring future payments so long as Vervent serviced First Equity accounts. Vervent’s post-trial motions for judgment as a matter of law and remittitur were denied.The Supreme Court of the State of South Dakota affirmed the circuit court’s determination that the Referral Agreement was not terminable at will. However, it reversed the denial of Vervent’s motions for judgment as a matter of law regarding damages after the First Equity acquisition, holding that Vervent’s obligation to pay referral fees ended once its affiliate acquired First Equity and there was no renewed client contractual relationship. The permanent injunction and post-acquisition damages award were vacated. View "LJP Consulting, LLC v. Vervent, Inc." on Justia Law