Justia Contracts Opinion Summaries

A professional track and field athlete received a bottle of Gatorade Recovery Gummies at an award ceremony hosted by Gatorade, which were labeled as “NSF Certified for Sport,” indicating independent testing for banned substances. After consuming the gummies, the athlete submitted a routine drug test that later returned positive for cardarine, a banned performance-enhancing drug, resulting in immediate suspension from elite competition. Subsequent investigation revealed that the gummies lot the athlete received had never been NSF certified, and Gatorade was aware of the mislabeling before distributing the product. The athlete suffered significant consequences, including loss of eligibility to compete, loss of a scholarship, and forfeiture of endorsement opportunities.The athlete initiated legal action in the United States District Court for the Southern District of New York, alleging strict products liability, negligence, negligent misrepresentation, violation of Texas’s Deceptive and Unfair Trade Practices Act, tortious interference with contract, and intentional infliction of emotional distress. The district court dismissed all claims. It found no “cognizable injury outside of purely economic damages” for the strict liability, negligence, and misrepresentation claims, applying New York’s economic loss doctrine. Additional claims were dismissed based on statutory definitions and insufficient allegations of extreme conduct or distress.On appeal, the United States Court of Appeals for the Second Circuit reviewed the dismissal de novo. It affirmed the district court’s dismissal of the tortious interference, consumer protection, and emotional distress claims. However, the court recognized uncertainty in New York law regarding tort recovery for nonconsensual bodily changes detectable only by laboratory testing and the boundaries of the economic loss doctrine. Accordingly, the Second Circuit deferred decision and certified two questions to the New York Court of Appeals concerning the scope of the economic loss doctrine and whether the athlete’s injury is cognizable in tort under New York law. View "Asinga v. Gatorade Co." on Justia Law

The case concerns a dispute arising from an oral agreement between a homeowner and a contractor regarding the construction of a wheelchair ramp and a covered addition at the homeowner’s residence. The parties did not sign a written contract or agree to a specific price, instead communicating the project’s scope via text messages. The homeowner paid the contractor $73,000, including $30,000 for siding, but the project was plagued by construction delays, quality concerns, and code violations. Work ceased before completion, and the contractor did not deliver or install the siding. The homeowner and his wife continued living in the property, though it did not receive a final certificate of compliance.The homeowner sued in the District Court of Sweetwater County, asserting claims including breach of contract, negligence, and breach of warranty. During discovery, the homeowner failed to provide a specific calculation of damages, only indicating he would supplement disclosures later. Before trial, the contractor moved to exclude any evidence of damages not previously disclosed. The district court partially granted this motion, limiting the homeowner’s evidence to what had been disclosed. At a bench trial, the homeowner did not call his retained expert and offered only the total amount paid as the measure of damages. The district court concluded the oral contract was unenforceable due to indefinite terms and found insufficient evidence to support a damages award.On appeal, the Supreme Court of Wyoming affirmed the district court’s rulings. The Supreme Court held that, because the homeowner failed to make an offer of proof regarding excluded damages evidence, there was no basis to review the trial court’s exclusionary ruling. The court further held that the district court’s finding—that the homeowner did not prove damages by a preponderance of the evidence—was not clearly erroneous. As the damages element was not satisfied, the Supreme Court affirmed the dismissal of the claims. View "Lacher v. Case" on Justia Law

The dispute centers on the government’s use of TETRA® software, developed by 4DD Holdings, LLC. The Department of Defense and Department of Veterans Affairs sought to improve data interoperability for healthcare records and decided to purchase commercial software. After a competitive process, Systems Made Simple (SMS), the government’s contractor, selected TETRA. The government acquired licenses for specific numbers of TETRA’s components through an authorized reseller, Immix Technology, Inc., with explicit restrictions on copying. However, SMS exceeded license limits by making thousands of unauthorized copies during development and testing. 4DD discovered these excess copies and initiated negotiations, ultimately settling for payment for additional cores at the previously agreed license rate. The government later ended its use of TETRA.The United States Court of Federal Claims reviewed the case after 4DD filed suit for copyright infringement. During discovery, evidence destruction by the government led to sanctions. Following a bench trial, the court found the government had significantly exceeded its licenses and assessed damages using a hypothetical negotiation approach, considering factors like the existence of alternative software and the nature of the use, instead of defaulting to the rates in the licensing agreements. The court awarded $12,683,065.86 in damages, including compensatory and non-compensatory (statutory) damages.The United States Court of Appeals for the Federal Circuit examined whether damages should be calculated by reference to the license rates or through a hypothetical negotiation. The court held that neither statute nor precedent compels using the license agreement rates for damages; courts may use hypothetical negotiations when material differences exist between licensed and infringing uses. However, the trial court erred by considering unforeseeable future events (like TETRA’s cancellation) in its damages analysis and by awarding non-compensatory statutory damages against the government. The Federal Circuit affirmed in part, vacated in part, and remanded for further proceedings. View "4DD HOLDINGS, LLC v. US " on Justia Law

Golden Corral, a buffet restaurant chain, held a commercial property insurance policy issued by Illinois Union Insurance Company, covering losses from physical damage to its property. When state and local governments, including North Carolina, mandated closure of indoor dining facilities in response to the COVID-19 pandemic, Golden Corral suspended its restaurant operations, resulting in significant lost revenue and reduced income from franchisees. Golden Corral submitted a claim to Illinois Union for coverage of these losses, which Illinois Union denied.After the denial, Golden Corral filed suit in North Carolina state court, seeking a declaration that its pandemic-related losses were covered under the policy. The case was removed to the United States District Court for the Eastern District of North Carolina, where Golden Corral amended its complaint to add claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Illinois Union moved for judgment on the pleadings, arguing that COVID-19 did not cause physical loss or damage as required for coverage. The district court granted the motion and dismissed the case with prejudice, a decision affirmed by the United States Court of Appeals for the Fourth Circuit.Over three years later, Golden Corral sought relief from final judgment under Federal Rule of Civil Procedure 60(b)(6), citing a subsequent North Carolina Supreme Court decision in North State Deli v. Cincinnati Insurance Co. that found similar losses covered. The United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of the Rule 60(b)(6) motion for abuse of discretion. The court held that a change in state decisional law alone does not constitute "extraordinary circumstances" warranting relief under Rule 60(b)(6), especially when the later case involved different parties, policies, and injuries. The Fourth Circuit affirmed the district court’s decision to deny relief. View "Golden Corral Corp. v. Illinois Union Insurance Co." on Justia Law

A large New York healthcare provider participated for decades in the Blue Cross Blue Shield insurance network through contracts with the New York Blue Cross licensee, Empire. Under this arrangement, the provider offered negotiated pricing and direct billing for Blue Cross patients. The Blue Cross network comprises thirty-four independent companies, each licensed to operate in a specific region. The provider’s current dispute concerns claims for care provided to patients insured by Blue Cross entities based in Washington, D.C., Maryland, and Virginia. These out-of-state insurers, although not directly contracted with the provider and not operating in New York, used the BlueCard Program to facilitate claims processing in New York and relied on Empire’s network to obtain discounted rates. The provider alleged that these insurers underpaid over $5.5 million in claims.After unsuccessful resolution attempts under the Provider Agreement, the provider brought suit in New York state court. The defendants removed the case to the United States District Court for the Eastern District of New York, which dismissed the case for lack of personal jurisdiction and failure to state a claim. The district court also denied leave to amend the complaint.The United States Court of Appeals for the Second Circuit reviewed the case. It found diversity jurisdiction proper, holding that the D.C.-based insurer’s federal charter made it a D.C. citizen for jurisdictional purposes. The court held that the out-of-state insurers’ purposeful business dealings with Empire and exploitation of New York’s healthcare market established personal jurisdiction under both New York’s long-arm statute and the Due Process Clause. On the merits, the Second Circuit held that the provider adequately stated claims for contract liability based on ratification and for quasi-contract, but affirmed dismissal of the provider’s third-party beneficiary claims. The court affirmed in part, reversed in part, and remanded for further proceedings. View "Northwell Health, Inc. v. Group Hospitalization and Medical Services, Inc." on Justia Law

A group of employees working for a private contractor, which operated and maintained a municipal wastewater treatment facility under a long-term contract with the local water and sewer commission, claimed they were entitled to be paid prevailing wages for their work. The contract, authorized under a special legislative act, included both initial capital improvements (which were subcontracted out and paid at prevailing wage rates) and ongoing operations, maintenance, repair, and replacement work, which was paid according to collective bargaining agreements. The employees performed work in the latter category and argued that the prevailing wage requirements should apply to their activities.After the employees brought suit in Massachusetts Superior Court, the case was removed to the United States District Court. Both sides filed for summary judgment. The District Court judge ruled for the contractor, finding that the employees' work was not covered by the phrase "construction and design of improvements" in the special act, and therefore was not subject to the prevailing wage law. The employees appealed, and the United States Court of Appeals for the First Circuit certified two questions of Massachusetts law to the Supreme Judicial Court.The Supreme Judicial Court of Massachusetts held that the phrase "construction and design of improvements" in the special act is not synonymous with the broader definition of "construction" in the prevailing wage law and does not include ordinary repairs, routine inspections, day-to-day operations and maintenance, or ordinary replacements. The Court further concluded that its previous decision in Metcalf v. BSC Group, Inc., 492 Mass. 676 (2023), which addressed different statutory provisions relating to professional services contracts, does not control or render the special act incompatible with the prevailing wage law. View "Nicholls v. Veolia Water Contract Operations USA, Inc." on Justia Law

A physician was employed by a medical group and its affiliated healthcare organization when they implemented a COVID-19 vaccination policy requiring employees to either be vaccinated or obtain a medical or religious exemption. The physician objected to the policy on scientific and religious grounds and engaged in internal advocacy, including meetings with leadership and organizing a petition among medical staff. She also communicated with a disbarred attorney who was promoting litigation against the vaccine mandate, forwarding confidential internal emails and documents to him to build his case. Although she was granted a religious exemption, she was subsequently terminated for cause, with the employer citing misappropriation of company property, policy violations, disruptive conduct, and breach of loyalty.After exhausting administrative remedies, the physician filed suit in the United States District Court for the Eastern District of Kentucky, asserting federal claims for retaliation under Title VII and the ADA, and state claims for retaliation, discharge against public policy, breach of contract, tortious interference, and declaratory relief from her non-compete clause. Both parties moved for summary judgment. The district court granted summary judgment in favor of the defendants on all claims, finding no violation of state or federal law.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s grant of summary judgment de novo. The court held that the physician did not engage in protected activity under Title VII or the ADA, as her conduct did not qualify under either the participation or opposition clauses. Her state retaliation claims failed for the same reasons. The court also ruled that Kentucky’s wrongful discharge tort applies only to at-will employees, and her contract employment precluded such a claim. Finally, it found no breach of contract, as her conduct violated company policies and justified termination for cause. The Sixth Circuit affirmed the district court’s judgment. View "DiChiara v. Summit Medical Group, Inc." on Justia Law

Jackie Lackie owned property adjacent to Greers Ferry Lake, a federally managed lake in Arkansas. In January 2022, park rangers discovered sixty-nine trees had been cut down on government land between Lackie’s property and the lake. The Army Corps of Engineers identified Lackie as responsible, filed a notice of trespass, and sent Lackie a letter offering to settle the violation if he paid for the tree damage. The letter also indicated the Corps was recommending revocation of his shoreline use permit for a boat dock. Enclosed was a settlement agreement stating the parties intended to settle “all known disputes” regarding the public lands. Lackie signed the agreement and paid the requested sum, but the Corps subsequently revoked his shoreline use permit.Lackie challenged the revocation in the United States District Court for the Eastern District of Arkansas, seeking judicial review under the Administrative Procedure Act. He argued the Corps’s action breached the settlement agreement, which he contended had resolved all disputes, including the permit issue. The district court affirmed the Corps’s decision, reasoning that the letter accompanying the settlement made clear that the permit revocation was not resolved by the agreement, so the Corps did not violate the agreement by revoking the permit.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s decision de novo. The court held that under the applicable federal common law, guided by Arkansas law, the unambiguous language of the settlement agreement encompassed “all known disputes,” including the dispute over Lackie’s permit. The Eighth Circuit concluded that the Corps’s revocation of Lackie’s permit contravened the settlement agreement and constituted unlawful agency action. The court reversed the district court’s judgment, remanding with instructions to set aside the Corps’s permit revocation. View "Lackie v. Noe" on Justia Law

A generic drug manufacturer and a brand-name drug company previously settled a patent infringement lawsuit concerning a medication used to treat osteoporosis. As part of their 2018 settlement, the generic manufacturer agreed not to sell its version of the drug until a specified “Entry Date,” and in return, the brand-name company covenanted not to take any action to prevent or delay the approval, launch, or marketing of the generic drug. The agreement did not specify a fixed expiration date for these obligations. Later, after the relevant patents expired in August 2019, the brand-name company submitted a supplemental application to the FDA, obtaining additional regulatory exclusivity that temporarily kept generics—including the plaintiff’s product—off the market.After being unable to enter the market due to this additional exclusivity, the generic manufacturer sued for breach of contract, arguing that the covenants in the settlement agreement required the brand-name company both to waive any exclusivity and not to interfere with its market entry. The United States District Court for the Southern District of Indiana dismissed the case, holding that the agreement and its obligations expired with the patents and therefore could not have been breached after that date.The United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. It held that the generic manufacturer plausibly alleged breaches of contract terms that may have survived the expiration of the patents, as the settlement agreement did not clearly define its own duration. The court found that, under Indiana law, a contract without a fixed term remains effective for a “reasonable time,” which is a factual question not suitable for resolution on the pleadings. The Seventh Circuit reversed the district court’s judgment and remanded the case for further proceedings. View "Teva Pharmaceuticals USA, Inc. v Eli Lilly and Company" on Justia Law

A contract between two parties provided for a succession plan at a dairy farm, outlining salary, livestock transfers, and an option to lease the farm. After four years, the party working at the dairy claimed not to have received all payments and livestock owed, resulting in a lawsuit for breach of contract, unjust enrichment, and conversion. A jury awarded damages to the plaintiff but did not specify which claims were the basis for the award. The plaintiff then sought to recover attorney fees and paralegal fees under a contractual provision.The Superior Court of Humboldt County found the plaintiff to be the prevailing party and awarded attorney fees but significantly reduced the compensable hours and, on its own initiative, excluded all paralegal fees, finding the contract did not authorize their recovery. When the plaintiff moved for reconsideration of the paralegal fee exclusion, the court denied the motion and ordered the plaintiff’s attorney to pay the defendants’ fees for opposing it, treating the motion as procedurally improper. The defendants also sought appellate sanctions, arguing the appeal was frivolous and that the plaintiff’s opening brief contained misrepresentations, including fabricated case law quotations.The California Court of Appeal, First Appellate District, Division Four, affirmed the trial court’s reduction of attorney hours, finding no abuse of discretion. However, it reversed the categorical exclusion of paralegal fees, holding that the contractual language allowing recovery of “attorneys’ fees” encompasses reasonable paralegal fees. The appellate court also vacated the sanctions imposed for the reconsideration motion, finding that the motion was procedurally permitted and not frivolous. While the court declined to sanction the appeal as frivolous, it ordered the plaintiff’s attorney to pay sanctions to the court for submitting a brief with fabricated legal quotations. The case was remanded for the trial court to determine reasonable paralegal fees. View "Del Biaggio v. Bansen" on Justia Law