Justia Contracts Opinion Summaries

Northwest terminated plaintiff’s membership in its frequent flyer program. A provision in the frequent flyer agreement gave Northwest sole discretion to determine whether a participant had abused the program. Plaintiff claimed that Northwest breached its contract by revoking his membership without valid cause and violated the duty of good faith and fair dealing because it terminated his membership in a way that contravened his reasonable expectations. The district court dismissed, holding that the Airline Deregulation Act of 1978 pre-empted the breach of the duty of good faith and fair dealing claim. The Ninth Circuit reversed, finding that claim “too tenuously connected to airline regulation to trigger” ADA pre-emption. A unanimous Supreme Court reversed. The Act pre-empts a state-law claim for breach of the implied covenant of good faith and fair dealing if it seeks to enlarge contractual obligations that the parties voluntarily adopted. The Act prohibits states from “enact[ing] or enforc[ing] a law, regulation, or other provision having the force and effect of law related to [an air carrier’s] price, route, or service,” 49 U.S.C. 41713(b)(1). The phrase “other provision having the force and effect of law” includes state common-law rules like the claimed implied covenant. Exempting common-law claims would disserve the Act’s central purpose: to eliminate federal regulation of rates, routes, and services so they could be set by market forces. Northwest’s program connects to “rates” by awarding credits redeemable for tickets and upgrades, thus eliminating or reducing ticket prices. It also connects to “services,” i.e., access to flights and higher service categories. Because the implied covenant claim sought to enlarge contractual agreement, it is pre-empted. Under controlling Minnesota law, parties may not contract out of the implied covenant; when state law does not authorize parties to free themselves from the covenant, a breach of covenant claim is pre-empted. Participants in frequent flyer programs can protect themselves by avoiding airlines with poor reputations and enrolling in more favorable rival programs; the Department of Transportation has authority to investigate complaints about frequent flyer programs. The Court also noted that the plaintiff did not appeal his breach of contract claim. View "Northwest, Inc. v. Ginsberg" on Justia Law

Philip Barter hired Philip Tobin to produce a book encompassing Barter’s artistic works. The parties subsequently entered into a written agreement providing that Tobin would write the text for the book and setting forth the financial arrangements. Tobin drafted a manuscript of the book and gave Barter a draft of the manuscript, but Barter did not respond. Thereafter, Tobin filed a complaint alleging that Barter had breached the parties’ contract. The jury returned a verdict in favor of Tobin. The next day, the trial court granted Barter’s motion for a judgment as a matter of law, concluding that Tobin had failed to present sufficient evidence that the parties had a meeting of the minds necessary to form a legal contract. The Supreme Court reversed and remanded with directions to reinstate the jury’s verdict in favor of Tobin, holding (1) the trial court erred in issuing its judgment in favor of Barter as a matter of law; and (2) a jury rationally could have found that Barter had materially breached the contract by failing to respond to Tobin. View "Tobin v. Barter" on Justia Law

This case stemmed from the settlement of a lawsuit alleging Libya's responsibility for the 1986 LaBelle discotheque bombing in Berlin. The victims' lawyers received nearly $36 million for their efforts. Plaintiff, a retired federal agent who allegedly provided investigative and other services to the lawyers in the litigation, filed suit against the lawyers, alleging a claim of unjust enrichment. The court agreed with the district court that plaintiff's claim was untimely under the three-year statute of limitations because it accrued when plaintiff received a letter refusing his request for compensation. Although plaintiff's right to recover on his contractual claim - still pending in district court - may turn on the success of the lawsuit, his right of recovery on his unjust enrichment claim was based on the services he performed. View "Bregman v. Perles, et al." on Justia Law

In this oil and gas billing dispute, Plaintiffs sued Defendant for, inter alia, breach of a joint operating agreement. Defendant counterclaimed and prevailed on its counterclaim. The trial court awarded Defendant prejudgment interest, but the court of appeals remanded to recalculate prejudgment interest. On remand, the trial court determined that the record had to be reopened, but rather than obtain the additional evidence, Plaintiff waived its claim for prejudgment interest. The trial court then awarded Defendant postjudgment interest from the date of its original, erroneous judgment. The court of appeals affirmed. The Supreme Court affirmed, holding (1) the trial court did not abuse its discretion in determining that new evidence was needed; but (2) because the remand necessitated reopening the record for additional evidence, postjudgment interest must accrue from the final judgment date rather than the original judgment date. Remanded. View "Long v. Castle Tex. Prod. Ltd. P'ship" on Justia Law

Crosstex Energy Services, LP hired Pro Plus, Inc. as the principal contractor to construct a natural gas compression station. Crosstex sued Pro Plus after an explosion occurred at the station, causing $10 million in property damage. The parties entered an agreement to move expert designation dates beyond the limitations period, but after limitations ran, Pro Plus filed a motion to dismiss because Crosstex had not filed a certificate of merit with its original petition as required by Tex. Civ. Prac. & Rem. Code Ann. 150.002. The trial court denied the motion and granted Crosstex an extension to file the certificate. The court of appeals reversed. The Supreme Court affirmed, holding (1) the court of appeals did not err in asserting jurisdiction over Pro Plus’s interlocutory appeal of the extension order; (2) section 150.002’s “good cause” extension is available only when a party filed suit within ten days of the end of the limitations period, and therefore, Crosstex could not claim protection from the good cause extension; and (3) a defendant’s conduct can waive the plaintiff’s certificate of merit requirement, but Pro Plus’s conduct did not constitute waiver. View "Crosstex Energy Servs. L.P. v. Pro Plus, Inc." on Justia Law

When Tyco Valves & Controls, L.P. decided to close one of its facilities located in Houston, Tyco offered certain employees retention agreements providing that, if the employees remained with the company through the facility’s closure, they would receive severance payments in the event they were not offered comparable employment with Tyco. After Tyco sold one of the production units located in the facility to another company, Plaintiffs, several former employees who had worked in that unit and been denied severance, filed a breach of contract action against Tyco. The trial court ruled in favor of the employees and awarded the severance pay. The court of appeals reversed. The Supreme Court affirmed, holding that the Employee Retirement Income and Security Act of 1974 preempted Plaintiffs’ breach-of-contract claims. View "Arsenio Colorado v. Tyco Valves & Controls, L.P." on Justia Law

Nationwide Retirement Solutions, Inc. ("NRS"), appealed a circuit court judgment awarding PEBCO,Inc. over a million dollars in attorney fees and $29,132.01 in expenses. In 2007, participants in the State of Alabama Public Employees Deferred Compensation Plan filed a class action against Nationwide Life Insurance Company ("NL"), NRS, the Alabama State Employees Association ("ASEA"), and PEBCO, Inc., alleging breach of fiduciary duty, conversion, and breach of contract in the administration of the Plan. The parties filed a "Stipulation of Settlement," which the trial court approved in its final order entered in 2011. Pursuant to the settlement, NL and NRS paid $15.5 million to the participants in the Plan and $2.9 million in attorney fees to settle class claims against all defendants, including ASEA and PEBCO. In its findings of fact, the trial court stated: "ASEA is being permitted to retain more than $12 million in sponsorship payments that it allegedly received unlawfully, and ASEA is receiving full release from any liability." A day before the parties filed their "Stipulation of Settlement," Nationwide moved for an order barring ASEA and PEBCO from filing any indemnification claims. The trial court granted the order except for claims for attorney fees and costs. "[I]n light of Nationwide's substantial contributions to the settlement," the court wrote that it was "fair and reasonable that ASEA and PEBCO be barred from pursuing any claims against Nationwide for reimbursement, indemnification, or contribution other than claims for attorney fees and costs ...." A month before entering its final order in the class action, the trial court ordered severance of ASEA and PEBCO's claim for fees and directed the Circuit Court clerk to docket that claim as "a separate and independent action," with ASEA and PEBCO as plaintiffs and NL and NRS as defendants. The trial court found that the indemnification clause in the agreement required that NRS pay the fees and costs incurred by ASEA and PEBCO in defending the class action. Noting that NRS "has contended, and still contends, that indemnification is improper based on the language of the agreement and the attending facts," the trial court stated that it "has held hearings on that issue and by prior order has ruled that indemnification is appropriate. The instant action was filed to enforce indemnification." The court ordered NRS to pay PEBCO $863,988.50 in attorney fees and $15,297.54 in expenses for the class-action litigation, and $210,039 in attorney fees and $13,834.47 in expenses for litigating the severed cross-claim. NRS timely appealed that decision to the Supreme Court. The Supreme Court reversed and remanded: "[b]ecause NRS did not fail to perform those duties under the agreement that ultimately gave rise to the class action, it did not, as a matter of law, breach the indemnification clause in the agreement. . . . Alabama does not permit a party to seek indemnification for defending against its own allegedly wrongful acts." View "Nationwide Retirement Solutions, Inc. v. PEBCO,Inc. " on Justia Law

New Jersey enacted the 2002 Off-Track and Account Wagering Act, N.J. Stat. 5:5-127, providing for establishment of 15 off-track wagering (OTW) facilities. The Act authorized a license for the N.J. Sports and Exposition Authority, conditioned upon NJSEA entering into a participation agreement with other entities that held horse racing permits in 2000 (ACRA and Freehold). NJSEA, ACRA, and Freehold entered into an agreement, allocating permit rights. By 2011, only four facilities had opened. NJSEA had leased control of its tracks to the New Jersey Thoroughbred Horsemen’s Association (NJTHA) and another. The 2011 Forfeiture Amendment provided that permit holders would forfeit rights to any OTW not licensed by 2012, unless they demonstrated “making progress” toward establishing an OTW; forfeited rights would be available to other “horsemen’s organizations” without compensation to the permit holder. NJTHA qualified for forfeited rights. The 2012 Deposit Amendment extended the forfeiture date and allowed a permit holder to make a $1 million deposit for each OTW facility not licensed by December 31, 2011, retaining the “making progress” exception. The Pilot Program Act allowed installation of electronic wagering terminals in some bars and restaurants, by lessees or purchasers of NJSEA-owned racetracks, who could exchange unused OTW licenses to install electronic terminals. NJTHA secured such a license. ACRA and Freehold submitted challenged the constitutionality of the amendments under the Contracts, Takings, Due Process, and Equal Protection Clauses. The Commission determined that both ACRA and Freehold had made progress toward establishing their unlicensed OTW facilities and absolved them of the obligation to submit deposits. The district court dismissed a suit under 42 U.S.C. 1983 and 1988 on Younger abstention grounds. Subsequently, the Supreme Court decided Sprint Communications v. Jacobs, (2013), clarifying the Younger abstention doctrine. The Third Circuit reversed, finding that the action does not fit within the framework for abstention. View "Acra Turf Club, LLC v. Zanzuccki" on Justia Law

Endo sells Opana® ER extended-release tablets containing a painkiller, oxymorphone. In earlier litigation, Endo sued Roxane and Actavis for patent infringement, 35 U.S.C. 271(e)(2)(A), based on their Abbreviated New Drug Applications to market generic versions of Opana® ER. The lawsuits settled; Endo granted defendants a license and a covenant not to sue. After making the agreements the 122 and 216 patents issued to Endo. They are continuations of the same parent application and directed to extended-release oxymorphone compositions and methods of treating pain using those compositions. Endo also acquired the unrelated 482 patent, concerning purified oxymorphone compositions and methods of making those compositions. The asserted patents are listed in the Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book) entry for Opana® ER. Endo again sued for infringement and sought a preliminary injunction to prevent marketing or sales of generic oxymorphone formulations. The district court held that Endo was estopped from claiming that the activity of defendants, “which has gone on for a substantial period of time, is now suddenly barred because of these new patents.” The Federal Circuit vacated, finding that the defendants did not have an express or implied license to practice the patents at issue.View "Endo Pharm. Inc. v. Actavis, Inc." on Justia Law

Appellant Charles DeGroot and DeGroot Farms, LLC appealed the district court's grant of summary judgment on its claims against Standley Trenching, Inc. d/b/a Standley & Co., relating to the construction and installation of a manure handling system at the DeGroot dairy. Beltman Construction, Inc., d/b/a Beltman Weldling and Construction, was the general contractor for the project. Beltman subcontracted with Standley for the installation of the manure handling equipment. J. Houle & Fils, Inc. manufactured the manure handling equipment installed at the DeGroot dairy. Because of maintenance problems with the manure handling equipment, DeGroot initiated litigation against Standley and Houle. DeGroot then initiated litigation against Beltman. Beltman brought a third party complaint against Standley. Standley counterclaimed against DeGroot for amounts due for parts and services. The district court granted Standley summary judgment on its counterclaim, granted Standley summary judgment on DeGroot's claims, and granted Standley summary judgment on Beltman's third party complaint. DeGroot appealed. Finding no reversible error, the Supreme Court affirmed. View "DeGroot v. Standley Trenching, Inc." on Justia Law