Justia Civil Procedure Opinion Summaries
Textron, Inc. v. Travelers Casualty and Surety Co.
At issue in this insurance dispute coverage between Textron and Travelers was whether an earlier choice of law ruling in a Rhode Island coverage action between the parties qualifies for collateral and judicial estoppel effect, thus precluding Textron from seeking coverage under California law in the current California coverage action, and leading to the conclusion that Textron's claim is outside the policy period. The Court of Appeal held that the Rhode Island choice of law ruling did not have collateral and judicial estoppel effect, because the factual predicate of the Rhode Island action was not adequate to litigate and decide the identical choice of law issue presented in this case. The court stated that a triable issue of fact exists under California's continuous trigger whether the Esters action constitutes an occurrence within the policy periods of the Textron policies. Accordingly, the court reversed the trial court's grant of summary judgment for Travelers on Textron's declaratory relief complaint, and on the parties' cross complaints. View "Textron, Inc. v. Travelers Casualty and Surety Co." on Justia Law
Radiant Global Logistics, Inc. v. Furstenau
Furstenau managed Radiant’ Detroit office. When he joined a competitor, BTX, Radiant sued him for misappropriation of trade secrets. The district court entered a preliminary injunction, prohibiting Furstenau and other former Radiant employees who had joined BTX from using Radiant’s trade secrets and from contacting certain customers and carriers for a six-month period. The Sixth Circuit dismissed an appeal as moot because the six months have passed. BTX never objected to the injunction’s ongoing restriction on the use of Radiant’s trade secrets. The six-month noncompete restrictions expired and today requires nothing; a court has no way to grant relief as to that part of the order. A mootness exception for disputes “capable of repetition, yet evading review” does not apply. A live controversy remains as to the merits of Radiant’s claims, so BTX will still have the opportunity for its day in court—including an appeal —once the district court enters a final judgment. The court declined to vacate the district court’s order; BTX did not even request vacatur until after oral argument and “slept on its rights,” and a preliminary injunction has no preclusive effect—no formal effect at all—on the judge’s decision whether to issue a permanent injunction. View "Radiant Global Logistics, Inc. v. Furstenau" on Justia Law
Smallen Revocable Living Trust v. Western Union Company
A district court dismissed Plaintiff–Appellant Lawrence Smallen and Laura Smallen Revocable Living Trust’s securities-fraud class action against Defendant–Appellee The Western Union Company and several of its current and former executive officers (collectively, “Defendants”). Following the announcements of Western Union’s settlements with regulators in January 2017 and the subsequent drop in the price of the company’s stock shares, Plaintiff filed this lawsuit on behalf of itself and other similarly situated shareholders. In its complaint, Plaintiff alleged Defendants committed securities fraud by making false or materially misleading public statements between February 24, 2012, and May 2, 2017 regarding, among other things, Western Union’s compliance with anti-money laundering and anti-fraud laws. The district court dismissed the complaint because Plaintiff failed to adequately plead scienter under the heightened standard imposed by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). While the Tenth Circuit found the complaint may have given rise to some plausible inference of culpability on Defendants' part, the Court concurred Plaintiff failed to plead particularized facts giving rise to the strong inference of scienter required to state a claim under the PSLRA, thus affirming dismissal. View "Smallen Revocable Living Trust v. Western Union Company" on Justia Law
Rodriguez v. Federal Deposit Insurance Corp.
The IRS allows affiliated corporations to file a consolidated federal return, 26 U.S.C. 1501, and issues any refund as a single payment to the group’s designated agent. If a dispute arises, federal courts normally turn to state law to resolve the question of distribution of the refund. Some courts follow the “Bob Richards Rule,” which initially provided that, absent an agreement, a refund belongs to the group member responsible for the losses that led to it. The Rule has evolved, in some jurisdictions, into a general rule that is always followed unless an agreement unambiguously specifies a different result. Soon after the bank suffered huge losses, its parent, Bancorp, was forced into bankruptcy. When the IRS issued a $4 million tax refund, the bank’s receiver, the FDIC, and Bancorp’s bankruptcy trustee each claimed it. The Tenth Circuit examined the parties’ allocation agreement, applied the more expansive version of Bob Richards, and ruled for the FDIC. The Supreme Court vacated. The Rule is not a legitimate exercise of federal common lawmaking. Federal judges may appropriately craft the rule of decision in only limited areas; claiming a new area is subject to strict conditions. Federal common lawmaking must be necessary to protect uniquely federal interests. The federal courts applying and extending Bob Richards have not pointed to any significant federal interest sufficient to support the rule, nor have these parties. State law is well-equipped to handle disputes involving corporate property rights, even in cases involving bankruptcy and a tax dispute. Whether this case might yield a different result without Bob Richards is a matter for the court of appeals on remand. View "Rodriguez v. Federal Deposit Insurance Corp." on Justia Law
Montanez v. Flahive
The Supreme Judicial Court affirmed the decision of the single justice of the court denying Petitioner's petition filed pursuant to Mass. Gen. Laws ch. 211, 3 seeking an order requiring a single justice of the appeals court to state findings and more detailed reasons for denying a prior petition for interlocutory review that she had filed pursuant to Mass. Gen. Laws ch. 211, 3, holding that the petition was properly denied. Petitioner sought interlocutory review from a single justice of the appeals court by various orders in a civil action that she had commenced and which was pending in the superior court. Petitioner filed a petition in the appeals court, and the appeals court single justice denied the petition. Petitioner then brought this action. The Supreme Judicial Court denied relief, holding that Petitioner was not entitled to further review of the single justice's order. View "Montanez v. Flahive" on Justia Law
Marriage of Deal
Patricia petitioned for the dissolution of her marriage to Thomas in 2001. A dissolution judgment entered in 2002; a judgment on reserved issues entered in 2008. In 2005, trial court Commissioner Oleon determined, based Thomas’s conduct in the dissolution proceedings and two separate civil actions, that Thomas was a vexatious litigant, and issued an order, prohibiting him from filing any new litigation or motion in propria persona without obtaining leave of the presiding judge. Thomas was also ordered to cover Patricia's attorney fees. In 2006, Thomas unsuccessfully moved (Code of Civil Procedure 170.1) to have Oleon disqualified. Weeks later, Thomas filed another section 170.1 challenge; the court failed to timely respond. Months later, notwithstanding his disqualification, Oleon reentered his previous vexatious litigant orders, effective from 7/29/05 because, when entering his original orders, he neglected to file a mandatory form. In 2018, Thomas complained to the presiding judge regarding Oleon’s post-disqualification involvement. The court issued an order to show cause, then reaffirmed that Thomas qualifies as a vexatious litigant and reimposed the pre-filing order. The court of appeal affirmed, noting that “Thomas appears to have used the opportunity ... to make implicit threats against various members of the California judiciary and State Bar.” The court upheld the 2018 orders as supported by substantial evidence and rejected an argument that a nonplaintiff litigant cannot be designated a vexatious litigant. View "Marriage of Deal" on Justia Law
Atwell Island Water District v. Atwell Island Water District
This case stemmed from a dispute concerning which persons are the true members of the Atwell Island Water District. The Court of Appeal held that the trial court relied on improper extraneous documents when ruling on the motion to strike and thereby abused its discretion, but the court nevertheless affirmed the granting of the motion without leave to amend. In this case, the election that appellant alleged took place on January 17, 2017 was void, because it was held the day after a state holiday, Martin Luther King, Jr. Day, and Milton Pace and Nathan Cameron were therefore not duly elected to the District board. Therefore, the court concluded that Leonard Herr's firm was not retained by a board majority as John Mitchell could not constitute a majority by himself, and Herr consequently was not authorized to prepare, sign, or file pleadings on the District's behalf. The court held that the pleadings were rightfully stricken, and leave to amend should not have been allowed because the pleadings were incurably defective. View "Atwell Island Water District v. Atwell Island Water District" on Justia Law
INTL FCStone Financial Inc. v. Farmer
Defendants, commodities futures investors, maintained trading accounts with FCStone, a clearing firm that handled the confirmation, settlement, and delivery of transactions. In 2018, extraordinary volatility in the natural gas market wiped out the defendants’ account balances with FCStone, leaving some defendants in debt. The defendants alleged Commodity Exchange Act violations against FCStone and initiated arbitration proceedings before the Financial Industry Regulatory Authority (FINRA). FCStone sought a declaratory judgment, claiming the parties must arbitrate their disputes before the National Futures Association (NFA), and that FINRA lacks jurisdiction over the underlying disputes. The district court ruled for FCStone, ordered arbitration and designated an arbitration forum, then stayed the case to address related issues, including the arbitration venue. The Seventh Circuit dismissed an appeal for lack of jurisdiction under 28 U.S.C. 1291 or the Federal Arbitration Act, ” 9 U.S.C. 16(a)(3). The district court’s decisions were non-final and no exception to the rule of finality applies. The court rejected an argument that the order amounted to an injunction prohibiting FINRA arbitration. A pro‐arbitration decision, coupled with a stay (rather than a dismissal) of the suit, is not appealable. The court noted that the district court did not decide whether the parties’ arbitration agreements relinquished defendants’ purported rights to FINRA arbitration. View "INTL FCStone Financial Inc. v. Farmer" on Justia Law
VIP, Inc. v. KYB Corp.
Plaintiffs purchase KYB shock absorbers from KAC through “buying groups.” There is no arbitration provision in the buying group agreements nor in the invoices reflecting specific purchases between the plaintiffs and KAC. Beginning in 2016, the buying group agreements provided that the individual plaintiffs agreed to accept a rebate from KAC in exchange for servicing consumer warranty issues. The agreement requires the plaintiffs, in exchange for that allowance, to honor the terms of the KYB limited warranty, which mandates arbitration in accordance with American Arbitration Association Commercial Rule 7(1), which delegates to the arbitrator the power to determine his jurisdiction. The plaintiffs filed a putative class action, alleging anticompetitive activities in the auto parts industry. The defendants move to dismiss, citing the Federal Arbitration Act, 9 U.S.C. 1. The Sixth Circuit affirmed the denial of the motion. Before referring a dispute to arbitration, the court must determine whether a valid arbitration agreement exists; if a valid agreement exists and delegates the arbitrability issue to the arbitrator, the court may not decide arbitrability. In this case, the parties did not form an agreement to arbitrate. The warranty’s arbitration provision applies only to original retail purchasers, a group that does not include the plaintiffs. View "VIP, Inc. v. KYB Corp." on Justia Law
Madej v. Maiden
Since 1997, the Social Security Administration has found Madej completely disabled and entitled to benefits. In addition to her other ailments, her doctors say she has “multiple chemical sensitivity,” which is not a disease recognized by the World Health Organization or the American Medical Association. She goes to great lengths to avoid everyday materials that she believes will trigger harmful reactions like burning eyes and throat, dizziness, or nausea. Madej fears that the use of asphalt on a road near her home will cause more harm. She sued to stop the roadwork, alleging violations of the Fair Housing Amendments Act and the Americans with Disabilities Act. Applying the “Daubert” standard, the district court excluded the opinions of Madej’s experts that the asphalt would injure her. Without expert causation evidence, the claims could not withstand summary judgment. The Sixth Circuit affirmed, stating that “as far as we are aware, no district court has ever found a diagnosis of multiple chemical sensitivity to be sufficiently reliable to pass muster under Daubert.” The court also questioned whether Madej had cognizable claims under the cited federal statutes. It is not obvious that the roadwork amounts to a “provision of services” “in connection with” the Madej home under 42 U.S.C. 3604(f)(2) View "Madej v. Maiden" on Justia Law