Justia Civil Procedure Opinion Summaries

LJM Partners, Ltd. and Two Roads Shared Trust, both involved in options trading on the Chicago Mercantile Exchange, experienced catastrophic losses on February 5 and 6, 2018, when volatility in the S&P 500 surged unexpectedly; LJM lost approximately 86.5% of its managed assets and the Preservation Fund (managed by Two Roads) lost around 80%. The plaintiffs alleged that eight defendant firms, acting as market makers, manipulated the VIX index by submitting inflated bid-ask quotes for certain SPX Options, which artificially raised volatility and resulted in inflated prices on the plaintiffs' trades, causing over one billion dollars in combined losses.After initially filing complaints against unnamed "John Doe" defendants in the United States District Court for the Northern District of Illinois, the plaintiffs pursued extensive discovery to identify the responsible parties. The cases were swept into a multidistrict litigation proceeding (VIX MDL), which delayed discovery. Eventually, after several rounds of amended complaints, the plaintiffs identified and named eight defendant firms. The defendants moved to dismiss. The district court found that LJM lacked Article III standing because it failed to allege an injury in fact, as the losses belonged to its clients, not LJM itself. For Two Roads, the district court held that its claims were time-barred under the Commodity Exchange Act’s two-year statute of limitations, and equitable tolling was denied due to lack of diligence.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. It held that LJM’s complaint failed to establish Article III standing, as it did not allege that LJM itself—not just its clients—suffered actual losses. The court further held that Two Roads’s complaint was untimely and that the district court did not abuse its discretion in refusing equitable tolling. Both dismissals were affirmed. View "LJM Partners, Ltd. v. Barclays Capital, Inc." on Justia Law

Several senior financial advisors resigned from a national investment advisory firm’s Des Moines branch to join a competitor that was opening a new local office. After their departure, nearly all remaining advisors at the branch also resigned en masse and joined the competitor, which offered substantial incentives. The resignations occurred despite restrictive covenants in the former advisors’ employment contracts, which limited their ability to solicit clients, disclose confidential information, and recruit other employees. The competitor and the departing advisors soon began servicing many of their former clients, resulting in a substantial loss of business for their previous employer.Following these events, the original firm filed suit in the United States District Court for the Southern District of Iowa, alleging breach of contract, tortious interference, and theft of trade secrets. The district court initially denied a temporary restraining order but later granted a broad preliminary injunction. This injunction prohibited the former advisors from servicing or soliciting covered clients, using confidential information, or recruiting employees, and it barred the competitor from using confidential information or interfering with employment agreements. The defendants sought a stay but were denied by both the district court and the appellate court.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the preliminary injunction. The appellate court determined that the record did not show a likelihood of irreparable harm that could not be compensated by money damages, as required for preliminary injunctive relief. The court found that the alleged financial harms were calculable and that the claimed destruction of the Des Moines branch had already occurred, rendering injunctive relief ineffective for preventing future harm. The Eighth Circuit therefore vacated the preliminary injunction and remanded the case for further proceedings. View "Choreo, LLC v. Lors" on Justia Law

A privately held Nebraska S corporation had two classes of stock: Class A voting shares and Class B nonvoting shares. In 2023, the corporation sold substantially all its assets to a third party in a transaction structured as a disposition of assets, with proceeds distributed to all shareholders. The board unanimously approved the transaction, and the majority of both classes of shares voted in favor, except for some Class A and Class B shareholders, who opposed or abstained. Following closing, Class B shareholders received their cash proceeds but subsequently notified the corporation of their intent to assert appraisal rights, seeking a higher payment per share.The District Court for Sarpy County was presented with cross-motions for partial summary judgment regarding whether Class B nonvoting shareholders were entitled to appraisal rights under Nebraska’s Model Business Corporation Act (NMBCA) following the asset sale. The district court found that the relevant statute (§ 21-2,172(a)(3)) limited appraisal rights for a disposition of assets to shareholders “entitled to vote on the disposition,” and therefore determined that Class B shareholders lacked such rights. The court granted summary judgment in favor of the corporation and related parties, dismissed certain third-party defendants, and certified the judgment for immediate appeal pursuant to Neb. Rev. Stat. § 25-1315(1).On appeal, the Nebraska Supreme Court reviewed the district court’s grant of summary judgment de novo and its certification for abuse of discretion. The court held that only Class A voting shareholders were entitled to appraisal rights in connection with the disposition of assets, as the statute unambiguously limited such rights to voting shareholders. The court also found no express grant of appraisal rights to Class B shareholders in the articles of incorporation. The Supreme Court affirmed the district court’s judgment. View "Streck, Inc. v. Ryan" on Justia Law

Two siblings, Ryan and Nancy, disputed the administration of their father Hal’s estate and the status of his ownership interest in Tautphaus Park Storage, LLC (TPS), an Idaho storage facility business. Hal, who suffered from progressive dementia before his death, was TPS’s sole voting member and manager, with Nancy assisting in legal and management matters. Several amendments to TPS’s operating agreement changed ownership and management, culminating—after Hal’s death—in Nancy executing further amendments that retroactively transferred Hal’s economic interest to herself and changed accounting records. Nancy, an attorney, served as both Hal’s lawyer and later as personal representative of his estate. Ryan questioned whether Hal’s interest in TPS remained an estate asset and sought access to business records, which Nancy resisted.The siblings litigated issues in two related cases in Bonneville County: a probate case in the Magistrate Court regarding Hal’s estate, and a separate TEDRA (Trust and Estate Dispute Resolution Act) civil action in District Court initiated by Ryan. Both courts and parties at times treated the cases as consolidated. Ryan’s TEDRA complaint sought judicial determination of estate assets, breach of fiduciary duty, fraud, and appointment of a receiver, naming Nancy in both her individual and representative capacities and TPS as defendants. The magistrate court dismissed Ryan’s claims and removed Nancy and TPS as parties, finding that estate matters should be decided exclusively in probate. The district court affirmed, denying Ryan’s motions and dismissing his amended complaint, reasoning that Ryan’s claims were matters for probate only.On appeal, the Supreme Court of the State of Idaho vacated both lower courts’ judgments. It held that Ryan’s claims for judicial determination of estate assets and breach of fiduciary duty fall within TEDRA’s definition of “matters” and may be raised in a separate civil action, not only in probate. The Court reversed the orders dismissing claims and parties, remanded the case for further proceedings, and awarded costs and reasonable attorney fees to Ryan against Nancy personally. View "Monson v. Monson" on Justia Law

A dispute arose between two siblings, Wayne Orkin and Lisa Albert, over the operation and ownership of a business called Boost Web SEO, Inc. Orkin managed the day-to-day business and generated all of its revenue, while Albert incorporated the company and was listed as its registered agent and officer. No written agreements clarified their roles, profit sharing, or compensation. In 2014, residual income from a payment processing arrangement was assigned to Boost Web, which both parties treated as company revenue for years. In 2021, after a breakdown in their relationship, Albert cut Orkin’s access to company funds and accused him of fraudulent activities in communications with a third-party vendor. Orkin then redirected company revenues to an account he controlled, prompting legal action.The litigation began in Massachusetts Superior Court, where Orkin (and his father) sued Albert and her son for various state-law claims, and Albert removed the case to the U.S. District Court for the District of Massachusetts. Boost Web intervened with a crossclaim against Orkin. After partial summary judgment, the remaining claims—Orkin’s defamation and related claims against Albert, and Boost Web’s conversion claim against Orkin—proceeded to a bench trial. The district court ruled for Albert on the defamation claim, finding her email was not defamatory or was protected as true, and for Boost Web on conversion, awarding it damages for funds Orkin took as personal expenses and for redirected residuals. The court also found Orkin in contempt for interfering with its orders and permanently enjoined him from pursuing related litigation in Florida.The United States Court of Appeals for the First Circuit reviewed the case. It held that the district court erred in dismissing Orkin’s defamation claim, finding that Albert’s email could be defamatory per se and remanded for further proceedings on truthfulness. It affirmed the conversion judgment regarding the redirected residuals but vacated the judgment concerning personal expenses, holding that Orkin was entitled to some compensation and remanded to determine the appropriate amount. The court vacated the contempt order and the permanent injunction, finding the previous orders did not unambiguously decide Boost Web’s ownership. The case was remanded for further proceedings consistent with these holdings. View "Orkin v. Albert" on Justia Law

Epic Games, a developer and operator of the Epic Games Store, sued Apple over its App Store practices, alleging violations of federal and California competition law. The dispute centered on Apple’s rules requiring developers to use Apple’s in-app payment system, which imposed a 30% commission, and its prohibition of developers directing users to other purchasing options outside the App Store. After a bench trial, the district court found Apple’s anti-steering provisions violated California’s Unfair Competition Law by preventing informed consumer choice but upheld Apple’s in-app payment system requirement for digital goods. The court issued an injunction barring Apple from restricting developers from including in their apps buttons, links, or other calls to action that direct users to alternative purchasing mechanisms.Following the injunction, Apple implemented a compliance plan involving a 27% commission on linked-out purchases and a series of restrictions on how developers could present external payment options, including limitations on button design, link placement, and user flow. Epic contested Apple’s compliance, arguing these measures still effectively prohibited alternative purchases. After holding multiple evidentiary hearings, the United States District Court for the Northern District of California found Apple in civil contempt for failing to comply with the injunction, citing Apple’s bad faith and pretextual justifications. The district court imposed broad sanctions, including prohibiting any commission on linked-out purchases, restricting Apple’s ability to limit external links, and referring Apple for criminal investigation.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s contempt findings and most of the resulting sanctions but found portions of the sanctions—particularly the blanket ban on commissions—overbroad and more punitive than coercive. The Ninth Circuit reversed and remanded those parts for further tailoring, clarified the scope of permissible developer link prominence, and declined to vacate the injunction or reassign the case. The court otherwise affirmed the district court’s orders. View "EPIC GAMES, INC. V. APPLE INC." on Justia Law

Two brothers operated a farming and cattle partnership, with one managing the finances and records and the other handling outside operations. The financial brother, assisted by his daughter, maintained control over the partnership’s handwritten ledgers and inventory records, while the other brother relied on the information provided. Over several years, the managing brother made false entries in the ledgers, diverted partnership income into personal accounts, and concealed certain ownership interests in partnership assets from his brother. Suspicious discrepancies surfaced when the outside-operating brother noticed substantial errors affecting his reported net worth, prompting him to seek dissolution of the partnership and to sue for damages.The District Court for Thurston County conducted a bench trial, hearing evidence from the parties and expert witnesses. It found that the managing brother and his daughter had exclusive control over the partnership’s finances and intentionally concealed information. The court concluded that the outside-operating brother could not reasonably have discovered the wrongdoing earlier, given his lack of access to original records and his trust in the managing brother. The court awarded damages to the plaintiff under several theories, including breach of fiduciary duty, fraudulent concealment, fraudulent and negligent misrepresentation, conversion, unjust enrichment, and breach of contract, and imposed joint and several liability on both defendants.Upon appeal, the Nebraska Supreme Court reviewed the district court’s factual findings for clear error and legal questions de novo. It held that the claims for fraudulent misrepresentation and concealment were not barred by the statute of limitations, as discovery of the fraud occurred within the allowed period. The Supreme Court affirmed the lower court’s determinations regarding liability, damages, and the denial of post-trial motions, upholding the judgment in favor of the plaintiff. The court specifically affirmed the joint and several liability for both defendants and the calculation of damages, rejecting the appellants’ arguments regarding settlements, contract defenses, and the statute of limitations. View "Sebade v. Sebade" on Justia Law

Jerome and Shaun Cohen operated a Ponzi scheme through their companies, EquityBuild, Inc. and EquityBuild Finance, LLC, from 2010 to 2018. They solicited funds from individual investors and institutional lenders, promising high returns secured by real estate, primarily in Chicago. In reality, the Cohens used new investors’ funds to pay earlier investors and overvalued properties to retain excess capital. By 2018, the scheme collapsed, leaving over $75 million in unpaid obligations. The Securities and Exchange Commission intervened, obtaining a temporary restraining order and having a receiver appointed to liquidate assets and distribute proceeds to victims.The United States District Court for the Northern District of Illinois oversaw the receivership and determined how proceeds from the sale of two properties—7749 South Yates and 5450 South Indiana—should be distributed. Both a group of individual investors and Shatar Capital Partners claimed priority to the proceeds, with Shatar arguing its mortgages were recorded before those of the individual investors. The district court found that Shatar was on inquiry notice of the individual investors’ preexisting interests and thus not entitled to priority, limiting all claimants’ recoveries to their contributed principal, minus any amounts previously received.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s distribution order. The appellate court affirmed, holding that under Illinois law, Shatar was on inquiry notice of the individual investors’ interests in both properties at the time it invested, given multiple red flags about the properties’ financing and EquityBuild’s business model. As a result, the individual investors were entitled to priority in the distribution of proceeds. The court also found Shatar’s challenge to the distribution plan moot, as there were insufficient funds to benefit Shatar after satisfying the investors’ claims. View "Securities and Exchange Commission v. Duff" on Justia Law

A business dispute arose when an individual agreed to sell her furniture and design company to a limited liability company controlled by two individuals for $2.7 million, with payment to be made in installments. The seller also entered into a consulting agreement to assist in the transition but was terminated a few months later. The seller alleged that she did not receive compensation due under the consulting agreement and that the buyer failed to pay the final installment of the purchase price. She asserted claims for breach of contract, unjust enrichment, fraudulent inducement, and promissory fraud. The defendants counterclaimed and brought in several third parties, but most of those claims were eventually dismissed, leaving several claims—including for declaratory judgment, conversion, slander, breach of contract, and tortious interference—still pending.The Cullman Circuit Court tried only the seller’s promissory fraud and fraudulent inducement claims against the two individual defendants, entering judgment based on a jury verdict for the seller and awarding over $10 million in damages. The court stayed all claims against the corporate defendants after they filed for bankruptcy. Despite multiple claims and parties remaining, the circuit court certified its judgment against the individuals as final under Rule 54(b) of the Alabama Rules of Civil Procedure.Upon review, the Supreme Court of Alabama determined that the circuit court’s Rule 54(b) certification was improper. The Supreme Court found that closely intertwined and factually overlapping claims, counterclaims, and third-party claims remained unresolved, and that proceeding in piecemeal fashion risked inconsistent results and unnecessary duplication. The Supreme Court dismissed the appeal, holding that the circuit court’s order was not properly certified as final and thus was not appealable at this stage. View "Roberson v. Daniel" on Justia Law

A dispute arose among members of a family-owned limited liability company (LLC) established in 1994 with an original dissolution date of December 31, 2024. In 2015, one member, Seth, provided notice of his withdrawal. Shortly after, the remaining members—Horatio (the siblings’ father), Cameron, and Lindsay—held a meeting and, over Lindsay’s objection, voted by supermajority to convert the LLC to a perpetual-term entity. This action was later formalized through an amendment filed with the state. Horatio subsequently passed away, and Cameron became personal representative of his estate, controlling Horatio’s LLC interest.After these events, Lindsay, individually, on behalf of her minor children, and as a derivative plaintiff for the LLC, initiated an action in the Montana Sixth Judicial District Court. She sought a declaratory judgment enforcing the operating agreement’s (OA) dissolution provision and contended that the OA required unanimous written consent for amendment—rendering the 2015 supermajority vote ineffective. Cameron moved to dismiss some claims and later sought to join the LLC as a defendant. The District Court denied the motion to dismiss, granted summary judgment to Cameron and the LLC on the validity of the amendment, ordered the LLC joined as a defendant, and required Lindsay to pay fees for a non-party hybrid witness’s deposition.The Supreme Court of the State of Montana reviewed the case. The court held that the OA provided two valid pathways to amendment—by unanimous written consent or by a 67% supermajority, and that the 2015 vote validly converted the LLC to a perpetual entity. The court affirmed the District Court’s grant of summary judgment and its joinder order. However, it reversed the order requiring Lindsay to pay the non-party witness’s fees, limiting compensation to the statutory witness fee unless otherwise agreed. The judgment was affirmed in part, reversed in part, and remanded with instructions. View "Barbier v. Burns" on Justia Law