Justia Civil Procedure Opinion Summaries

The case involves Andris Pukke, Peter Baker, and John Usher, who were found liable for violations of the Federal Trade Commission Act, the Telemarketing Sales Rule, and a permanent injunction from a prior fraud case. They were involved in a real estate scam, selling lots in a development called "Sanctuary Belize" through deceptive practices. The district court issued an equitable monetary judgment of $120.2 million for consumer redress, imposed an asset freeze, and appointed a receiver.The United States District Court for the District of Maryland found the defendants liable after a bench trial and issued permanent injunctions against them. The court also held them in contempt for violating a prior judgment in a related case, ordering them to pay the same $120.2 million in consumer redress. The defendants appealed, and the United States Court of Appeals for the Fourth Circuit affirmed the district court's decision, except for vacating the monetary judgment to the extent it relied on FTC Act Section 13(b).The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision to maintain the receivership and asset freeze. The court held that the receivership and asset freeze were necessary to effectuate the injunctive relief and ensure that the defendants did not continue to profit from their deceptive practices. The court also found that the contempt judgment supported maintaining the receivership and asset freeze until the judgment was satisfied. The court emphasized the defendants' history of deceptive conduct and the need for a professional receiver to manage and distribute the assets to defrauded consumers. The judgment was affirmed. View "Federal Trade Commission v. Pukke" on Justia Law

Phhhoto Inc. filed a lawsuit against Meta Platforms, Inc., alleging that Meta engaged in anticompetitive practices that harmed Phhhoto's business. Phhhoto claimed that Meta's introduction of an algorithmic feed on Instagram in March 2016 suppressed Phhhoto's content, leading to a significant decline in user engagement and new registrations. Phhhoto argued that Meta's actions, including withdrawing access to Instagram's Find Friends API, terminating a joint project, and releasing a competing app called Boomerang, were part of a scheme to monopolize the market and eliminate Phhhoto as a competitor.The United States District Court for the Eastern District of New York dismissed Phhhoto's claim under Federal Rule of Civil Procedure 12(b)(6), ruling that it was time-barred by the four-year statute of limitations under the Sherman Act. The court found that Phhhoto's claim accrued outside the limitations period and that equitable tolling did not apply because Phhhoto failed to demonstrate fraudulent concealment by Meta.On appeal, the United States Court of Appeals for the Second Circuit reviewed the case de novo and concluded that Phhhoto sufficiently alleged that the statute of limitations should be equitably tolled due to Meta's fraudulent concealment. The court found that Meta's public statements about the algorithmic feed were misleading and constituted affirmative acts of concealment. The court also determined that Phhhoto did not have actual or inquiry notice of its antitrust claim until October 25, 2017, when it discovered evidence suggesting Meta's anticompetitive behavior. The court held that Phhhoto's continued ignorance of the claim was not due to a lack of diligence.The Second Circuit vacated the district court's judgment and remanded the case for further proceedings, allowing Phhhoto's antitrust claim to proceed. View "Phhhoto Inc. v. Meta Platforms, Inc." on Justia Law

Phoenix Lighting Group, L.L.C. (Phoenix) sued Genlyte Thomas Group, L.L.C. (DCO) and obtained a jury verdict for tortious interference, misappropriation of trade secrets, and civil conspiracy. The jury awarded Phoenix compensatory and punitive damages, as well as reasonable attorney fees. The trial court awarded additional punitive damages for the misappropriation claim and enhanced the attorney fees by a multiplier of two.The Ninth District Court of Appeals affirmed the trial court's decision in part but reversed the application of the punitive-damages cap for the conspiracy claim, remanding the case for further proceedings. Phoenix requested postjudgment attorney fees, which the Ninth District did not specifically address but remanded the case for further proceedings consistent with its opinion.The Supreme Court of Ohio accepted jurisdiction over DCO's challenge to the enhancement of the attorney-fee award. The court reversed the Ninth District's affirmation of the enhanced attorney fees and remanded the case to the trial court to issue a final judgment granting Phoenix attorney fees in the amount of $1,991,507.On remand, the trial court awarded Phoenix postjudgment attorney fees and expenses. The Ninth District affirmed this award, concluding that the trial court had jurisdiction to consider postjudgment attorney fees and did not exceed its authority.The Supreme Court of Ohio reviewed the case and held that the trial court exceeded its authority by considering and granting Phoenix's motion for postjudgment attorney fees and expenses. The court reversed the Ninth District's judgment and remanded the case to the trial court with instructions to vacate its award of postjudgment attorney fees and expenses and to enter final judgment. View "Phoenix Lighting Group, L.L.C. v. Genlyte Thomas Group, L.L.C." on Justia Law

Garret Hirchak, Manufacturing Solutions, Inc., and Sunrise Development LLC (plaintiffs) appealed a trial court's order dissociating Garret from Hirchak Brothers LLC and Hirchak Group LLC (defendants) and requiring the LLCs to pay over $900,000 in equity interest, unpaid compensation, and reimbursements. Plaintiffs argued that the trial court erred in not recognizing oppression by the majority members of the LLCs, treating a $300,000 down payment made by Garret as gratuitous, declining to order reimbursements for certain services and cash advances, and refusing to assess prejudgment interest on any of the reimbursements. Defendants cross-appealed, arguing that the court erred in awarding compensation to Garret after he breached his fiduciary duties.The Superior Court, Lamoille Unit, Civil Division, found that Garret had breached his fiduciary duties by failing to make explicit agreements on service rates and withholding financial records. The court ordered Garret's dissociation from the LLCs and required the LLCs to pay Garret $375,000 for his equity interest, $215,430 for cash advances made before March 2020, and $213,591.84 for unpaid compensation from October 2019 to January 2021. The court also ordered reimbursement of $71,537.64 and $50,214.57 for unpaid invoices from MSI and Sunrise, respectively, before March 2020. The court denied prejudgment interest on any reimbursements and rejected Garret's claim for the $300,000 down payment.The Vermont Supreme Court affirmed the trial court's decision, agreeing that Garret was not entitled to reimbursement for the $300,000 down payment or for cash advances and invoices after March 2020 due to his breach of fiduciary duties. The court also upheld the denial of prejudgment interest, finding it was within the trial court's discretion. However, the Supreme Court reversed the trial court's award of compensation to Garret after March 2020, concluding that his breach of fiduciary duties forfeited his right to compensation during that period. The case was remanded for a recalculation of the compensation due to Garret. View "Hirchak v. Hirchak" on Justia Law

D.A. Davidson & Co. initiated an interpleader action to resolve a dispute over funds held in an investment account for Whitefish Masonic Lodge 64. The Grand Lodge of Ancient Free and Accepted Masons of Montana revoked Whitefish Lodge's charter and claimed the funds. Donald Slaybaugh, a member of Whitefish Lodge, contested the revocation and the transfer of funds, arguing that the Grand Lodge did not follow proper procedures.The Eleventh Judicial District Court, Flathead County, granted summary judgment in favor of the Grand Lodge, dismissing Slaybaugh's cross claims. The court determined that Slaybaugh lacked standing to bring claims against the Grand Lodge on behalf of Whitefish Lodge or in his individual capacity. The court found that Whitefish Lodge, having had its charter revoked, no longer existed as a legal entity capable of bringing claims. Additionally, the court concluded that Slaybaugh did not have the authority to act on behalf of the Lodge, as he was not an elected officer and his previous authority to oversee the investment account had been revoked.The Supreme Court of the State of Montana affirmed the District Court's decision. The court held that Slaybaugh did not have standing to bring claims on behalf of Whitefish Lodge because the Lodge was dissolved and could not appear in litigation. The court also rejected Slaybaugh's argument that he had standing as a fiduciary or under a derivative action, noting that he did not meet the pleading requirements for a derivative action and that his fiduciary authority had been revoked. Finally, the court found no evidence to support claims of fraud or arbitrary action by the Grand Lodge in revoking the Lodge's charter. View "D.A. Davidson v. Slaybaugh" on Justia Law

Local Puerto Rico merchants brought unfair competition claims against major big-box retailers, alleging that during the COVID-19 pandemic, Costco Wholesale Corp. and Wal-Mart Puerto Rico, Inc. violated executive orders limiting sales to essential goods. The plaintiffs claimed that the defendants continued to sell non-essential items, capturing sales that would have otherwise gone to local retailers, and sought damages for lost sales during the 72-day period the orders were in effect.The case was initially filed as a putative class action in Puerto Rico's Court of First Instance. Costco removed the case to federal district court under the Class Action Fairness Act (CAFA). The district court denied Costco's motion to sever the claims against it and also denied the plaintiffs' motion to remand the case to state court. The district court dismissed most of the plaintiffs' claims but allowed the unfair competition claim to proceed. However, it later denied class certification and granted summary judgment for the defendants, concluding that the executive orders did not create an enforceable duty on the part of Costco and Wal-Mart.The United States Court of Appeals for the First Circuit reviewed the case on jurisdictional grounds. The court held that CAFA jurisdiction is not lost when a district court denies class certification. It also held that CAFA's "home state" exception did not apply because Costco, a non-local defendant, was a primary defendant. However, the court found that CAFA's "local controversy" exception applied because the conduct of Wal-Mart Puerto Rico, a local defendant, formed a significant basis for the claims. The court concluded that the district court did not abuse its discretion in denying Costco's motion to sever and determined that the entire case should be remanded to the Puerto Rico courts. The court reversed the district court's denial of the motion to remand, vacated the judgment on the merits for lack of jurisdiction, and instructed the district court to remand the case to the Puerto Rico courts. View "Kress Stores of Puerto Rico, Inc. v. Wal-Mart Puerto Rico, Inc." on Justia Law

In 2020, American Airlines and JetBlue Airways formed the Northeast Alliance (NEA), a joint venture to operate as a single airline for most routes in and out of Boston and New York City. The U.S. Department of Justice (DOJ), along with several states, sued to stop the NEA, claiming it violated the Sherman Act by unreasonably restraining competition. After a bench trial, the district court ruled in favor of the plaintiffs, finding that the NEA reduced competition and output without sufficient procompetitive benefits. American Airlines appealed the decision.The district court found that the NEA caused American and JetBlue to stop competing on overlapping routes, leading to decreased capacity and reduced consumer choices. The court also found that the NEA's schedule coordination and revenue-sharing provisions effectively merged the two airlines' operations in the Northeast, which resembled illegal market allocation. The court rejected the airlines' claims that the NEA increased capacity and provided significant consumer benefits, finding these claims unsupported by reliable evidence.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's decision, agreeing that the NEA had substantial anticompetitive effects. The appellate court found no clear error in the district court's factual findings and upheld its application of the rule of reason. The court concluded that the NEA's harms outweighed any procompetitive benefits, which could have been achieved through less restrictive means. The judgment of the district court was affirmed, and the NEA was enjoined from further implementation. View "US v. American Airlines Group Inc." on Justia Law

Major Brands, Inc., a Missouri-licensed liquor distributor, had been the exclusive distributor of Jägermeister in Missouri since the 1970s. In 2018, Mast-Jägermeister US, Inc. (MJUS) terminated this relationship and appointed Southern Glazers Wine and Spirits, LLC (Southern Glazers) as the new distributor. Major Brands sued MJUS and Southern Glazers, alleging wrongful termination under Missouri franchise law, conspiracy to violate Missouri franchise law, and tortious interference with the franchise relationship.The case was initially brought in state court but was removed to the United States District Court for the Eastern District of Missouri. After dismissing additional defendants, the case proceeded to a jury trial. The jury awarded Major Brands $11.75 million, finding in its favor on five counts, including violation of Missouri franchise law and tortious interference. The district court denied the defendants' motions for judgment as a matter of law or a new trial and awarded attorney’s fees to Major Brands.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court found that the district court had prejudicially erred in instructing the jury on the essential element of a "community of interest" under Missouri franchise law. The appellate court held that the jury instructions failed to require consideration of whether Major Brands made substantial investments that were not recoverable upon termination, which is necessary to establish a community of interest. Consequently, the Eighth Circuit reversed the district court’s decision, vacated the jury’s verdict and the award of attorney’s fees, and remanded the case for a new trial. View "Major Brands, Inc. v. Mast-Jagermeister US, Inc." on Justia Law

In this case, Four Thirteen, LLC filed a complaint against three corporate entities and several individuals, including Joshua Wearmouth, Larry Stephens, Edmond X. Moriniere, Ronald G. Meyers, and David C. Norton. The complaint alleged that Wearmouth and Stephens solicited funds from Four Thirteen for a business venture involving Brazilian carbon credits, which turned out to be fraudulent. Four Thirteen claimed that the corporate entities did not own the carbon credits and that Wearmouth and Stephens made numerous misrepresentations. The complaint included claims of breach of contract, fraud, negligent misrepresentation, and other related allegations.The District Court of Laramie County reviewed the case and rejected the affidavits of non-involvement filed by Moriniere, Meyers, and Norton, who sought dismissal from the suit. The court found that there were factual issues regarding their involvement in the alleged fraud. Additionally, the district court imposed discovery sanctions and entered a default judgment against all defendants, including the individual appellants, for failing to comply with discovery orders.The Wyoming Supreme Court reviewed the case and affirmed the district court's decision regarding the affidavits of non-involvement. The Supreme Court determined that the district court correctly found that there were factual disputes about the involvement of Moriniere, Meyers, and Norton, which precluded their dismissal from the case.However, the Supreme Court reversed the district court's decision to impose discovery sanctions against the individual appellants. The Supreme Court found that the appellants were not given proper notice that they were subject to sanctions under Wyoming Rule of Civil Procedure 37(b) and that there was no evidence they violated any prior discovery order. The court held that the sanctions against the individual appellants were not justified and remanded the case for further proceedings consistent with its opinion. View "Stephensv. Four Thirteen, LLC" on Justia Law

The case involves an interlocutory appeal arising from a Securities and Exchange Commission (SEC) enforcement action against Michael Young and others, alleging a fraudulent investment scheme. The SEC claimed that the defendants raised over $125 million from investors by falsely representing the use of a profitable algorithmic trading strategy, misappropriating funds for personal gain, and misrepresenting the profitability of their trading scheme. The parties agreed to a preliminary injunction freezing the defendants' assets, with the defendants retaining the right to request relief from the freeze.The United States District Court for the District of Colorado denied the Youngs' motions to unfreeze assets on three occasions. In April 2020, the court denied their first motion. In November 2020, the court denied their second motion, and the Youngs appealed. The Tenth Circuit affirmed the district court's decision, holding that the Youngs had forfeited their arguments by not raising them properly in the lower court. In March 2023, the Youngs filed a third motion to unfreeze assets, which the district court also denied, citing the law of the case doctrine and improper reconsideration.The United States Court of Appeals for the Tenth Circuit reviewed the appeal and dismissed it for lack of jurisdiction. The court held that the March 2023 motion was a successive motion raising the same issues that could have been raised in the November 2020 motion. The court emphasized that there was no change in circumstances, evidence, or law since the prior motion that would warrant jurisdiction under 28 U.S.C. § 1292(a)(1). The court concluded that the Youngs failed to demonstrate a close nexus between any change and the issues raised on appeal, thus affirming the district court's denial of the motion to unfreeze assets. View "USSEC v. Mediatrix Capital" on Justia Law