Justia Civil Procedure Opinion Summaries

Movant, IJK Palm LLC filed a motion in the district court seeking discovery under 28 U.S.C. Section 1782 from several companies and individuals for use in a suit it intended to file in the Cayman Islands. After IJK filed its request under Section 1782, the company on behalf of which IJK intended to sue, entered liquidation proceedings.   In the Cayman Islands, only a company’s official liquidator may ordinarily sue on the company’s behalf. IJK proposes three avenues through which it might nevertheless use the material it requests. The district court granted IJK’s discovery request. The Second Circuit reversed the district court’s ruling granting Movant’s discovery request. The court held that Movant has not established that it is an “interested person” with respect to its first proposed suit and that it has not established that the material it requests is “for use” in any of its proposed suits within the meaning of Section 1782. View "IJK Palm LLC v. Anholt Services USA, Inc. et al." on Justia Law

EBO filed suit after unsuccessfully seeking to lease a space in a building owned by the Taylor LLC, including derivative claims brought by EBO on behalf of Taylor, alleging that the denial of the lease caused Taylor to suffer economic injury. The defendants argued that EBO lacked standing under Corporations Code section 17709.02 to pursue them because during the litigation it relinquished its interest in and was no longer a member of the Taylor LLC. The court determined that it nonetheless had statutory discretion to allow EBO to maintain the derivative claims.The court of appeal vacated. Section 17709.02 requires a party to maintain continuous membership in a limited liability company to represent it derivatively, just as section 800 requires a party to maintain continuous ownership in a corporation to represent it derivatively. The statutory discretion conferred on trial courts under section 17709.02(a)(1), to permit “[a]ny member [of an LLC] who does not meet these requirements” to maintain a derivative suit does not permit courts to excuse a former member from the continuous membership requirement. While equitable considerations may warrant exceptions to the continuous membership requirement, no such considerations were presented here. View "Sirott v. Superior Court of Contra Costa County" on Justia Law

The United States District Court for the Western District of Oklahoma certified two questions of law to the Oklahoma Supreme Court relating to the Oklahoma Consumer Protection Act, and whether it applied to conduct outside of Oklahoma. The matter concenred a dispute between Continental Resources, Inc. (Continental), an oil and gas producer headquartered in Oklahoma, and Wolla Oilfield Services, LLC (Wolla), a North Dakota limited liability company that operated as a hot oil service provider in North Dakota. Continental alleged the parties entered into an agreement for Wolla to provide hot oil services at an hourly rate to Continental's wells in North Dakota. As part of the contract, Wolla agreed to submit its invoices through an "online billing system" and to bill accurately and comprehensively for work it performed. A whistleblower in Wolla's accounting department notified Continental about systematic overbilling in connection with this arrangement. Continental conducted an audit and concluded Wolla's employees were overbilling it for time worked. Wolla denies these allegations. The Oklahoma Supreme Court concluded: (1) the Oklahoma Consumer Protection Act does not apply to a consumer transaction when the offending conduct that triggers the Act occurs solely within the physical boundaries of another state; and (2) the Act also does not apply to conduct where, even if the physical location is difficult to pinpoint, such actions or transactions have a material impact on, or material nexus to, a consumer in the state of Oklahoma. View "Continental Resources v. Wolla Oilfield Services" on Justia Law

Grove, an employee of Juul, a Delaware corporation that was headquartered in San Francisco, received options to acquire company stock. Grove stopped working for Juul in 2017, then exercised those options. In 2019, Grove sought to inspect the company’s books and records under California Corporations Code section 1601 to determine the value of his stock and to investigate potential breaches of fiduciary duty. Juul sought declaratory and injunctive relief in Delaware. Grove filed a shareholder class action and derivative complaint in California. Juul cited a forum selection clause, requiring that derivative and class claims proceed in Delaware. Grove filed an amended complaint, alleging only violations of section 1601. The California court stayed Grove's action, reasoning that the Agreement Grove signed states that Delaware courts have exclusive jurisdiction to enforce the agreement. The Court of Chancery of Delaware then granted Juul judgment on the pleadings; Grove did not waive inspection rights under California law but “[s]tockholder inspection rights are a core matter of internal corporate affairs,” so Grove’s rights as a stockholder are governed by Delaware law; Grove may litigate his inspection rights only in a Delaware court.The California court of appeal affirmed the stay order. It was reasonable to enforce the forum selection clause as to the class and derivative claims. Grove’s claim to inspect the books and records has already been adjudicated in the Delaware court, whose decision is entitled to full faith and credit. View "Grove v. Juul Labs, Inc." on Justia Law

Taj Jerry Mahabub, founder and Chief Executive Officer (“CEO”) of GenAudio, Inc. (“GenAudio”; collectively referred to as “Appellants”) attempted to secure a software licensing deal with Apple, Inc. (“Apple”). Mahabub intended to integrate GenAudio’s three-dimensional audio software, “AstoundSound,” into Apple’s products. While Appellants were pursuing that collaboration, the Securities and Exchange Commission (“SEC”) commenced an investigation into Mr. Mahabub’s conduct: Mahabub was suspected of defrauding investors by fabricating statements about Apple’s interest in GenAudio’s software and violating registration provisions of the securities laws in connection with sales of GenAudio securities. The district court found Mahabub defrauded investors and violated the securities laws. The court determined that Appellants were liable for knowingly or recklessly making six fraudulent misstatements in connection with two offerings of GenAudio’s securities in violation of the antifraud provisions of the securities laws. Appellants appealed, but finding no reversible error, the Tenth Circuit affirmed the district court’s grant of summary judgment in favor of the SEC. View "SEC v. GenAudio Inc., et al." on Justia Law

Over four years, Plaintiffs-Appellants Eighteen Seventy, LP and the Marie Kennedy Foundation (the “Kennedy Entities” or “Entities”) lost more than $10 million they invested in CRUPE Pte. Ltd. (“CRUPE”) and its subsidiaries. CRUPE was a foreign company organized under the laws of Singapore and managed in Zurich, Switzerland. Believing that CRUPE’s co-founder and CFO, Defendant-Appellee Richard Jayson, induced their investment losses through misrepresentations and material omissions, the Kennedy Entities sued Jayson for gross negligence and breach of fiduciary duty in the U.S. District Court for the District of Wyoming. The Entities, both of which had their principal place of business in Wyoming, averred that Jayson surreptitiously used their financial support to compensate himself and another company co-founder while failing to provide the Kennedy Entities with information about CRUPE’s viability and the true nature of their investments. Jayson, a domiciliary and resident of the United Kingdom, moved to dismiss the Kennedy Entities’ suit, pursuant to Federal Rule of Civil Procedure 12(b)(2), arguing that the court lacked personal jurisdiction over him. The district court agreed with Jayson and dismissed the complaint. The Kennedy Entities appealed appeal, claiming the district court erred when it held Jayson lacked the requisite minimum contacts with Wyoming to afford the court personal jurisdiction. They contended Jayson purposefully directed activities at Wyoming by preparing investment documents that encouraged the Kennedy Entities’ investments and by communicating with the Entities’ owners about the investments. These contentions notwithstanding, the Tenth Circuit Court of Appeals affirmed the district court’s dismissal of this case for want of personal jurisdiction. “Although the Kennedy Entities meet the first prong of the purposeful direction test, they fail to satisfy the second: that is, they fail to show that Mr. Jayson expressly aimed his conduct at Wyoming.” View "Eighteen Seventy, et al. v. Jayson" on Justia Law

While shopping at the Carmel Mountain Ranch location of Costco in San Diego, plaintiff Lilyan Hassaine slipped and fell on a slippery substance that she believed was liquid soap. Claiming serious injuries from the fall, she sued Costco and Club Demonstration Services (CDS), an independent contractor that operated food sample tables within the store. The trial court granted a motion for summary judgment filed by CDS, concluding that the company owed Hassaine no duty of care. In the court’s view, it was dispositive that CDS’s contract with Costco limited its maintenance obligations to a 12-foot perimeter around each sample table, and that Hassaine’s fall occurred outside that boundary. The Court of Appeal reversed, finding the trial court erred in concluding CDS’s contract with Costco delineated the scope of its duty of care to business invitees under general principles of tort law. Businesses have a common law duty of ordinary care to their customers that extends to every area of the store in which they are likely to shop. "While the CDS-Costco agreement may allocate responsibility and liability as a matter of contract between those parties, it does not limit the scope of CDS’s common law duty to customers. ... Breach and causation present triable factual issues here, precluding summary judgment on those grounds." View "Hassaine v. Club Demonstration Services, Inc." on Justia Law

Plaintiff Wells Fargo Bank filed a statutory-interpleader action after facing conflicting demands for access to the checking account of Mesh Suture, Inc. Mark Schwartz, an attorney who founded Mesh Suture with Dr. Gregory Dumanian, was named as a claimant-defendant in the interpleader complaint but was later dismissed from the case after the district court determined that he had disclaimed all interest in the checking account. The district court ultimately granted summary judgment to Dr. Dumanian as the sole remaining claimant to the bank account, thereby awarding him control over the funds that remained. Schwartz appealed, arguing: (1) the district court lacked jurisdiction over the case because (a) there was not diversity of citizenship between him and Dr. Dumanian and (b) the funds in the checking account were not deposited into the court registry; (2) he did not disclaim his fiduciary interest in the checking account, and (3) the award of funds to Dr. Dumanian violated various rights of Mesh Suture. Finding no reversible error, the Tenth Circuit affirmed the district court judgment. View "Wells Fargo Bank v. Mesh Suture, et al." on Justia Law

This appeal stemmed from a family dispute concerning ownership interests in Nelsen Farms, LLC (“LLC”). The LLC, as originally established, included equal ownership for two of the Nelsen’s sons, Jack S. and Jonathan. However, in 2015, Jack H. Nelsen (“Jack H.”) and Joan Nelsen modified their estate plans and decided to pass their interests in the LLC to Jonathan via an inter vivos transfer, rather than through their wills. In August 2017, members of the LLC held a special meeting, during which the transfer of the membership interest to Jonathan was approved. The next month, Jack S., his wife and son, and Jack S.’s sister Janice Lehman, filed a complaint against Jack H., Joan and Jonathan alleging Jack H. and Joan were incompetent and lacked testamentary capacity to modify their 2015 wills and to make the 2017 inter vivos conveyance. Appellants also alleged Jonathan unduly influenced Jack H. and Joan to obtain the estate modification. Appellants amended their complaint in October 2017, adding a claim for dissolution of the LLC. The district court ultimately granted summary judgment to Respondents and dismissed all of Appellants’ claims. After review, the Idaho Supreme Court affirmed the district court in all respects save one: dissolution of the LLC. To this, the Court held that when the district court granted dissolution on summary judgment, Jack S. was ipso facto deprived of his membership interest and relegated to the status of economic interest holder, without the right to petition for dissolution since, under the statute, only members could do so. Jack S. was reinstated as a member of the LLC, and had the right to seek dissolution upon remand. View "Nelsen v. Nelsen" on Justia Law

Qin (from China) is among 165 foreign limited partners who collectively invested $82.5 million into the Colorado Regional Center Project Solaris LLLP (CRCPS), whose general partner is CRC-I (an LLC). The parent company of CRC-I is Waveland, which has a member (Deslongchamps) and a Milwaukee office. CRCPS was part of an approved U.S. EB-5 immigrant visa program through which Qin and others obtained permanent-resident visas as a result of their investment in a commercial enterprise in the United States. CRC-I invested CRCPS’s funds in a condominium project. The investment was a failure, allegedly due to CRC-I’s malfeasance. Qin, on behalf of a class of investors, wants to sue CRC-I in the Eastern District of Wisconsin. He filed a petition under Federal Rule of Civil Procedure 27, seeking leave to depose Deslongchamps, in order to identify CRC-1’s members.The district court denied the petition, reasoning that Qin’s request is not one to perpetuate testimony that is at risk of being lost. The Seventh Circuit affirmed. While Qin faces an obstacle to pursuing federal court relief, and the dilemma posed by the non-corporate association whose members (and their citizenship) the plaintiff cannot ascertain despite reasonable investigatory efforts has been noted and discussed elsewhere, the court concluded that addressing that issue would require an advisory opinion. View "Qin v. Deslongchamps" on Justia Law