Justia Civil Procedure Opinion Summaries

Plaintiffs sued Sugar Rock, seeking a dissolution of partnerships, alleging them to be mining partnerships and attempted to obtain class action status. The circuit court granted plaintiffs partial summary judgment, finding that the partnerships should be dissolved, and appointed a special receiver and a distribution company to achieve that result. The Supreme Court of Appeals reversed, finding genuine issues of material fact and questions of law regarding the type of partnerships involved in the case, the parties who are the partners thereof, whether the partnerships’ property includes leases, and whether the procedural requirements for a decree of dissolution have been satisfied. View "Sugar Rock, Inc. v. Washburn" on Justia Law

Corporate citizens of Delaware, Nebraska, and Illinois, sued Americold, a “real estate investment trust” organized under Maryland law, in a Kansas court. Americold removed the suit based on diversity jurisdiction, 28 U.S.C. 1332(a)(1), 1441(b). The federal court accepted jurisdiction and ruled in Americold’s favor. The Tenth Circuit held that the district court lacked jurisdiction. The Supreme Court affirmed. For purposes of diversity jurisdiction, Americold’s citizenship is based on the citizenship of its members, which include its shareholders. Historically, the relevant citizens for jurisdictional purposes in a suit involving a “mere legal entity” were that entity’s “members,” or the “real persons who come into court” in the entity’s name. Except for that limited exception of jurisdictional citizenship for corporations, diversity jurisdiction in a suit by or against the entity depends on the citizenship of all its members, including shareholders. The Court rejected an argument that anything called a “trust” possesses the citizenship of its trustees alone; Americold confused the traditional trust with the variety of unincorporated entities that many states have given the “trust” label. Under Maryland law, the real estate investment trust at issue is treated as a “separate legal entity” that can sue or be sued. View "Americold Realty Trust v. ConAgra Foods, Inc." on Justia Law

TriQuint Semiconductor, Inc., and its directors were defendants in two consolidated shareholder derivative suits filed in Washington State. TriQuint moved to dismiss those suits on the ground that its corporate bylaws establish Delaware as the exclusive forum for shareholder derivative suits. The trial court denied TriQuint’s motion to dismiss, and the Supreme Court allowed TriQuint’s petition for an alternative writ of mandamus. After review, the Supreme Court concluded that, as a matter of Delaware law, TriQuint’s bylaw was a valid forum-selection clause and bound its shareholders. The Court also concluded that, as a matter of Oregon law, the bylaw was enforceable. The Court issued a peremptory writ of mandamus directing the trial court to grant TriQuint’s motion to dismiss. View "Roberts v. TriQuint Semiconductor, Inc." on Justia Law

In 2005, plaintiffs, former Beeland minority shareholders, hired the McGuireWoods law firm to sue Beeland’s managers and majority shareholder, alleging misappropriation of Beeland’s intellectual property. Plaintiffs brought these claims in their individual capacities and derivatively on behalf of Beeland. In 2008, the court dismissed several claims without prejudice all claims. Plaintiffs’ new counsel obtained leave to amend and added counts against Beeland’s corporate counsel, Sidley Austin. The court dismissed all claims against Sidley as untimely and dismissed all individual claims against Sidley on the grounds plaintiffs lacked standing in their individual capacities. In 2011, plaintiffs settled with Rogers; relinquished their ownership interests in Beeland, and, in their individual capacities, sued McGuireWoods for breach of fiduciary duty for failing to timely assert obvious claims against Sidley. The court granted McGuireWoods summary judgment. The appellate court noted that in the underlying action the court never ruled on the merits of derivative claims against Sidley and remanded for a determination as to whether plaintiffs would have been successful in a derivative but for failure to add Sidley in a timely manner. The Illinois Supreme Court held that plaintiffs are bound by the trial court’s determination in the underlying case that they had no standing to bring individual claims against Sidley; even assuming they were successful, plaintiffs could not have collected personally on any judgment against Sidley on the derivative claims. McGuireWoods’s failure to assert claims against Sidley in a timely manner caused no injury to plaintiffs in their individual capacities, which is the only capacity in which they are proceeding. View "Stevens v. McGuireWoods L.L.P." on Justia Law

The jeopardy element of the tort for wrongful discharge against public policy and whether the administrative remedies available under the Surface Transportation Assistance Act of 1982 (STAA) were at issue in this case. This was one of three concomitant cases before the Washington Supreme Court concerning the "adequacy of alternative remedies" component of the jeopardy element that some of Washington cases seemingly embrace. The complaint here alleged that Anderson Hay & Grain Company terminated petitioner Charles Rose from his position as a semi-truck driver when he refused to falsify his drivetime records and drove in excess of the federally mandated drive-time limits. Rose had worked as a truck driver for over 30 years, the last 3 of which he worked as an employee for Anderson Hay. In March 2010, Rose sued under the STAA in federal court but his suit was dismissed for lack of jurisdiction because he failed to first file with the secretary of labor. Rose then filed a complaint in Kittitas County Superior Court, seeking remedy under the common law tort for wrongful discharge against public policy. The trial court dismissed his claim on summary judgment, holding that the existence of the federal administrative remedy under the STAA prevented Rose from establishing the jeopardy element of the tort. The Court of Appeals affirmed. The Supreme Court remanded the case back to the appellate court for reconsideration in light of "Piel v. City of Federal Way," (306 P.3d 879 (2013)). Like the statute at issue in Piel, the STAA contained a nonpreemption clause. On remand, the Court of Appeals distinguished Rose's case from Piel, and again affirmed the trial court's decision. Upon review, the Supreme Court addressed the cases the Court of Appeals used as basis for its decision, and held that adequacy of alternative remedies component misapprehended the role of the common law and the purpose of this tort and had to be stricken from the jeopardy analysis. The Court "re-embraced" the formulation of the tort as initially articulated in those cases, and reversed the Court of Appeals. View "Rose v. Anderson Hay & Grain Co." on Justia Law

Plaintiff Erika Rickman brought this suit against her former employer, Premera Blue Cross, for wrongful discharge in violation of public policy. Rickman alleged she was terminated in retaliation for raising concerns about potential violations of the federal Health Insurance Portability and Accountability Act of 1996, and its Washington counterpart, the Uniform Health Care Information Act (UHCIA). The trial court dismissed Rickman's suit on Premera's motion for summary judgment, concluding Rickman could not satisfy the jeopardy element of the tort because Premera's internal reporting system provided an adequate alternative means to promote the public policy. The Court of Appeals affirmed. The Washington Supreme Court granted review of this case and two others in order to resolve confusion with respect to the jeopardy element of the tort of wrongful discharge in violation of public policy. Consistent with its decisions in the other two cases, the Court held that nothing in Premera' s internal reporting system, nor in HIPAA or UHCIA, precluded Rickman's claim of wrongful discharge. The Court reversed the Court of Appeals but remanded for that court to address Premera's alternate argument for upholding the trial court's order of dismissal. View "Rickman v. Premera Blue Cross" on Justia Law

Respondent Gregg Becker began working for Rockwood Clinic PS, an acquired subsidiary of Community Health Systems (CHS) 1 as its chief financial officer (CFO) in February 2011. As a publicly traded company, CJ-IS is required to file reports with the United States Securities and Exchange Commission (SEC). As Rockwood's CFO, Becker was required by state and federal law to ensure that Rockwood's reports did not mislead the public, which also required his personal verification that the reports did not contain any inaccurate material facts or material omissions. In October 2011, Becker submitted to CHS' financial department an "EBIDTA," calculation. Becker was not told that when CHS acquired Rockwood, it represented to creditors that the acquisition would incur a $4 million operating loss. To cover the discrepancy, CHS' financial supervisors allegedly directed Becker to correct his EBIDTA to reflect the targeted $4 million loss. CHS did not provide a basis for its low calculation. Becker refused, fearing that the projection would mislead creditors and investors in violation of the Sarbanes-Oxley Act. The CEO made clear that Becker's refusal to do so put his position in jeopardy; Becker felt compelled to resign unless CHS responded to his concerns. CHS and Rockwood accepted Becker's resignation. CHS filed a CR 12(b)(6) motion to dismiss Becker's complaint for wrongful termination, contending that the jeopardy element of the tort had not been met because there were adequate alternative means to protect the public policy of honesty in corporate financial reporting. The Court of Appeals accepted review and determined that the jeopardy element had been satisfied because the alternative administrative enforcement mechanisms of SOX were inadequate and therefore did not foreclose common law tort remedies for employees. The Supreme Court's holding in "Rose v. Anderson Hay" instructed that alternative statutory remedies were to be analyzed for exclusivity, rather than adequacy. Under that formulation, neither SOX nor Dodd-Frank precluded Becker from recovery. The Court affirmed the trial court's denial of Community CHS' CR 12(b)(6) motion, and affirmed the Court of Appeals in upholding that decision upon certified interlocutory review. View "Becker v. Comm'y Health Sys., Inc.." on Justia Law

Kivisto, co-founder and former President and CEO of SemCrude, an Oklahoma-based oil and gas company, allegedly drove SemCrude into bankruptcy through his self-dealing and speculative trading strategies. SemCrude’s Litigation Trust sued Kivisto, and the parties reached a settlement agreement and granted a mutual release of all claims. A month later, a group of SemCrude’s former limited partners (Oklahoma Plaintiffs) sued Kivisto in state court, alleging breach of fiduciary duty, negligent misrepresentation, and fraud. The Bankruptcy Court for the District of Delaware granted Kivisto’s emergency motion to enjoin the state action, finding that the Oklahoma Plaintiffs’ claims derived from the Litigation Trust’s claims. The district court reversed, concluding that the claims were possibly direct and remanded. The Third Circuit concluded that the claims are derivative and reversed. Even if Kivisto owed the Oklahoma Plaintiffs unique, individual fiduciary duties in addition to the duties owed to them as unitholders, they could show neither that they were injured separately from the company or all other unitholders on the basis of that misconduct, nor that they were entitled to recovery of the units they allegedly would not have contributed or would have sold but for Kivisto’s misconduct. View "In re: Semcrude L.P." on Justia Law

These appeals both involved damages actions by stockholder plaintiffs arising out of mergers in which the controlling stockholder, who had representatives on the board of directors, acquired the remainder of the shares that it did not own in a Delaware public corporation. Both mergers were negotiated by special committees of independent directors, were ultimately approved by a majority of the minority stockholders, and were at substantial premiums to the pre-announcement market price. Nonetheless, the plaintiffs filed suit in the Court of Chancery in each case, contending that the directors had breached their fiduciary duty by approving transactions that were unfair to the minority stockholders. In both appeals, it was undisputed that the companies did not follow the process established in "Kahn v. M&F Worldwide Corporation" as a safe harbor to invoke the business judgment rule in the context of a self-interested transaction. In both cases, the defendant directors were insulated from liability for monetary damages for breaches of the fiduciary duty of care by an exculpatory charter provision adopted in accordance with 8 Del. C. 102(b)(7). Despite that provision, the plaintiffs in each case sued the controlling stockholders and their affiliated directors, and also sued the independent directors who had negotiated and approved the mergers. The issue central to both, presented for the Supreme Court's review was whether, where the plaintiff challenges an interested transaction that is presumptively subject to entire fairness review, must plead a non-exculpated claim against the disinterested, independent directors to survive a motion to dismiss by those directors. The Court answered that question in the affirmative: a plaintiff seeking only monetary damages must plead non-exculpated claims against a director who is protected by an exculpatory charter provision to survive a motion to dismiss, regardless of the underlying standard of review for the board's conduct. The Court of Chancery in both of these cases denied the defendants' motions to dismiss because it read the Supreme Court's precedent to require doing so, regardless of the exculpatory provision in each company's certificate of incorporation. When the independent directors are protected by an exculpatory charter provision and the plaintiffs are unable to plead a non-exculpated claim against them, those directors are entitled to have the claims against them dismissed, in keeping with the Court's opinion in "Malpiede v. Townson" (and cases following that decision). Accordingly, the Court remanded both of these cases to allow the Court of Chancery to determine if the plaintiffs sufficiently pled non-exculpated claims against the independent directors. View "In Re Cornerstone Theraputics, Inc. Leal, et al. v. Meeks, et al." on Justia Law

The Meisters were preferred shareholders in Sesame, a now-dissolved software company. Mensinger was Sesame’s chief financial officer and Koppel was its chief executive officer. Sesame experienced financial difficulties, and its assets were sold to ExtraView, which was formed and owned by Mensinger. Sesame then dissolved, rendering the Meisters’ preferred shares valueless. The Meisters sued, alleging Mensinger and Koppel colluded to secure a preferential sale of Sesame’s assets and business to ExtraView, violating their fiduciary duties to the Meisters. The trial court found that Mensinger and Koppel had breached their fiduciary duties to the Meisters, but that the Meisters had failed to prove damages. The appeals court reversed, holding that the trial court erred in refusing to frame an appropriate remedy and in conducting an in camera post-trial review of ExtraView’s electronic financial records, rather than ordering an accounting of ExtraView’s net worth and profit/loss status,View "Meister v. Mensinger" on Justia Law