Justia Civil Procedure Opinion Summaries

Timothy Barton was involved in a scheme to develop underutilized land with loans from Chinese nationals. The Securities and Exchange Commission (SEC) and the Department of Justice initiated parallel civil and criminal proceedings against Barton and his associates, alleging violations of antifraud provisions of the Securities Act and the Exchange Act. The SEC sought a receivership to preserve lenders' assets, leading to various district court orders imposing and administering a receivership and freezing Barton’s assets. Barton appealed these orders and requested reassignment of the case on remand.The United States District Court for the Northern District of Texas initially imposed a receivership, which Barton appealed. The United States Court of Appeals for the Fifth Circuit vacated the receivership order, finding that the district court used the wrong standard and that the receivership's scope was too broad. On remand, the district court applied the correct standard from Netsphere, Inc. v. Baron and reimposed a receivership, including entities that received or benefited from assets traceable to Barton’s alleged fraudulent activities. Barton again appealed, challenging the district court’s jurisdiction, the decision to appoint the receiver, the scope of the receivership, the administration of the receivership, and the preliminary injunction.The United States Court of Appeals for the Fifth Circuit affirmed the district court’s imposition and scope of the receivership and the grant of a preliminary injunction. The court found no abuse of discretion in the district court’s actions and dismissed Barton’s appeal of certain orders administering the receivership for lack of jurisdiction. The court also denied Barton’s request to reassign the case to another district-court judge, finding no basis for reassignment. View "Securities and Exchange Commission v. Barton" on Justia Law

A publicly traded company, CoreCivic, which operates private prisons, faced scrutiny after the Bureau of Prisons raised safety and security concerns about its facilities. Following a report by the Department of Justice's Inspector General highlighting higher rates of violence and other issues in CoreCivic's prisons compared to federal ones, the Deputy Attorney General recommended reducing the use of private prisons. This led to a significant drop in CoreCivic's stock price and a subsequent shareholder class action lawsuit.The United States District Court for the Middle District of Tennessee, early in the litigation, issued a protective order allowing parties to designate discovery materials as "confidential." This led to many documents being filed under seal. The Nashville Banner intervened, seeking to unseal these documents, but the district court largely maintained the seals, including on 24 deposition transcripts, without providing specific reasons for the nondisclosure.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court emphasized the strong presumption of public access to judicial records and the requirement for compelling reasons to justify sealing them. The court found that the district court had not provided specific findings to support the seals and had not narrowly tailored the seals to serve any compelling reasons. The Sixth Circuit vacated the district court's order regarding the deposition transcripts and remanded the case for a prompt decision in accordance with its precedents, requiring the district court to determine if any parts of the transcripts meet the requirements for a seal within 60 days. View "Grae v. Corrections Corp. of Am." on Justia Law

Alebia, Inc. (Alebia) is a Rhode Island corporation that owned a property at 284-286 Atwells Avenue, Providence. In September 2005, Carmela Natale and Walter Potenza, purported owners and shareholders of Alebia, executed a promissory note and mortgage in favor of Equity One Mortgage Company. The mortgage lacked a legal description of the property, but the loan proceeds were used to pay off prior mortgages and taxes on the property. The note was intended to be secured by the property, but Natale and Potenza signed the mortgage in their individual capacities instead of as corporate representatives of Alebia.In 2011, Deutsche Bank National Trust Company (Deutsche Bank), the current holder of the note, filed a complaint in Providence County Superior Court against Natale and Potenza for breach of contract and against Alebia seeking reformation of the mortgage. Deutsche Bank obtained a judgment against Natale and Potenza in 2017 but could not proceed against the property. In 2021, Deutsche Bank filed a motion to equitably reform the mortgage against Alebia. The Superior Court held remote evidentiary hearings and granted the motion, reforming the mortgage to reflect that Natale and Potenza signed as corporate representatives of Alebia.The Rhode Island Supreme Court reviewed the case. The court held that the Superior Court did not abuse its discretion in admitting testimony and evidence, including the promissory note. The court found sufficient evidence to support the reformation of the mortgage due to mutual mistake. The court also held that the mortgage could be reformed without reforming the note and that the remote hearings did not violate due process, despite the error in holding them remotely without consent. The Supreme Court affirmed the judgment of the Superior Court. View "Deutsche Bank National Trust Company v. Alebia, Inc." on Justia Law

In 2020, Cody Sturzenbecher and his mother, Judy Sturzenbecher, entered into a series of transactions with Sioux County Ranch, LLC (Sioux County) related to the purchase of their family farm from a trust. Judy bought the farm using a loan from Sioux County, then sold the property to Sioux County, which leased it to Cody. The lease included an option for Cody to purchase the property. Cody defaulted on the lease, leading Sioux County to terminate the lease and list the property for sale.The Sturzenbechers sought declaratory and injunctive relief, arguing that Judy’s conveyance of the farm to Sioux County created an equitable mortgage rather than an absolute sale. The Circuit Court of the First Judicial Circuit in Turner County, South Dakota, granted the Sturzenbechers’ request for a preliminary injunction and denied Sioux County’s motion for judgment on the pleadings. Sioux County appealed both decisions.The Supreme Court of the State of South Dakota reviewed the case and affirmed the lower court’s decisions. The court concluded that the arrangement between the Sturzenbechers and Sioux County was intended as a financing agreement rather than an absolute sale. The court found that the agreements between the parties were unambiguous but unenforceable as an absolute sale due to public policy favoring a mortgagor’s right of redemption. The court held that the Sturzenbechers were likely to succeed on their equitable mortgage claim and that the circuit court did not abuse its discretion in granting the preliminary injunction. The court also affirmed the denial of Sioux County’s motion for judgment on the pleadings, finding that the Sturzenbechers had pled sufficient facts to support their claim. View "Sturzenbecher v. Sioux County Ranch" on Justia Law

In 1993, 11-year-old Michael Nellenback was placed in the care of Madison County's Department of Social Services (DSS) and assigned to caseworker Karl Hoch. Over the next three years, Hoch sexually abused Nellenback. Hoch was later convicted of various sex crimes and died in prison in 2001. In 2019, Nellenback filed a lawsuit against Madison County under the Child Victims Act, alleging negligent hiring, supervision, and retention of Hoch.The Supreme Court granted Madison County's motion for summary judgment, dismissing the complaint. The court found that the County lacked actual or constructive knowledge of Hoch's propensities for abuse and that no further investigation or supervision would have uncovered the abuse. The Appellate Division affirmed the decision, with two Justices dissenting, arguing that there were triable issues of fact regarding the County's liability for negligent supervision.The New York Court of Appeals reviewed the case and affirmed the lower courts' decisions. The Court held that Nellenback failed to raise a triable issue of fact on his negligent supervision claim. The evidence did not show that the County had actual or constructive knowledge of Hoch's propensity for abuse. The Court found that the absence of records documenting Hoch's interactions with Nellenback was not sufficient to establish a triable issue, as the records were routinely destroyed after a certain period. Additionally, the Court noted that the primary role of caseworkers was to transport children, and it was speculative to suggest that increased review of records would have put the County on notice of the abuse. Thus, the Court concluded that Nellenback's claim could not withstand summary judgment. View "Nellenback v Madison County" on Justia Law

Dynamic Logic Inc. (Dynamic) markets products to help clients measure the effectiveness of their advertising campaigns. The product in question, AdIndex, uses a control/exposed methodology to measure the effectiveness of digital advertising. Dynamic surveys individuals exposed to a client's advertisements and a control group, compares the results to broader market data in its MarketNorms database, and generates a report for the client. The data from each AdIndex report is later incorporated into the MarketNorms database for future use.In 2014, the Commissioner of Taxation and Finance audited Dynamic and concluded that AdIndex was a taxable information service under Tax Law § 1105 (c) (1), assessing additional sales tax. Dynamic challenged the assessment before the Division of Tax Appeals, which upheld the tax imposition. The Tax Appeals Tribunal affirmed, finding that AdIndex's primary function was the collection and analysis of information, and that any recommendations were ancillary to the data collection. The Tribunal also determined that Dynamic was not entitled to an exclusion under Tax Law § 1105 (c) (1) because the data collected was furnished to other persons through its incorporation into the MarketNorms database.Dynamic filed a CPLR article 78 petition in the Appellate Division to annul the Tribunal's determination. The Appellate Division confirmed the determination and dismissed the petition, holding that the Tribunal had rationally determined that AdIndex was an information service and that there was substantial evidence supporting its reasoning. The court also held that the Tribunal rationally concluded that the information provided through AdIndex was substantially incorporated into reports furnished to other persons, disqualifying Dynamic from the exclusion.The New York Court of Appeals affirmed the Appellate Division's judgment, holding that the Tribunal's determination was rational and supported by substantial evidence. The court found that AdIndex fit the definition of a taxable information service and that the data was substantially incorporated into subsequent reports, making Dynamic ineligible for the exclusion under Tax Law § 1105 (c) (1). View "Matter of Dynamic Logic, Inc. v Tax Appeals Trib. of the State of New York" on Justia Law

The defendant, Clough, Harbour & Associates LLP (CHA), agreed to design a new athletic field for the plaintiff, Trustees of Boston University (university). The contract included an express indemnification provision, which required CHA to indemnify the university for any expenses resulting from CHA's negligent design. A defect in CHA's design caused the university to incur expenses to fix the field. The university demanded indemnification from CHA, which CHA refused. More than six years after the field opened, the university sued CHA for breach of the indemnification provision.The Superior Court judge granted summary judgment in favor of CHA, relying on the tort statute of repose, which bars tort actions for damages arising from design defects in real property improvements six years after the improvement's opening. The judge concluded that the university's claim was barred by this statute. The university appealed the decision.The Supreme Judicial Court of Massachusetts reviewed the case. The court held that the tort statute of repose does not apply to the university's contract claim for indemnification. The court emphasized that the claim was based on an express contractual provision, not a tort duty imposed by law. The court distinguished between claims for breach of an implied warranty, which are barred by the statute of repose, and claims for breach of an express warranty or indemnification provision, which are not. The court reversed the Superior Court's decision and remanded the case for further proceedings. View "Trustees of Boston University v. Clough, Harbour & Associates LLP" on Justia Law

Jaime Vargas and Francis R. Alvarez, former employees of medical supplier Lincare, Inc., and its subsidiary Optigen, Inc., filed a qui tam complaint under the False Claims Act (FCA). They alleged that Optigen engaged in fraudulent practices, including systematic upcoding of durable medical equipment, improper kickback arrangements, waiver of co-pays, and shipment of unordered supplies. The relators claimed that Optigen billed CPAP batteries and accessories under codes designated for ventilator accessories, waived patient co-pays without assessing financial hardship, shipped CPAP supplies automatically without patient requests, and paid kickbacks to healthcare providers for referrals.The case was initially filed in the Eastern District of Virginia and later transferred to the Middle District of Florida. The United States declined to intervene, and the District Court unsealed the complaint. The relators filed multiple amended complaints, each of which was dismissed by the District Court for failing to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The District Court dismissed the fourth amended complaint, holding that it still failed to plead sufficient facts with the requisite specificity.The United States Court of Appeals for the Eleventh Circuit reviewed the case. The court affirmed the District Court's dismissal of the relators' claims regarding improper kickback arrangements, waiver of co-pays, and automatic shipment of supplies, finding that these allegations lacked the necessary specificity and failed to identify any actual false claims submitted to the government. However, the court reversed the dismissal of the upcoding claim, holding that the relators had pleaded sufficient facts with particularity to withstand a motion to dismiss. The court remanded the case for further proceedings limited to the upcoding issue. View "Vargas v. Lincare, Inc." on Justia Law

Justin Longworth, a federal inmate, alleged that he faced repeated sexual harassment and abuse by Sherry M. Beck, a correctional officer at the Federal Correctional Institution in Butner, North Carolina. Longworth claimed Beck engaged in daily aggressive sexual harassment and abuse, including forced oral sex, fondling, and groping. He did not immediately report Beck's conduct due to fear of retaliation. Other officials at the institution initially did nothing to stop or report Beck's abuse. Eventually, Beck was reported, fired, and Longworth was transferred to another facility, but Beck continued to harass him through letters.Longworth filed two separate lawsuits in the Eastern District of North Carolina. The first lawsuit was a Bivens action against the officials directly involved, alleging violations of his civil rights under the Fourth and Eighth Amendments. The district court dismissed the Bivens claims, finding that they presented new contexts and that special factors counseled hesitation in extending Bivens to this context. Longworth appealed the dismissal of his Bivens claims. The second lawsuit was an FTCA claim against the United States, alleging negligence by the officials. The district court dismissed the FTCA claim for lack of subject matter jurisdiction, finding that Beck was not acting within the scope of her employment during the alleged misconduct. Longworth did not appeal the FTCA judgment.The United States Court of Appeals for the Fourth Circuit reviewed the case and concluded that the district court's FTCA judgment precluded Longworth's Bivens appeal. The FTCA judgment bar provides that an FTCA judgment is a complete bar to any action by the claimant against the employee of the government whose act or omission gave rise to the claim. Since a judgment on the FTCA claim had been entered, Longworth could no longer pursue his Bivens action based on the same conduct. Consequently, the Fourth Circuit dismissed the appeal. View "Longworth v. Mansukhani" on Justia Law

Mesabi Metallics Company LLC (Mesabi) filed for Chapter 11 bankruptcy in 2016 and emerged successfully in 2017. During the bankruptcy proceedings, Mesabi initiated an adversary proceeding against Cleveland-Cliffs, Inc. (Cliffs), alleging tortious interference, antitrust violations, and civil conspiracy. Mesabi claimed Cliffs engaged in anti-competitive conduct to impede Mesabi's business operations. To facilitate discovery, the parties entered a stipulated protective order allowing documents to be designated as confidential. Mesabi later moved to unseal certain documents filed under seal to support a petition in the Minnesota Court of Appeals.The United States Bankruptcy Court for the District of Delaware, applying the common law right of access, held that Cliffs had not met the burden to keep the documents sealed. The court relied on the Third Circuit's precedent in In re Avandia, which requires a showing that disclosure would cause a clearly defined and serious injury. Recognizing potential ambiguity in the law, the Bankruptcy Court certified the question for direct appeal to the United States Court of Appeals for the Third Circuit.The Third Circuit clarified that the sealing of documents in bankruptcy cases is governed by 11 U.S.C. § 107, not the common law right of access. Section 107 imposes a distinct burden, requiring protection of trade secrets or confidential commercial information without the need for balancing public and private interests. The court vacated the Bankruptcy Court's decision and remanded for application of the correct standard under § 107. Additionally, the Third Circuit held that the Bankruptcy Court lacked jurisdiction to grant a third party's motion to intervene and unseal documents while the appeal was pending, vacating those orders as well. View "ESML Holdings Inc v. Mesabi Metallics Compay LLC," on Justia Law