Articles Posted in Business Law

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The Ninth Circuit affirmed the district court's decision affirming the bankruptcy court's dismissal of a Chapter 11 petition filed by the former board members of Sino. The panel held that the bankruptcy court properly dismissed the action because plaintiffs lacked corporate authority under Nevada law when they filed the petition where a receiver appointed by the Nevada state court already had removed them from the corporation's board of directors. Therefore, plaintiffs were not authorized to file the petition on behalf of the corporation. View "Sino Clean Energy, Inc. v. Seiden" on Justia Law

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Where such delivery of summonses to attorneys of companies provides actual notice to a foreign organization, it satisfies Federal Rule of Criminal Procedure 4(c)(3)(D). The Ninth Circuit denied a petition for a writ of mandamus brought by companies owned and controlled by the Chinese government, seeking to vacate the denial of their motion to quash service of criminal summonses the government had delivered to attorneys for the companies. The panel held that the evidence established that the companies had actual notice of the summonses and thus the district court did not err, let alone clearly err, in denying their motion to quash service. View "In re Pangang Group Co." on Justia Law

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The Ninth Circuit reversed the district court's grant of summary judgment for CES in a class action alleging that natural gas companies colluded to fix retail natural gas prices in Wisconsin. CES, a wholly owned subsidiary of Reliant, asserted that it acted innocently and without knowledge of its parent company's price-fixing scheme. The panel held that Supreme Court precedent established that a parent and a wholly owned subsidiary always have a unity of purpose and thus act as a single enterprise whenever they engage in coordinated activity. Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (1984). In this case, plaintiffs raised a triable issue of CES's anticompetitive intent; plaintiffs' evidence was sufficient to raise a triable issue of whether CES knowingly acted to further the alleged price-fixing scheme; any knowledge of the alleged price-fixing scheme that CES's directors and officers acquired while concurrently acting as directors or officers of the other Reliant companies was imputable to CES as a matter of Wisconsin law; and plaintiffs submitted sufficient evidence to raise a genuine issue under the Sherman Act – and Wisconsin Statute 133.03(1) – as to whether CES participated in coordinated activity in furtherance of the alleged inter-enterprise price-fixing conspiracy. View "Arandell Corp. v. CenterPoint Energy Services, Inc." on Justia Law

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Professional golf caddies filed suit against the PGA Tour after it required them to wear bibs containing advertisements at professional golfing events. The Ninth Circuit affirmed the district court's dismissal of all claims with prejudice, holding that the caddies consented to wearing the bibs and that they did not do so under economic duress. Therefore, the caddies failed to state claims for breach of contract and quasi-contract relief, California state law publicity claims, a Lanham Act false endorsement claim, or a plausible economic duress claim. The panel also held that the caddies failed to allege plausibly that the Tour secured their consent through economic duress, and thus the district court properly dismissed the antitrust claims for failure to state a relevant market and the California unfair competition claims for failure to plead that any of the Tour's conduct was unlawful, unfair, or fraudulent. The panel remanded to allow the district court to reconsider whether to grant the caddies leave to amend their federal antitrust and California unfair competition claims. View "Hicks v. PGA Tour, Inc." on Justia Law

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These consolidated appeals stemmed from the Commissioner's efforts to hold the former shareholders of a close corporation, Slone Broadcasting, responsible for taxes owed on the proceeds of its sale of assets to another broadcasting company, Citadel. The shareholders followed up the asset sale to Citadel by selling Slone Broadcasting's stock to another company, Berlinetta, an affiliate of Fortrend. Berlinetta and Slone Broadcasting then merged into a new company called Arizona Media. The Ninth Circuit reversed the tax court's judgment on the petition for redetermination of federal income tax deficiency challenging the shareholders' liability for taxes in connection with an asset and stock sale. The panel applied Arizona's Uniform Fraudulent Transfer Act and held that the transaction was constructively fraudulent as to the creditor (the IRS) because the debtor (Slone Broadcasting) did not receive a reasonably equivalent value in exchange for the transfer to the shareholders and was left unable to satisfy its tax obligation. In this case, the purpose of the shareholders' transaction with Berlinetta was tax avoidance and thus reasonable actors in the shareholders' position would have been on notice that Berlinetta never intended to pay Slone Broadcasting's tax obligation. The panel held that the shareholders' sale to Berlinetta was a cash-for-cash exchange lacking independent economic substance beyond tax avoidance. The panel also held that the shareholders were liable to the government for Slone Broadcasting's federal tax obligation as "transferees" under 26 U.S.C. 6901, because Slone Broadcasting's liquidating distribution to the shareholders was a constructively fraudulent transfer under Arizona law. View "Slone v. Commissioner of Internal Revenue" on Justia Law

Posted in: Business Law, Tax Law

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The Ninth Circuit affirmed the dismissal of an action alleging that when Yahoo! invested in Alibaba.com, a Chinese retail website, Yahoo! violated the conditions of its exemption, granted by the SEC, from the registration requirements of the Investment Company Act (ICA). Plaintiff brought derivative claims against Yahoo!'s board of directors and certain corporate officers, as well as one direct claim against Yahoo!, under the ICA. The panel held that plaintiff failed to state a claim because the ICA does not establish a private right of action for challenging the continued validity of an ICA exemption. View "UFCW Local 1500 Pension Fund v. Mayer" on Justia Law

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The Ninth Circuit affirmed the dismissal of a shareholder derivative action under Federal Rule of Civil Procedure 23.1 for failure to show demand futility. As a preliminary matter, the panel held that binding authority compelled it to apply abuse of discretion review. The panel applied Delaware law and held that the shareholders failed to show demand futility; the Aronson test did not apply in this case because it was limited to board business decisions; and under the Rales test, demand was not excused. View "Tindall v. First Solar Inc." on Justia Law

Posted in: Business Law

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The Ninth Circuit certified the following question to the Supreme Court of California: Does a plaintiff suffer discriminatory conduct, and thus have statutory standing to bring a claim under the Unruh Act, when the plaintiff visits a business's website with the intent of using its services, encounters terms and conditions that deny the plaintiff full and equal access to its services, and then departs without entering into an agreement with the service provider? Alternatively, does the plaintiff have to engage in some further interaction with the business and its website before the plaintiff will be deemed to have been denied full and equal treatment by the business? View "White v. Square, Inc." on Justia Law

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The Ninth Circuit certified the following questions regarding D.C. partnership law: (1) Under District of Columbia law does a dissociated partner owe a duty to his or her former law firm to account for profits earned post-departure on legal matters that were in progress but not completed at the time of the partner's departure, where the partner's former law firm had been hired to handle those matters on an hourly basis and where those matters were completed at another firm that hired the partner? (2) If the answer to question (1) is "yes," then does District of Columbia law allow a partner's former law firm to recover those profits from the partner's new law firm under an unjust enrichment theory? (3) Under District of Columbia law what interest, if any, does a dissolved law firm have in profits earned on legal matters that were in progress but not completed at the time the law firm was dissolved, where the dissolved law firm had been retained to handle the matters on an hourly basis, and where those matters were completed at different pre-existing firms that hired partners of the dissolved firm post-dissolution? View "Diamond v. Hogan Lovells US LLP" on Justia Law

Posted in: Business Law

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The Ninth Circuit reversed the district court's dismissal based on lack of subject matter jurisdiction of an action alleging a claim of legal malpractice. The panel held that what little business Lincoln One conducted was done in Missouri—its state of incorporation—making both Lincoln One and its wholly-owned subsidiary, plaintiff, putative citizens of that state alone. Therefore, there was complete diversity between the parties because defendant was a California citizen. The panel conditionally reversed the district court's jurisdictional dismissal and remanded so that it may consider in the first instance whether Lincoln One and plaintiff were alter egos or there was jurisdictional manipulation that would warrant treating plaintiff as a California citizen. In regard to the issue of classifying the citizenship of a holding company such as Lincoln One that has engaged in no activity other than incorporation, the panel held that a recently-formed holding company's principal place of business is the place where it has its board meetings, regardless of whether such meetings have already occurred, unless evidence shows that the corporation is directed from elsewhere. View "3123 SMB LLC V. Horn" on Justia Law