Justia U.S. 9th Circuit Court of Appeals Opinion SummariesArticles Posted in Business Law
DOMINGUEZ V. BETTER MORTGAGE CORPORATION
In this case, the plaintiff, Lorenzo Dominguez, who was a former employee of Better Mortgage Corporation, alleged that the company violated federal and state wage-and-hour laws, primarily by failing to pay overtime to him and other mortgage underwriters. Upon being sued, Better Mortgage attempted to reduce the size of the potential class and collective action by persuading employees to agree not to join any collective or class action and to settle their claims individually. The district court found that Better Mortgage's communications were misleading and coercive. As such, the court nullified the new employment agreements, release agreements, and ordered the company to communicate with current and former employees about wage-and-hour issues only in writing and with prior approval.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s order imposing a communication restriction on Better Mortgage, considering the company's appeal timely due to a motion to reconsider the restriction, thus tolling the time to file the notice of appeal. The appellate court held that it had jurisdiction to review the communication restriction and found it both justified and tailored to the situation created by the employer’s misleading and coercive communications. However, the appellate court dismissed for lack of jurisdiction the employer’s appeal from the district court’s order nullifying agreements between the employer and current and former employees. The appellate court found that it lacked jurisdiction to consider the merits of the nullification order because the issue was raised in an interlocutory appeal and did not fit any exception that would allow for review. View "DOMINGUEZ V. BETTER MORTGAGE CORPORATION" on Justia Law
AMALGAMATED BANK V. FACEBOOK, INC.
In this case, the plaintiffs, who are shareholders of Facebook, Inc., brought a securities fraud action against the company and its executives, alleging that they made materially misleading statements and omissions about the risk of improper access to Facebook users' data, Facebook's internal investigation into the actions of Cambridge Analytica, and the control Facebook users have over their data. The United States Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the decision of the District Court for the Northern District of California.The Circuit Court held that the shareholders adequately pleaded falsity as to the challenged risk statements in Facebook's 2016 Form 10-K. The court held that these statements were materially misleading because Facebook knew at the time of filing that the risk of improper third-party misuse of Facebook users' data was not hypothetical, but had already occurred.As to the statements regarding Facebook's investigation into Cambridge Analytica, the court affirmed the district court's decision, holding that the shareholders failed to plead scienter, or intent to defraud.Lastly, the court held that the shareholders adequately pleaded loss causation as to the statements assuring users that they controlled their data on the platform. The court found that the shareholders had adequately pleaded that the March 2018 revelation about Cambridge Analytica and the June 2018 revelation about Facebook's whitelisting policy were the first times Facebook investors were alerted that Facebook users did not have complete control over their own data, causing significant stock price drops.The case was remanded to the district court for further proceedings. View "AMALGAMATED BANK V. FACEBOOK, INC." on Justia Law
GEOFF WINKLER V. THOMAS MCCLOSKEY, JR., ET AL
The district court appointed a receiver to claw back profits received by investors in a Ponzi scheme that was the subject of a Securities and Exchange Commission enforcement action. The receiver filed suit against certain investors, alleging fraudulent transfers from the receivership entities to the investors. The district court concluded that the receiver was bound by arbitration agreements signed by the receivership company, which was the instrument of the Ponzi scheme. The district court relied on Kirkland v. Rune. The Ninth Circuit reversed the district court’s order denying a motion to compel arbitration. The panel held that EPD did not control because it addressed whether a bankruptcy trustee, not a receiver, was bound by an arbitration agreement. Unlike under bankruptcy law, there was no explicit statute here establishing that the receiver was acting on behalf of the receivership entity’s creditors. The panel held that a receiver acts on behalf of the receivership entity, not defrauded creditors, and thus can be bound by an agreement signed by that entity. But here, even applying that rule, it was unclear whether the receiver was bound by the agreements at issue. The panel remanded for the district court to consider whether the defendant investors met their burden of establishing that the fraudulent transfer claims arose out of agreements with the receivership entity, whether the investors were parties to the agreements and any other remaining arbitrability issues. View "GEOFF WINKLER V. THOMAS MCCLOSKEY, JR., ET AL" on Justia Law
THE OREGON CLINIC, PC V. FIREMAN’S FUND INS. CO.
This appeal arises out of a commercial property insurance policy (“Policy”) that Oregon Clinic, P.C. (“Oregon Clinic”) purchased from Fireman’s Fund Insurance Company (“Fireman’s Fund”). The Policy provides Oregon Clinic, a medical provider with more than fifty locations in Oregon, with coverage for a reduction of business income only if its insured property suffers “direct physical loss or damage.” In March 2020, after the COVID-19 pandemic began, Oregon Clinic, like hundreds of other insured businesses nationwide, sought coverage under its Policy. It alleged that it suffered “direct physical loss or damage” because of the COVID-19 pandemic and related governmental orders that prevented it from fully making use of its insured property. Fireman’s Fund denied coverage. Oregon Clinic then sued Fireman’s Fund in the United States District Court for the District of Oregon. At Oregon Clinic’s request, the Ninth Circuit certified to the Oregon Supreme Court the interpretation of “direct physical loss or damage” under Oregon law and stayed proceedings. The Oregon Supreme Court declined the certification request. The Ninth Circuit affirmed the district court’s dismissal. The panel held that the Oregon Supreme Court would interpret “direct physical loss or damage” to require physical alteration of property, consistent with the interpretation reached by most courts nationwide. Because Oregon Clinic failed to state a claim under this interpretation and because the amendment would be futile, the panel affirmed the district court’s judgment. View "THE OREGON CLINIC, PC V. FIREMAN'S FUND INS. CO." on Justia Law
U.S. WHOLESALE OUTLET & DISTR., ET AL V. INNOVATION VENTURES, LLC, ET AL
Defendant Living Essentials, LLC, sold its 5-hour Energy drink to the Costco Wholesale Corporation and also to the plaintiff wholesalers, who alleged that Living Essentials offered them less favorable pricing, discounts, and reimbursements in violation of the Robinson-Patman Act. On summary judgment, the district court found that the wholesalers had proved the first three elements of their section 2(a) claim for secondary-line price discrimination. At a jury trial on the fourth element of section 2(a), whether there was a competitive injury, the jury found in favor of Defendants. At a bench trial on the wholesalers’ section 2(d) claim for injunctive relief, the court ruled in favor of Defendants. The Ninth Circuit affirmed in part and vacated and reversed in part the district court’s judgment after a jury trial and a bench trial in favor of Defendants. The panel held that the district court did not abuse its discretion in finding that there was some factual foundation for instructing the jury that section 2(a) required the wholesalers to show, as part of their prima facie case, that Living Essentials made “reasonably contemporaneous” sales to them and to Costco at different prices. The panel further held that the district court did not abuse its discretion in instructing the jury that the wholesalers had to prove that any difference in prices could not be justified as “functional discounts” to compensate Costco for marketing or promotional functions. The panel concluded that the functional discount doctrine was legally available to Defendants. View "U.S. WHOLESALE OUTLET & DISTR., ET AL V. INNOVATION VENTURES, LLC, ET AL" on Justia Law
LUIS PINO V. CARDONE CAPITAL, LLC, ET AL
Plaintiff brought claims under Section 12(a)(2) of the Securities Act against all Defendants, and a claim pursuant to Section 15 of the Securities Act against Cardone and Cardone Capital. At issue was whether Cardone and Cardone Capital count as persons who “offer or sell” securities under Section 12(a) based on their social media communications to prospective investors. The district court concluded that Cardone and Cardone Capital did not qualify as statutory sellers. The Ninth Circuit affirmed in part and reversed in part the district court’s dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6). The panel concluded that Section 12 contains no requirement that a solicitation be directed or targeted to a particular plaintiff, and accordingly, held that a person can solicit a purchase, within the meaning of the Securities Act, by promoting the sale of a security in mass communication. Because the First Amended Complaint sufficiently alleges that Cardone and Cardone Capital were engaged in solicitation of investments in Funds V and VI, the district court erred in dismissing Plaintiff’s claim against Cardone and Cardone Capital under Section 12(a)(2), and also erred in dismissing his Section 15 claim for lack of a primary violation of the Securities Act. View "LUIS PINO V. CARDONE CAPITAL, LLC, ET AL" on Justia Law
ONLINE MERCHANTS GUILD V. NICOLAS MADUROS
Plaintiffs sell products as third-party merchants through Amazon’s “Fulfilled by Amazon” (“FBA”) program. Prior to October 2019, California required FBA merchants to collect and pay sales tax on sales to California residents. California’s Marketplace Facilitator Act altered that requirement. However, the Marketplace Facilitator Act is not retroactive and the Department continued to seek sales tax remittances from third-party FBA merchants for pre-October 2019 sales.Plaintiffs claimed that the California Department of Tax and Fee Administration’s tax collection efforts against Guild members violated the Due Process, Equal Protection, Privileges and Immunities, and Commerce Clauses of the United States Constitution, as well as the Internet Tax Freedom Act, 47 U.S.C. Sec. 151. The district court granted the Department’s motion to dismiss, holding that the Guild’s claims were barred by the Tax Injunction Act (“TIA”), 28 U.S.C. Sec. 1341.The Ninth Circuit affirmed, finding that the district cour properly dismissed the action pursuant to the TIA, which bars federal jurisdiction over the Guild’s claims because the Guild seeks an injunction that would to some degree stop the assessment or collection of a state tax and an adequate state law remedy exists. View "ONLINE MERCHANTS GUILD V. NICOLAS MADUROS" on Justia Law
PHILIP PINKERT V. SCHWAB CHARITABLE FUND, ET AL
Plaintiff alleges that Schwab Charitable, its board of directors, and its Investment Oversight Committee breached their fiduciary duties under California law by partnering with Schwab & Co.—a legally separate but closely related company—for brokerage, custodial, and administrative services. Plaintiff filed suit in the United States District Court for the Northern District of California. After Defendants moved to dismiss, the district court held that Plaintiff lacked standing under Article III and statutory standing under California law. The district court allowed Plaintiff to amend his complaint, but he notified the district court that he did not intend to do so, and instead wished to appeal. The district court then entered judgment for the defendants. Plaintiff timely appealed. The Ninth Circuit affirmed the district court’s judgment, holding that Plaintiff did not have Article III standing to sue Schwab Charitable Fund for allegedly breaching its fiduciary duties by, among other things, deducting excessive fees from Plaintiff’s donor-advised fund. The panel held that it need not decide whether Plaintiff’s arguments, regarding his purported need to contribute more to the DAF and related impact on his reputation and expressive rights, were cognizable in general because Plaintiff did not allege that he had experienced or will experience any of these purported injuries. The panel concluded that Plaintiff had not adequately alleged standing based on these theories of injury. View "PHILIP PINKERT V. SCHWAB CHARITABLE FUND, ET AL" on Justia Law
LORI WAKEFIELD V. VISALUS, INC.
Plaintiffs alleged that ViSalus, Inc., sent them automated telephone calls featuring an artificial or prerecorded voice message without prior express consent. The jury returned a verdict against ViSalus, finding that it sent 1,850,440 prerecorded calls in violation of the TCPA. Because the TCPA sets the minimum statutory damages at$500 per call, the total damages award against ViSalus was $925,220,000. Nearly two months later, the FCC granted ViSalus a retroactive waiver of the heightened written consent and disclosure requirements. ViSalus then filed post-trial motions to decertify the class, grant judgment as a matter of law, or grant a new trial on the ground that the FCC’s waiver necessarily meant ViSalus had consent for the calls made. Alternatively, ViSalus filed a post-trial motion challenging the statutory damages award as being unconstitutionally excessive. The district court denied these motions.Affirming in part, the panel held that members of the plaintiff class had Article III standing to sue because the receipt of unsolicited telemarketing phone calls in alleged violation of the TCPA is a concrete injury.The panel held that, when ruling on ViSalus’s motions to decertify the class, grant judgment as a matter of law, or grant a new trial, the district court properly refused to consider the FCC’s retroactive waiver. The panel explained that ViSalus waived a consent defense, and no intervening change in law excused this waiver of an affirmative defense.The panel vacated the district court’s denial of ViSalus’s post-trial motion challenging the constitutionality of the statutory damages award under the Due Process Clause of the Fifth Amendment. View "LORI WAKEFIELD V. VISALUS, INC." on Justia Law
SILVERADO HOSPICE, INC. V. XAVIER BECERRA
Plaintiff hospices exceeded their aggregate caps in the 2013 fiscal year, and three Silverado hospices also exceeded their aggregate caps in the 2014 fiscal year. Plaintiffs appealed their cap determinations to the Provider Reimbursement Review Board (“PRRB”), arguing that their MAC had failed to calculate the aggregate cap using the “actual net amount of payment received by the hospice provider.” The Ninth Circuit affirmed the district court’s summary judgment in favor of the government. The court held that CMS correctly concluded that the Budget Control Act required it to reduce the total annual amounts paid to hospices, not only the periodic reimbursements, and that the agency’s chosen method for implementing sequestration was consistent with the Medicare statute. The court further held that the agency was not required to undertake notice-and-comment rulemaking before implementing the Budget Control Act’s sequestration mandate. The agency’s sequestration method, as reflected in the TDL and the PRRB’s decisions, did not amount to the “establish[ment]” or “change” of a substantive legal standard governing payment for services under Medicare, within the meaning of 42 U.S.C. Section 1395hh. Rather, Congress enacted the Budget Control Act’s sequestration requirements, and the President implemented sequestration when the statutory conditions were triggered. View "SILVERADO HOSPICE, INC. V. XAVIER BECERRA" on Justia Law