Justia U.S. 9th Circuit Court of Appeals Opinion Summaries

The dispute at issue is between Jones Day and one of its former partners, a German national who was based in its Paris office until he left to join Orrick, Herrington & Sutcliffe (“Orrick”). Jones Day’s partnership agreement provides for mandatory arbitration of all disputes among partners, and that all such arbitration proceedings are governed by the FAA. The partnership dispute proceeded to arbitration in Washington D.C., the location designated in the arbitration agreement.   The Ninth Circuit reversed the district court’s order denying Jones Day’s petitions to compel Orrick to comply with an arbitrator’s subpoena. First, the court held that the district court had subject matter jurisdiction over the action to enforce arbitral summonses issued by the arbitrator in an ongoing international arbitration being conducted in Washington, D.C., under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention. The court further held that venue was proper in the Northern District of California. The court reversed and remanded with instructions to enforce Jones Day’s petitions to compel Orrick and its partners to comply with the arbitral summonses. View "JONES DAY V. ORRICK, HERRINGTON & SUTCLIFFE" on Justia Law

The Ninth Circuit panel held that defendant was not required to disgorge to CytoDyn his short-swing profits from exercising options and warrants granted by CytoDyn, entitling him to purchase and later sell CytoDyn shares. The panel held that the short-swing transaction fell within an exemption, set forth in SEC Rule 16b-3(d)(1) because the option and warrant award was “approved by the board of directors” of CytoDyn. The circuit court concluded that the affirmative votes of three of CytoDyn’s five board members, at a meeting where only four board members were present, were sufficient, and a unanimous decision was not required under either the plain text of Rule 16-3(d)(1), Delaware corporate law, or CytoDyn’s bylaws.The court left the determination of what a corporate board must do to approve insider-issuer acquisitions to the laws of the state where the corporation is incorporated. Reasoning that federal securities law defers to—and does not displace—the state laws governing corporate boards. Thus, the circuit court affirmed the district court’s ruling. View "ALPHA VENTURE CAPITAL PARTNERS V. NADER POURHASSAN" on Justia Law

The Ninth Circuit certified to the Supreme Court of Nevada the following question: Under Nevada law, must a series LLC created pursuant to Nev. Rev. Stat. 86.296 be sued in its own name for a court to obtain jurisdiction over it, or may the master LLC under which the series is created be sued instead? View "Federal Housing Finance Agency v. Saticoy Bay, LLC" on Justia Law

Plaintiffs filed suit against defendants, alleging unfair competition in violation of section 43 of the Lanham Act. A jury found that defendants engaged in materially false or misleading advertising about their competing whale-watching-cruise business in violation of the Lanham Act, but awarded $0 in actual damages and declined to award an equitable remedy of disgorgement of profits. The district court then issued a permanent injunction prohibiting defendants from engaging in specified future acts of false advertising, denied plaintiffs' request for attorneys' fees, and entered judgment.The Ninth Circuit reversed the judgment to the extent that it denies an award of profits and remanded for a new trial on that issue. The panel concluded that, under Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492 (2020), the district court erred in instructing the jury on the element of willfulness. Instead, defendant's mental state is a highly important consideration in determining whether an award of profits is appropriate. The panel declined plaintiffs' request to remand the case with specific instructions to conduct a new jury trial, declining to apply judicial estoppel to either side and holding that Federal Rule of Civil Procedure 39(c) does not require that the retrial on remand be a jury trial. The panel also vacated the district court's attorneys' fee determination because retrial of the disgorgement issue could affect the assessment of some of the relevant circumstances. View "Harbor Breeze Corp. v. Newport Landing Sportfishing, Inc." on Justia Law

Ngo purchased a BMW. The dealership financed Ngo’s purchase; the purchase agreement contained an arbitration clause. As a result of alleged defects with the car, Ngo sued BMW, the manufacturer, which was not a signatory to the purchase agreement. BMW moved to compel arbitration. The district court granted the motion, finding BMW to be a third-party beneficiary.The Ninth Circuit reversed. Under California law, a nonsignatory is a third-party beneficiary only to a contract made expressly for its benefit. Any benefit that BMW might receive from the clause was peripheral and indirect because it was predicated on the decisions of others to arbitrate. The purchase agreement was drafted with the primary "motivating purpose" of securing benefits for the contracting parties; third parties were not the purposeful beneficiaries of that undertaking. Nothing in the contract evinced any intention that the arbitration clause should apply to BMW. The parties easily could have indicated that the contract was intended to benefit BMW but did not do so. The court declined to apply equitable estoppel to compel arbitration. Ngo did not allege any “concerted misconduct.” BMW was mistaken that, under the Song-Beverley and Magnuson-Moss Warranty Acts, Ngo’s claims were inextricably intertwined with the terms of the purchase agreement. View "Ngo v. BMW of North America, LLC" on Justia Law

Uber’s wholly-owned Dutch subsidiaries retained Rattagan, an Argentinian attorney, to serve as their legal representative in Buenos Aires in connection with a new Uber subsidiary in Argentina. Uber representatives from San Francisco allegedly assumed responsibility for communicating with Rattagan. According to Rattagan, Uber launched its platform in Argentina before its subsidiary was registered with the proper tax authority, despite knowing that Rattagan, as the entities’ legal representative, could be subject to personal liability for Uber’s violations of Argentine law. Law enforcement authorities raided Rattagan’s office and the homes of his business colleagues; his offices were surrounded by protestors and he received negative press. Rattagan later was charged with aggravated tax evasion for his perceived involvement with the Uber launch.Rattagan sued for negligence, breach of the implied covenant of good faith and fair dealing, fraudulent concealment, and aiding and abetting fraudulent concealment. Applying California law, the district court dismissed, as time-barred, Rattagan’s negligence and breach of the implied covenant claims, and held that the fraudulent concealment claims were foreclosed by the economic loss rule, which prevents a party to a contract from recovering economic damages resulting from breach of contract under tort theories. The Ninth Circuit noted that Rattagan’s appeal hinges on whether fraudulent concealment claims are exempt from California’s economic loss rule and certified that question to the California Supreme Court. View "Rattagan v. Uber Technologies, Inc." on Justia Law

A 2019 Arizona statute prohibits auto dealer management system (DMS) providers from “tak[ing] any action by contract, technical means or otherwise to prohibit or limit a dealer’s ability to protect, store, copy, share or use” data the dealer has stored in its DMS. DMS providers may not impose charges “beyond any direct costs incurred” for database access. DMS providers may not prohibit the third parties contracted by the dealers “from integrating into the dealer’s data system,” nor may they otherwise “plac[e] an unreasonable restriction on integration.” DMS providers must “[a]dopt and make available a standardized framework for the exchange, integration, and sharing of data” with authorized integrators.The Ninth Circuit affirmed the denial of a preliminary injunction against the statute’s enforcement. There is no conflict preemption; the statute and the federal Copyright Act are not irreconcilable. The statute does not conflict with 17 U.S.C. 106(1), which grants the owner of a copyrighted work the exclusive right “to reproduce the copyrighted work in copies.” The plaintiffs forfeited their claim that the statute impaired their contracts with third-party vendors and did not show that the statute impaired their ability to discharge their contractual duty to keep dealer data confidential. The statute was reasonably drawn to serve important public purposes of promoting consumer data privacy and competition and amounted to neither a per se physical taking nor a regulatory taking. View "CDK Global LLC v. Brnovich" on Justia Law

Competitors BladeRoom and Emerson began negotiating a sale of BladeRoom to Emerson. They signed a non-disclosure agreement (NDA). The negotiations fell through. Facebook selected Emerson’s proposal for a data center. BladeRoom sued. Emerson proposed a jury instruction that would have excluded information disclosed or used after August 17, 2013, from its liability for breach of contract, which Emerson argued was the date of the contract’s expiration. The district court agreed that the NDA’s confidentiality obligations did not expire under paragraph 12 of the NDA. The jury found that Emerson breached the NDA and willfully and maliciously misappropriated BladeRoom’s trade secrets and awarded $10 million in lost profits and $20 million in unjust enrichment. The district court later awarded BladeRoom $30 million in punitive damages.The Ninth Circuit reversed. Paragraph 12’s natural meaning unambiguously terminated the NDA and its confidentiality obligations two years after it was signed. The court treated the district court’s error as an error of jury instruction and addressed issues for consideration on the awards of damages and prejudgment interest should they be determined after a new trial. Under California law, a party cannot collect punitive damages for breach of contract awards. On remand, the district court must take several steps to allocate damages and should consider adopting a more detailed special verdict form. View "BladeRoom Group Ltd. v. Emerson Electric Co." on Justia Law

California Senate Bill 826 requires all corporations headquartered in California to have a minimum number of females on their boards of directors. Corporations that do not comply with SB 826 may be subject to monetary penalties. The shareholders of OSI, a corporation covered by SB 826, elect members of the board of directors. One shareholder of OSI challenged the constitutionality of SB 826 on the ground that it requires shareholders to discriminate on the basis of sex when exercising their voting rights, in violation of the Fourteenth Amendment.The Ninth Circuit reversed the dismissal of the suit for lack of standing. The plaintiff plausibly alleged that SB 826 requires or encourages him to discriminate based on sex and, therefore, adequately alleged an injury-in-fact, the only Article III standing element at issue. Plaintiff’s alleged injury was also distinct from any injury to the corporation, so he could bring his own Fourteenth Amendment challenge and had prudential standing to challenge SB 826. The injury was ongoing and neither speculative nor hypothetical, and the district court could grant meaningful relief. The case was therefore ripe and not moot. View "Meland v. Weber" on Justia Law

After Uber’s founding in 2009, its valuation soared, with some investors assigning a valuation as high as $68 billion by mid-2016. Between June 2014 and May 2016, Kalanick, Uber’s founder, and Uber completed four preferred stock offerings, raising more than $10 billion in additional capital through limited partnerships and other entities. Irving Firemen’s Relief & Retirement Fund acquired Uber securities on February 16, 2016. In 2017, several alleged corporate scandals surfaced. By early 2018, investors estimated a nearly 30% decline in Uber’s valuation. Irving filed a putative class action against Uber and Kalanick alleging securities fraud under California Corporations Code sections 25400(d) and 25500. The Ninth Circuit affirmed the dismissal of the complaint, upholding the use of the federal standard for loss causation rather than the “less-rigid state law standard.” Irving did not state a claim because it did not adequately allege that Uber and Kalanick’s alleged fraudulent misstatements and omissions caused its alleged losses. Even assuming actionable misstatements by Uber and Kalanick and that news articles, a lawsuit, and government investigations revealed the truth to the market, Irving did not adequately and with particularity allege that these revelations caused the resulting drop in Uber’s valuation. View "Irving Firemen’s Relief & Retirement Fund v. Uber Technologies, Inc." on Justia Law