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

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

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

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

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

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

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

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

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

Movant-Appellee Nabors Drilling USA, L.P. filed for reorganization under Chapter 11 of the Bankruptcy Code. That filing triggered the automatic stay under 11 U.S.C. 362(a)(1), which generally applied to protect a debtor after it has filed for bankruptcy protection. The question presented in this case was whether that stay applied to a lawsuit filed by appellant-plaintiff Jeremy Porter, who has asserted a claim under California’s Private Attorney General Act of 2004 (“PAGA”). Porter contended the exception established in 11 U.S.C. 362(b)(4) applied to exempt his PAGA claim from the automatic stay. The Ninth Circuit concluded that the exception does not apply to a claim brought by a private party under PAGA, and therefore granted Nabors’s motion to recognize the automatic stay. View "Porter v. Nabors Drilling USA, L.P." on Justia Law

The SBA guaranteed a loan between a private bank and Michael Bensal's company, BCI. The private bank filed suit against BCI as the borrower and Bensal as a personal guarantor after BCI defaulted on the loan. The private bank recovered a default judgment and assigned that judgment to the SBA. Bensal later received an inheritance from his father's trust that he did not accept and, instead, disclaimed. Bensal's disclaimer of the inheritance legally passed his trust share to his two children and prevented creditors from accessing his trust share under California law. The SBA filed suit seeking to satisfy the default judgment. The court held that the Fair Debt Collection Practices Act (FDCPA), 28 U.S.C. 3301-3308, displaces California's disclaimer law. In this case, the court concluded that Bensal's disclaimer constitutes a transfer of property under the FDCPA, and California disclaimer law did not operate to prevent the SBA from reaching Bensal's trust share. The court also concluded that the portion of the default judgment based on the second loan, which was guaranteed by the SBA, was a debt within the meaning of the FDCPA. Accordingly, the court affirmed the judgment. View "SBA v. Bensal" on Justia Law