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

Articles Posted in Contracts
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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

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The Ninth Circuit amended the opinion and concurrence filed on August 30, 2021, denied a petition for panel rehearing, and denied on behalf of the court a petition for rehearing en banc. The panel held that the district court erroneously interpreted a non-disclosure agreement (NDA) and reversed the district court's order granting a motion in limine as it related to the twelfth paragraph of the NDA; vacated the district court's judgment and post-verdict orders; and vacated the orders awarding attorneys' and expert witness fees.The panel concluded that a reasonable person in the parties' situation would have read the NDA and understood that the confidentiality obligations terminated after two years. The panel treated the district court’s error as an error of jury instruction, and held that the district court prejudiced Emerson when the jury made its breach of contract, misappropriation, and damage findings. The panel addressed a number of issues for consideration on the awards of damages and prejudgment interest should they be determined after a new trial. View "BladeRoom Group Ltd. v. Emerson Electric Co." on Justia Law

Posted in: Contracts
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Plaintiff filed suit under the Electronic Fund Transfer Act (EFTA) against JPMorgan Chase Bank, alleging that she was the victim of unauthorized electronic fund transfers from her checking account at Chase. Chase reimbursed plaintiff for some of those losses, but refused to repay $300,000 of the funds stolen from her account. The district court dismissed plaintiff's complaint at the pleading stage on the ground that her lengthy delay in reporting the unauthorized withdrawals to Chase barred her claims as a matter of law.The Ninth Circuit concluded that the district court misinterpreted the relevant provision of the EFTA and reversed the dismissal of plaintiff's EFTA claim. The panel concluded that, under 15 U.S.C. 1693g(a), a consumer may be held liable for unauthorized transfers occurring after the 60-day period only if the bank establishes that those transfers "would not have occurred but for the failure of the consumer" to timely report the earlier unauthorized transfer reflected on her bank statement. In this case, plaintiff met her pleading burden by alleging facts plausibly suggesting that even if she had reported an unauthorized transfer within the 60-day period, the subsequent unauthorized transfers for which she sought reimbursement would still have occurred. The panel affirmed the district court's dismissal of plaintiff's state law claims, concluding that plaintiff's claim for breach of contract failed because a Privacy Notice appended to her Deposit Account Agreement did not impose any substantive duties on Chase. Furthermore, plaintiff's claim for breach of the implied covenant of good faith and fair dealing failed because the Deposit Account Agreement expressly permitted Chase to close plaintiff’s accounts. View "Widjaja v. JPMorgan Chase Bank, N.A." on Justia Law

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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

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In 1993, the County and the Orange County Employee Retirement System (OCERS) entered into a Memorandum of Understanding (MOU), allowing the County to access surplus investment earnings controlled by OCERS and depositing a portion of the surplus into an account to pay for county retirees' health insurance. The county adopted the Retiree Medical Plan, funded by those investment earnings and mandatory employee deductions. The Plan explicitly provided that it did not create any vested rights. The labor unions then entered into MOUs, requiring the county to administer the Plan and that retirees receive a Medical Insurance Grant. In 1993-2007, retired employees received a monthly grant benefit to defray the cost of health insurance. In 2004, the county negotiated with its unions to restructure the underfunded program, reducing benefits for retirees.Plaintiffs filed suit. The Ninth Circuit affirmed summary judgment in favor of the county. The 1993 Plan explicitly provided that it did not create any vested right to benefits. The Plan was adopted by resolution and became law with respect to Grant Benefits, part of the MOUs. The MOUs expired on their own terms by a specific date. Absent express language providing that the Grant Benefits vested, the right to the benefits expired when the MOUs expired. The Plan was not unilaterally imposed on the unions and their employees without collective bargaining; the unions executed MOUs adopting the Plan. The court rejected an assertion that the Grant Benefit was deferred compensation and vested upon retirement, similar to pension benefits. View "Harris v. County of Orange" on Justia Law

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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

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Following the outbreak of COVID-19 in early 2020, Los Angeles imposed an eviction moratorium during a “Local Emergency Period” with the stated purposes of ensuring housing security and promoting public health during the pandemic. Related provisions delay applicable tenants’ rent payment obligations and prohibit landlords from charging late fees and interest. A trade association of Los Angeles landlords, sued, alleging violations of the Constitution’s Contracts Clause.The Ninth Circuit affirmed the denial of the plaintiff’s request for preliminary injunctive relief, noting that other courts, including the Supreme Court, have recently considered various constitutional and statutory challenges to COVID-19 eviction moratoria. Under modern Contracts Clause doctrine, even if the eviction moratorium was a substantial impairment of contractual relations, the moratorium’s provisions were likely “reasonable” and “appropriate” given the circumstances of the COVID-19 pandemic. The city fairly tied the moratorium to its stated goals. The court noted that contemporary Supreme Court case law has severely limited the Contracts Clause’s potency. View "Apartment Association of Los Angeles County, Inc. v. City of Los Angeles." on Justia Law

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In 2010, AMN Healthcare contracted with Aya Healthcare to provide travel nursing services to healthcare facilities. The contract prohibited Aya from soliciting AMN’s employees. In 2015, Aya began actively soliciting AMN’s travel nurse recruiters. AMN temporarily terminated Aya’s access to AMN’s platform. The parties ended their relationship. Aya filed suit under the Sherman Antitrust Act, 15 U.S.C. 1, 2, including a “per se” claim and a quick-look/rule-of-reason claim and claims for attempted monopolization and monopolization, and state law tortious interference and other claims. Aya claimed that it suffered exclusionary damages as a result of AMN’s non-solicitation covenant and retaliatory damages as a result of AMN’s termination of the relationship.The Ninth Circuit affirmed summary judgment in favor of AMN. The non-solicitation agreement is an ancillary, rather than a naked restraint, because it is reasonably necessary to the parties’ procompetitive collaboration; it is not per se unlawful but is subject to the rule-of-reason standard. Aya failed to satisfy its initial burden under that standard because it did not establish a triable issue of fact with respect to whether AMN’s nonsolicitation agreement has a substantial anticompetitive effect that harms consumers in the relevant market. Aya’s claim for retaliatory damages failed because it did not present any evidence of a cartel or a concerted action in the termination of the agreement. View "Aya Healthcare Services, Inc. v. AMN Healthcare, Inc." on Justia Law

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The Mundens own ranching property in Bannock County, Idaho. They purchased 768 acres in 2012 and 660 acres in 2014 and purchased title insurance for the first purchase through Stewart and for the second purchase through Chicago Title. The property contains a gravel road. A 2019 ordinance amended a 2006 ordinance that closed specified snowmobile trails, including that gravel road, to motor vehicles except snowmobiles and snow-trail-grooming equipment during winter months. The 2019 ordinance deleted the December-to-April closure, giving the County Public Works Director the discretion to determine when to close specified snowmobile trails, and increased the maximum fine for violations. The Mundens sought an injunction. The county asserted that the road had been listed as a public road on county maps since 1963 and that the Mundens purchased their property expressly subject to easements and rights of way apparent or of record.The Mundens filed a federal complaint, seeking declaratory relief, indemnification, and damages. The district court granted the insurance companies summary judgment. The Ninth Circuit reversed as to Chicago Title, finding that the county road map is a “public record” within the meaning of its policy so that coverage applied. Stewart has no duty to indemnify or defend; its policy disclaims coverage for damages “aris[ing] by reason of . . . [r]ight, title and interest of the public in and to those portions of the above-described premises falling within the bounds of roads or highways.” View "Munden v. Stewart Title Guaranty Co." on Justia Law

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Lim, formerly a TForce California delivery driver, alleged that TForce employs delivery drivers and misclassifies them as independent contractors in violation of California law. The drivers sign an Independent Contractor Operating Agreement, providing that the agreement is governed by the laws of Texas, that “any legal proceedings … shall be filed and/or maintained in Dallas, Texas,” that all disputes “arising under, out of, or relating to this Agreement … including any claims or disputes arising under any state or federal laws, statutes or regulations, … including the arbitrability of disputes … shall be fully resolved by arbitration," that any arbitration will be governed by the Commercial Arbitration Rules of the American Arbitration Association, that class actions are prohibited, and that the parties shall share the costs except in the case of substantial financial hardship--the prevailing party is entitled to recover its attorney’s fees and costs.The Ninth Circuit affirmed the denial of a motion to compel arbitration, referring to the Agreement as an adhesion contract. Based on the cost-splitting, fee-shifting, and Texas venue provisions, the district court correctly concluded the delegation clause, which requires the arbitrator to determine the gateway issue of arbitrability, the agreement was substantively unconscionable as to Lim. View "Lim v. TForce Logistics, LLC" on Justia Law