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

Articles Posted in Contracts
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Stafford used his third-party insurance coverage to purchase prescription drugs from Rite Aid’s pharmacies. Rite Aid submits a claim for a prescription drug to an insurance company through a “pharmacy benefits manager” (PBM). The claim form that Rite Aid submits includes the “usual and customary” price of the relevant prescription drug.Stafford brought a class action, alleging that Rite Aid fraudulently inflated the reported prices of prescription drugs, which resulted in class members paying Rite Aid a higher co-payment for the drugs than they would have paid if Rite Aid had reported the correct price. After litigating several motions to dismiss, Rite Aid moved to compel arbitration. Although Rite Aid and Stafford had no contract between them containing an arbitration clause, Rite Aid did have such contracts with the PBMs who coordinated insurance reimbursements and co-payment calculations.The Ninth Circuit affirmed the denial of the motion to compel arbitration. Under California law, Stafford’s claims did not depend on Rite Aid’s contractual obligations to the PBMs. Consequently, equitable estoppel did not apply to bind Stafford to the arbitration agreements in those contracts. View "Stafford v. Rite Aid Corp." on Justia Law

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A defendant is not required to file a new answer reasserting its affirmative defenses when the claim in the amended complaint related to those affirmative defenses remains the same. After ES entered into a contract with KST to provide services to NASA, KST filed suit against ES after ES's nonpayment of invoices. The district court granted summary judgment sua sponte to KST on its breach of contract claim.Applying de novo review, the Ninth Circuit held that, by not giving ES notice and the opportunity to assert its affirmative defenses, the district court erred in granting summary judgment sua sponte. The panel also held that ES was not required to respond and reassert its affirmative defenses to KST's Second Amended Complaint because ES had already asserted those affirmative defenses in response to the same breach of contract claim in the First Amended Complaint. Therefore, the panel reversed the district court's grant of summary judgment and entry of judgment for KST and remanded with instructions for the district court to allow ES to show why KST is not entitled to judgment as a matter of law on KST's breach of contract claim. View "KST Data, Inc. v. DXC Technology Co." on Justia Law

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The Ninth Circuit certified to the New York Court of Appeals the following questions: 1) Whether a litigation financing agreement may qualify as a “loan” or a “cover for usury” where the obligation of repayment arises not only upon and from the client’s recovery of proceeds from such litigation but also upon and from the attorney’s fees the client’s lawyer may recover in unrelated litigation? 2) If so, what are the appropriate consequences, if any, for the obligor to the party who financed the litigation, under agreements that are so qualified? View "Fast Trak Investment Co., LLC v. Sax" on Justia Law

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After the City agreed to have OBOT develop a commercial terminal at an Army base near the bay. The City moved to block coal from being transported through the terminal amid a public backlash. The district court concluded that the City breached its contract with OBOT.Because this is a breach of contract dispute, the Ninth Circuit must defer to the district court's factual findings, rather than administrative law review principles. The panel held that the district court did not clearly err in finding that the City breached the contract, because the City lacked substantial evidence of a substantial danger to health or safety when it enacted its resolution barring coal. Furthermore, the district court did not abuse its discretion in denying intervention of right. Therefore, the panel affirmed the district court's judgment. View "Oakland Bulk & Oversized Terminal, LLC v. City of Oakland" on Justia Law

Posted in: Contracts
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The Ninth Circuit reversed the district court's order compelling arbitration of a labor dispute between a waste management company, NASA Services, and the union. The company and union signed a Labor Peace Agreement containing an arbitration clause, and the agreement's terms were expressly conditioned upon the City entering into an exclusive franchise agreement with NASA.The panel held that the agreement clearly and unambiguously contains a condition precedent to formation that is both ascertainable and lawful. Therefore, NASA and the union were parties to a proposed agreement that would become operative, effective, and enforceable if and only if the condition precedent therein was satisfied. Consequently, the condition failed and the district court may not compel arbitration. View "International Brotherhood of Teamsters, Local 396 v. NASA Services, Inc." on Justia Law

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Plaintiff filed suit against 3D Systems for breach of contract and breach of the implied covenant of good faith and fair dealing, among other claims. Plaintiff's claims arose out of a purchase and sale agreement (PSA) documenting 3D Systems' acquisition of 3D printing websites from plaintiff. 3D Systems counterclaimed that plaintiff breached a covenant not to compete (CNTC) contained in the PSA.The Ninth Circuit affirmed the district court's evidentiary rulings regarding the exclusion of a prior arbitration award. The panel held that the district court did not abuse its discretion by excluding evidence of whether 3D Systems promised to invest substantial resources in the Domains. The panel also held that the district court exercised equitable jurisdiction to award 3D Systems restitution in the form of monetary relief. However, the district court erred in concluding that 3D Systems had a right to an equitable accounting and by relying solely on the text of the parties' contract to grant equitable relief. Accordingly, the court affirmed in part, reversed in part, and vacated in part. View "Barranco v. 3D Systems Corp." on Justia Law

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This appeal stemmed from the parties' longstanding dispute over the literary works of John Steinbeck. In this case, a federal jury in Los Angeles unanimously awarded plaintiff, as executrix of Elaine's estate (Elaine was the widow of Steinbeck), compensatory damages for slander of title, breach of contract, and tortious interference with economic advantage, and punitive damages against defendants.Determining that it had jurisdiction, the Ninth Circuit affirmed the orders granting summary judgment and striking defendants' defenses to tortious interference on grounds of collateral estoppel. Furthermore, the panel explained that it follows that the district court's decisions to exclude evidence related to defendants' different understanding of the agreement at issue or the validity of the prior court decisions were not abuses of discretion. The panel affirmed the compensatory damages award, holding that the record contained substantial evidence to support the awards on each cause of action independently. Furthermore, the compensatory damages were not speculative. The panel held that there was more than ample evidence of defendants' malice in the record to support the jury's verdict, thus triggering entitlement to punitive damages. However, the panel vacated and remanded with instructions to dismiss the punitive damages claims against Gail, Steinbeck's daughter-in-law, based on lack of meaningful evidence of Gail's financial condition and her ability to pay. View "Kaffaga v. The Estate of Thomas Steinbeck" on Justia Law

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The Ninth Circuit reversed the district court's dismissal of a diversity action based on a forum selection clause in the parties' Asset Purchase Agreement. The panel applied its decision in Yei A. Sun v. Advanced China Healthcare, Inc., 901 F.3d 1081 (9th Cir. 2018), which was decided after the district court ruled in this case, and held that the forum-selection clause here was unenforceable because it contravened the strong public policy declared by Idaho Code 29-110(1). Therefore, the panel remanded so the district court could apply a traditional forum non conveniens balancing analysis. View "Gemini Technologies, Inc. v. Smith & Wesson Corp." on Justia Law

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The Ninth Circuit certified the following questions to the California Supreme Court: Does section 16600 of the California Business and Professions Code void a contract by which a business is restrained from engaging in a lawful trade or business with another business? Is a plaintiff required to plead an independently wrongful act in order to state a claim for intentional interference with a contract that can be terminated by a party at any time, or does that requirement apply only to at-will employment contracts? View "Ixchel Pharma, LLC v. Biogen, Inc." on Justia Law

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After Hamas fired rockets from Gaza into Israel, Universal moved the production of their televisions series out of Jerusalem at significant expense. Universal filed an insurance claim for coverage of those costs under a television production insurance policy and the insurer, Atlantic, denied coverage based on the policy's war exclusions.The Ninth Circuit reversed the district court's grant of summary judgment for Atlantic in part and held that Atlantic breached its contract when it denied coverage by defining Hamas' conduct as "war" or "warlike action by a military force." Because the district court did not address the third war exclusion regarding whether Hamas' actions constituted "insurrection, rebellion, or revolution," the panel remanded for the district court to address that question in the first instance. Consequently, the panel vacated the district court's grant of summary judgment on Universal's bad faith claim because it turned on the district court's erroneous analysis of the first two war exclusions. The panel remanded for further proceedings. View "Universal Cable Productions, LLC v. Atlantic Specialty Insurance Co." on Justia Law