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

Petitioner appealed from a decision of the United States tax court concluding that he owed $128,292 in income tax for the 2004 taxable year. Petitioner entered into an agreement with Optech Limited pursuant to which he transferred floating rate notes (FRNs) worth approximately $1 million to Optech in return for a nonrecourse loan of ninety percent of the FRNs' value. The agreement gave Optech the right to receive all dividends and interest on the FRNs and the right to sell the FRNs during the loan term without Petitioner's consent. Instead of holding the FRNs as collateral for the loan, Optech sold the FRNs and transferred ninety percent of the proceeds to Petitioner. Petitioner did not report that he had sold the FRNs in his 2004 federal income tax return. The Ninth Circuit Court of Appeals affirmed the decision of the tax court, holding that Petitioner's transaction with Optech constituted a sale for tax purposes despite its taking the form of a loan because the burdens and benefits of owning the FRNs were transferred to Optech. View "Sollberger v. Comm'r of Internal Revenue" on Justia Law

The Scotts Company, an Ohio LLC, brought a diversity action against Seeds, Inc., a Washington corporation, in federal district court. Thereafter, Millhorn Farmers, Maple Leaf Farms, Mica Creek, and Tim Freeburg (Growers) sued Seeds and Scotts in Washington state court. Maple Leaf Farms and Mica Creek were Washington corporations, Millhorn Farms was an Idaho corporation, and Tim Freeburg was a citizen of Idaho. Scotts subsequently filed an amended complaint in federal court adding the Growers as defendants and seeking declaratory relief. The district court subsequently realigned the Growers and plaintiffs and Seeds and Scotts as defendants and held, alternatively, that it would stay the federal proceedings in favor of the related state court proceedings under either the Brillhart doctrine or the Colorado River doctrine. Because the parties' realignment resulted in the absence of complete diversity of citizenship between defendant Seeds and newly-aligned plaintiffs-Growers, the district court dismissed the action for lack of subject matter jurisdiction. The Ninth Circuit Court of Appeals reversed, holding that the district court should not have declined to entertain the claim for declaratory relief under the Brillhart doctrine, and instead, the claims should have been evaluated under the Colorado River doctrine. Remanded. View "Scotts Co., LLC v. Seeds, Inc." on Justia Law

Plaintiff brought suit under the qui tam provisions of the False Claims Act (FCA) against Lockheed Martin Corporation, alleging that Lockheed defrauded the United States Air Force under a contract for the Range Standardization and Automation IIA program concerning software and hardware used to support space launch operations at Vandenberg Air Force Base and Cape Kennedy. Hooper filed his suit in the Maryland district court, which transferred the suit to the central district of California on forum non conveniens grounds. The district court granted summary judgment in favor of Lockheed on all grounds. The Ninth Circuit Court of Appeals (1) affirmed the district court's evidentiary rulings and conclusion that Hooper failed to establish his claims of fraudulent use of the software and defective testing procedures because there was no genuine issue of material fact as to whether Lockheed "knowingly" submitted a false claim; and (2) reversed the district court's dismissal of (i) Hooper's wrongful discharge claim as barred by California's two-year statute of limitations, holding that Maryland's three-year statute of limitations applied here, and (ii) Hooper's claim that Lockheed violated the FCA by knowingly underbidding the contract. View "Hooper v. Lockheed Martin Corp." on Justia Law

Pentonville Developers, Ltd. and Marblearch Trading, Ltd., two Cyprus oil brokerage companies, sued the Republic of Iraq for unilaterally terminating two contracts for the purchase and sale of Iraqi oil. The district court concluded it had subject matter jurisdiction notwithstanding Iraq's assertion of sovereign immunity under the Foreign Sovereign Immunities Act because the lawsuit fell within the "commercial exception" to that immunity. The Ninth Circuit Court of Appeals reversed, holding that because the lawsuit was not based upon commercial activity by Iraq in the United States, nor upon an act in connection with such commercial activity having a direct effect in the United States, the district court erred in denying Iraq's motion to dismiss for lack of subject matter jurisdiction. View "Terenkian v. Republic of Iraq " on Justia Law

R.J. Reynolds Tobacco Company (RJR) operated a customer rewards program, called Camel Cash, from 1991 to 1007. Customers could purchase Camel cigarettes, save Camel Cash certificates, enroll in the program, and ultimately redeem their certificates for merchandise featured in RJR catalogs. Plaintiffs alleged that, in reliance on RJR's actions, they purchased Camel cigarettes, enrolled in the program, and saved their certificates for future redemption. They alleged that in 2006 RJR abruptly ceased accepting certificates for redemption, making Plaintiffs' unredeemed certificates worthless. Plaintiffs brought this action for breach of contract, promissory estoppel, and violation of two California consumer protection laws. The district court dismissed the action for failure to state a claim. The Ninth Circuit Court of Appeals (1) affirmed dismissal of Plaintiffs' claims under the Unfair Competition Law and the Consumer Legal Remedies Act; and (2) reversed the dismissal of Plaintiffs' claims for promissory estoppel and breach of contract, holding that Plaintiffs adequately alleged these claims. View "Sateriale v. R.J. Reynolds Tobacco Co." on Justia Law

Plaintiff brought suit against an airline alleging a common law breach of contract under the implied covenant of god faith and fair dealing. The district court held that Plaintiff's claim was preempted by the Airline Deregulation Act (ADA) and dismissed the claim pursuant to Fed. R. Civ. P. 12(b)(6). The Ninth Circuit Court of Appeals reversed the district court after examining the purpose, history, and language of the ADA, along with Supreme Court and Ninth Circuit precedent, leading the Court to conclude that the ADA does not preempt a contract claim based on the doctrine of good faith and fair dealing. View "Ginsberg v. Northwest, Inc." on Justia Law

At issue before the Ninth Circuit Court of Appeals in this case was whether an adverse claim to a stake may be so lacking in substance that a neutral stakeholder cannot interplead in good faith. Interpleader is proper when a stakeholder has at least a good faith belief that there are conflicting colorable claims. Appellee in this case was an insurance company that sought to interplead disputed insurance proceeds. Seeking to interplead the insurance funds, Appellee filed a counterclaim against Appellant and a third party complaint against Appellant's former husband. The district court found that interpleader was appropriate. The Ninth Circuit affirmed, holding that Appellee interpleaded in good faith, and consequently, the district court's judgment in interpleader was proper. View "Michelman v. Lincoln Nat'l Life Ins. Co." on Justia Law

After Lender failed to respond to Plaintiff's correspondence regarding ownership of his loan, Lender foreclosed on Borrower's property. Plaintiff filed suit against all the actors involved (Defendants), alleging violations of the Truth in Lending Act (TILA) , seeking injunctive relief against foreclosure, and claiming breach of contract, failure to act in good faith, and wrongful foreclosure under Nevada law. The district court dismissed Plaintiff's Nevada law claims with prejudice. Plaintiff then filed an amended complaint claiming a breach of the covenant of good faith and fair dealing. The court dismissed the amended complaint without leave to amend. The Ninth Circuit Court of Appeals (1) affirmed the district court's dismissal of Plaintiff's TILA and breach of the covenant of good faith and fair dealing claims, as Lender was not legally required to respond to Plaintiff's correspondence in its capacity as loan servicer; and (2) vacated the district court's dismissal of Plaintiff's state law claims regarding the foreclosure of Plaintiff's property and remanded those remaining claims to the district court. View "Gale v. First Franklin Loan Servs." on Justia Law

Plaintiffs commenced an arbitration proceeding against Defendant pursuant to terms of a written agreement between the parties. Eber subsequently filed for Chapter 7 bankruptcy protection, and the arbitration was automatically stayed. Plaintiffs then filed a complaint for determination that debts are nondischargeable and for damages. Thereafter, Plaintiffs filed a motion for relief from automatic stay in the bankruptcy court proceeding and a motion to compel arbitration in the adversary proceeding. Both motions were denied. The bankruptcy court found that Plaintiffs' claims were discharged. The Ninth Circuit Court of Appeals affirmed, holding (1) the district court did not abuse its discretion in denying Plaintiffs' motion to compel arbitration because granting the motion would have conflicted with the underlying purposes of the Bankruptcy Code; and (2) the Court did not need address the denial of Plaintiffs' motion for relief from the automatic stay because the stay had already dissolved before the bankruptcy judge ruled on the motion. View "Ackerman v. Eber" on Justia Law

David Day, an ERISA plan beneficiary, elected to roll over his pension benefits into an individual retirement account (IRA) upon separation from his employer, AT&T. Exercising its discretion, the plan's claims administrator construed Day's lump sum rollover as the equivalent of his having "received" his pension benefits and, according to the terms of AT&T's Disability Income Benefit Plan, reduced Day's long-term disability (LTD) benefits by the amount of the rollover. The district court entered judgment in favor of the plan. The Ninth Circuit Court of Appeals affirmed, holding (1) the administrator reasonably interpreted the plan; (2) AT&T did not breach its fiduciary duties by failing to disclose the possibility that Petitioner's LTD benefits would be reduced by his receipt of pension benefits; and (3) the administrator's actions did not violate the Age Discrimination in Employment Act. View "Day v. AT&T Disability Income Plan" on Justia Law