Justia Corporate Compliance Opinion Summaries

In this case, the United States Court of Appeals for the Ninth Circuit affirmed the district court's decision to vacate the plaintiffs' quasi in rem attachment of a vessel owned by Bergshav Aframax Ltd., a defendant in an admiralty action seeking fulfillment of arbitration awards. The arbitration awards were owed to the plaintiffs by B-Gas Ltd., renamed Bepalo, a different corporate entity. The plaintiffs tried to hold Aframax liable for the arbitration awards by arguing that Aframax and Bepalo were alter egos, essentially the same entity.However, the court found that the plaintiffs failed to show a reasonable probability of success on their veil piercing theory, which would be required to establish that Aframax and Bepalo were alter egos. The court found that the plaintiffs did not demonstrate that Bepalo was dominated and controlled by the Bergshav Group, the parent corporate group of Aframax. The court noted that the minority shareholders of Bepalo exercised independent judgment in approving the relevant transactions, countering the claim that the Bergshav Group had total domination of Bepalo. Therefore, the court concluded that the plaintiffs had not met their burden of demonstrating a reasonable probability of success on their veil-piercing claim, leading to the affirmation of the district court's decision to vacate the attachment of the vessel. View "SIKOUSIS LEGACY, INC. V. B-GAS LIMITED" on Justia Law

While inspecting a commercial fishing vessel in the Gulf of Mexico, a federal agent found that the catch contained undersized red grouper, in violation of conservation regulations, and instructed the captain, Yates, to keep the undersized fish segregated from the rest of the catch until the ship returned to port. After the officer departed, Yates told the crew to throw the undersized fish overboard. Yates was convicted of destroying, concealing, and covering up undersized fish to impede a federal investigation under 18 U. S. C. 519, which applies when a person “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence” a federal investigation. Yates argued that section 1519 originated in the Sarbanes-Oxley Act, to protect investors, and that its reference to “tangible object” includes objects used to store information, such as computer hard drives. The Eleventh Circuit affirmed. The Supreme Court reversed, holding that “tangible object” refers to one used to record or preserve information. Section 1519’s position within Title 18, Chapter 73 and its title, “Destruction, alteration, or falsification of records in Federal investigations and bankruptcy,” signal that it was not intended to serve as a cross-the-board ban on the destruction of physical evidence. The words immediately surrounding “tangible object,” “falsifies, or makes a false entry in any record [or] document,” also indicate the contextual meaning of that term. Even if traditional tools of statutory construction leave any doubt about the meaning of the term, it would be appropriate to invoke the rule of lenity. View "Yates v. United States" on Justia Law