Justia Corporate Compliance Opinion Summaries

The New Jersey Staffing Alliance, the American Staffing Association, and the New Jersey Business and Industry Association sought to enjoin a New Jersey law designed to protect temporary workers. The law, known as the Temporary Workers’ Bill of Rights, mandates recordkeeping, disclosure requirements, and state certification procedures for staffing firms. It also imposes joint and several liability on clients hiring temporary workers and requires staffing firms to pay temporary workers wages equivalent to those of permanent employees performing similar work.The United States District Court for the District of New Jersey denied the preliminary injunction, concluding that the Staffing Associations were unlikely to succeed on the merits of their claims. The court found that the law did not discriminate against out-of-state businesses, as it imposed the same burdens on both in-state and out-of-state firms. The court also rejected the void-for-vagueness claim, reasoning that the law provided sufficient guidance on its requirements. Additionally, the court determined that the law was a reasonable exercise of New Jersey’s police power, as it was rationally related to the legitimate state interest of protecting temporary workers.The United States Court of Appeals for the Third Circuit affirmed the District Court’s decision. The Third Circuit agreed that the Staffing Associations failed to show a likelihood of success on their claims. The court held that the law did not violate the dormant Commerce Clause, as it did not favor in-state businesses over out-of-state competitors. The court also found that the law was not unconstitutionally vague, as it provided adequate notice of its requirements. Finally, the court upheld the law as a permissible exercise of state police power, as it was rationally related to the goal of protecting temporary workers. View "New Jersey Staffing Alliance v. Fais" on Justia Law

In 2006, David and Jill Landrum, along with Michael and Marna Sharpe, purchased land in Madison County to develop a mixed-use project called the Town of Livingston. The project stalled due to the 2008 financial crisis and legal issues. In 2010, Jill and Marna formed Livingston Holdings, LLC, which owned the development properties. Marna contributed more financially than Jill, leading to a disparity in ownership interests. In 2014, Marna sold her interest to B&S Mississippi Holdings, LLC, managed by Michael Bollenbacher. Jill stopped making her required monthly contributions in December 2018.The Madison County Chancery Court disqualified Jill as a derivative plaintiff, realigned Livingston Holdings as a defendant, and dismissed several claims. The court found that Jill did not fairly and adequately represent the interests of the company due to personal interests and economic antagonisms. The court also granted summary judgment in favor of several defendants and denied the Landrums' remaining claims after a bench trial.The Supreme Court of Mississippi reviewed the case and affirmed the lower court's decision to disqualify Jill as a derivative plaintiff and exclude the Landrums' expert witness. The court found that Jill's personal interests and actions, such as failing to make required contributions and attempting to gain control of the company, justified her disqualification. The court also affirmed the dismissal of claims for negligent omission, misstatement of material facts, civil conspiracy, fraud, and fraudulent concealment due to the Landrums' failure to cite legal authority.However, the Supreme Court reversed and remanded the case on the issues of remedies and attorneys' fees under the Second Memorandum of Understanding (MOU) and the alleged breach of fiduciary duty between B&S and Jill. The court found that the chancellor erred in interpreting the Second MOU as providing an exclusive remedy and remanded for further proceedings to determine if Livingston is entitled to additional remedies and attorneys' fees. The court also remanded for factual findings on whether B&S breached its fiduciary duty to Jill regarding property distribution and tax loss allocation. View "Landrum v. Livingston Holdings, LLC" on Justia Law

A group of AIM ImmunoTech, Inc. stockholders believed the board was mismanaging the company and initiated a campaign to elect new directors. This effort included two felons convicted of financial crimes. The board rejected two nomination attempts under its bylaws, leading to a lawsuit. The Court of Chancery denied the insurgents' request for a preliminary injunction, citing factual disputes. The insurgents, led by Ted D. Kellner, made a third attempt to nominate directors. The board amended its bylaws to include new advance notice provisions and rejected Kellner's nominations for non-compliance. Kellner filed suit.The Court of Chancery invalidated four of the six main advance notice bylaws and reinstated a 2016 bylaw. The court upheld the board's rejection of Kellner's nominations for failing to comply with the remaining bylaws, including the reinstated 2016 provision. Kellner argued that the court improperly used the 2016 bylaw and that the amended bylaws were preclusive and adopted for an improper purpose. The defendants contended that the court erred in invalidating the bylaws and that they withstood enhanced scrutiny.The Delaware Supreme Court reviewed the case. It found that the AIM board identified a legitimate threat to its information-gathering function but acted inequitably by adopting unreasonable bylaws to thwart Kellner's proxy contest. The court held that the board's primary purpose was to interfere with Kellner's nominations and maintain control. Consequently, the court declared the amended bylaws unenforceable. The judgment of the Court of Chancery was affirmed in part and reversed in part, closing the case. View "Kellner v. AIM ImmunoTech Inc." on Justia Law

This case involves a dispute between Motorola Solutions, Inc. and Hytera Communications Corporation Ltd., two global competitors in the market for two-way radio systems. After struggling to develop its own competing products, Hytera poached three engineers from Motorola, who, before leaving Motorola, downloaded thousands of documents and files containing Motorola's trade secrets and copyrighted source code. Using this stolen material, Hytera launched a line of radios that were functionally indistinguishable from Motorola's radios. In 2017, Motorola sued Hytera for copyright infringement and trade secret misappropriation.The jury found that Hytera had violated both the Defend Trade Secrets Act of 2016 (DTSA) and the Copyright Act, awarding compensatory and punitive damages totaling $764.6 million. The district court later reduced the award to $543.7 million and denied Motorola’s request for a permanent injunction. Both parties appealed.The United States Court of Appeals for the Seventh Circuit held that the district court must recalculate copyright damages, which will need to be reduced substantially from the original award of $136.3 million. The court affirmed the district court’s award of $135.8 million in compensatory damages and $271.6 million in punitive damages under the DTSA. The court also found that the district court erred in denying Motorola’s motion for reconsideration of the denial of permanent injunctive relief. The case was remanded for the district court to reconsider the issue of permanent injunctive relief. View "Motorola Solutions, Inc. v. Hytera Communications Corporation Ltd." on Justia Law

In 2020 and 2021, two plaintiffs, identified as Jane Doe WHBE 3 and Jane Doe LSA 35, filed separate lawsuits against Uber Technologies, Inc. and its subsidiary, Raiser, LLC, alleging they were sexually assaulted by their Uber drivers in Hawaii and Texas, respectively. These cases, along with hundreds of others, were coordinated before a single judge of the San Francisco Superior Court. Uber moved to stay the cases on the ground of forum non conveniens, arguing that the cases should be heard in the jurisdictions where the alleged incidents occurred. The trial court granted Uber's motions, staying the cases and providing for tolling of the statute of limitations.The trial court's decision was based on a comprehensive 21-page order that considered whether the alternate forums (Hawaii and Texas) were suitable for trial, the private interests of the litigants, and the public interest in retaining the action for trial in California. The court concluded that the alternate forums were suitable, and that the public interest factors weighed heavily in favor of transfer. The court also found that the cases should be viewed as individual sexual assault/misconduct cases in which the plaintiffs claimed Uber was vicariously liable due to its deficient safety practices, rather than as corporate misconduct cases.The plaintiffs appealed both the trial court’s forum non conveniens order and the agreed-upon order applying it to the non-California cases. They argued that the trial court erred in failing to ensure that a suitable alternative forum existed for all the affected cases, failing to require Uber to demonstrate that California was a “seriously inconvenient” forum, and failing to “accord the coordination order proper deference.” The Court of Appeal rejected all of these arguments and affirmed the trial court's decision. View "Doe v. Uber Technologies, Inc." on Justia Law

The case involves Santa Fe Natural Tobacco Company (Santa Fe), a New Mexico corporation that sells branded tobacco products to wholesalers, who then sell to retailers in Oregon. The primary issue is whether a federal statutory limit on a state’s ability to impose income tax on out-of-state corporations, 15 USC section 381, precludes Oregon from taxing Santa Fe because its business in Oregon is limited. The Oregon Department of Revenue concluded that Santa Fe’s various actions in Oregon had taken it outside the safe harbor of Section 381, thus rendering Santa Fe liable to pay Oregon tax. The Tax Court agreed with the department that Santa Fe’s actions had made it subject to taxation in this state.The Tax Court agreed with the Oregon Department of Revenue that Santa Fe Natural Tobacco Company's actions in Oregon had made it subject to taxation in the state. The court found that Santa Fe's representatives had exceeded the scope of "solicitation of orders" when they obtained "prebook orders" from Oregon retailers. These orders, bolstered by incentive agreements with wholesalers, facilitated sales on behalf of wholesalers, who were effectively committed to accept those sales. This activity went beyond the protections of Section 381(a)(2), which limits a state's ability to impose income tax on out-of-state corporations whose in-state activities are limited to the solicitation of orders.The Supreme Court of the State of Oregon affirmed the judgment of the Tax Court. The court concluded that Santa Fe's pursuit of prebook orders in Oregon, invoking incentive agreement contractual provisions used by Santa Fe to ensure that wholesalers treated each one of those orders favorably, exceeded the scope of permitted "solicitation of orders" under Section 381(a)(2). The court further agreed that Santa Fe's activities were not de minimis. Accordingly, Santa Fe was subject to Oregon income tax. View "Santa Fe Natural Tobacco Co. v. Dept. of Rev." on Justia Law

Insulet Corp. and EOFlow are medical device manufacturers that produce insulin pump patches. Insulet began developing its OmniPod product in the early 2000s, and EOFlow started developing its EOPatch product after its founding in 2011. Around the same time, four former Insulet employees joined EOFlow. In 2023, reports surfaced that Medtronic had started a process to acquire EOFlow. Soon after, Insulet sued EOFlow for violations of the Defend Trade Secrets Act (DTSA), seeking a temporary restraining order and a preliminary injunction to enjoin all technical communications between EOFlow and Medtronic in view of its trade secrets claims.The U.S. District Court for the District of Massachusetts temporarily restrained EOFlow from disclosing products or manufacturing technical information related to the EOPatch or OmniPod products. The court then granted Insulet’s request for a preliminary injunction, finding strong evidence that Insulet is likely to succeed on the merits of its trade secrets claim, strong evidence of misappropriation, and that irreparable harm to Insulet crystallized when EOFlow announced an intended acquisition by Medtronic. The injunction enjoined EOFlow from manufacturing, marketing, or selling any product that was designed, developed, or manufactured, in whole or in part, using or relying on alleged trade secrets of Insulet.The United States Court of Appeals for the Federal Circuit reversed the district court’s order. The court found that the district court had failed to address the statute of limitations, lacked a tailored analysis as to what specific information actually constituted a trade secret, and found it hard to tell what subset of that information was likely to have been misappropriated by EOFlow. The court also found that the district court had failed to meaningfully engage with the public interest prong. The court concluded that Insulet had not shown a likelihood of success on the merits and other factors for a preliminary injunction. The case was remanded for further proceedings consistent with the opinion. View "INSULET CORP. v. EOFLOW, CO. LTD. " on Justia Law

The case involves Dr. Peter Bolos, who was convicted of mail fraud, conspiracy to commit healthcare fraud, and felony misbranding as part of a complex scheme. Bolos purchased an interest in Florida-based pharmacy Synergy Pharmacy Services in 2013 and became the managing partner. Synergy signed an agreement with HealthRight, a telemarketing firm, to generate business. HealthRight used social media advertisements and large phone banks to generate potential clients for Synergy. The information collected from potential clients was forwarded to a licensed doctor in the patient’s home state for review. Most of these decisions were made without the doctor ever seeing or speaking to the patient. The doctors then sent the prescriptions to Synergy for filling.The District Court for the Eastern District of Tennessee convicted Bolos on all counts after a four-week trial. Bolos appealed, arguing that his actions were not unlawful and that he was being unfairly held criminally culpable for contractual violations and others’ misconduct.The United States Court of Appeals for the Sixth Circuit disagreed with Bolos and affirmed the lower court's decision. The court found that Bolos and Synergy leadership knew of the deficiencies in their business practices and either actively facilitated and furthered them or turned a blind eye, all in an effort to induce Pharmacy Benefit Managers (PBMs) to pay Synergy. The court also held that the federal healthcare-fraud statute requires the government to prove that Bolos knowingly devised a scheme or artifice to defraud a health care benefit program in connection with the delivery of or payment for health care benefits, items, or services. The court found ample evidence in the record to support the jury’s finding that Bolos conspired to create a scheme with the intent to defraud the PBMs of their money. View "United States v. Bolos" on Justia Law

The case involves a dispute over the validity of certain provisions in a governance agreement between BRP Group, Inc. and its founder. The founder sought to maintain control over the company while selling a significant portion of his equity stake. The agreement stipulated that as long as the founder and his affiliates owned at least 10% of the outstanding shares, the corporation had to obtain the founder's prior written approval before engaging in a list of actions. A stockholder plaintiff challenged three of these pre-approval requirements as invalid.The corporation argued that the plaintiff had waited too long to sue and had implicitly accepted the terms of the agreement by purchasing shares. However, the court rejected these arguments, stating that equitable defenses could not validate void acts. The corporation also claimed that a subsequent agreement, in which the founder agreed to consent to any action approved by an independent committee of directors, rendered the plaintiff's claims moot. The court disagreed, finding that the plaintiff's claims were not moot because the corporation had modified but not eliminated the challenged provisions.On the merits, the court found that the challenged provisions were invalid because they contravened sections of the Delaware General Corporation Law. The court granted the plaintiff's motion for judgment on the pleadings as to those provisions and denied the company's cross motion for judgment on the pleadings to a reciprocal degree. View "Wagner v. BRP Group, Inc." on Justia Law

The case involves Capital Advisors, LLC, and Danzig, Ltd., minority shareholders of Cam Group, Inc. (CAMG), who filed a shareholder derivative action against nine CAMG officers and directors. The defendants included Wei Heng Cai (Ricky) and Wei Xuan Luo (Tracy), who were the only ones to proceed to trial. The plaintiffs alleged that Ricky arranged for a $1.85 million unsecured loan at zero-percent interest to a company called Parko Ltd., and Tracy, as CFO, failed to stop the loan. The loan allegedly drained approximately 80% of the cash reserves for the consolidated CAM companies. Ricky later resigned from CAMG to focus on developing business opportunities for another company, National Agricultural Holdings Limited (NAHL), and his own company, Precursor Management Inc. (PMI).The district court granted a motion for judgment as a matter of law in favor of Ricky and Tracy, dismissing all causes of action. The court found that officers and directors of a parent company cannot be held liable for actions taken by a wholly owned subsidiary without piercing the corporate veil. The court also awarded Ricky and Tracy over $2 million in attorney fees and costs.The Supreme Court of Nevada affirmed in part, reversed in part, vacated in part, and remanded the case for further proceedings. The court held that officers and directors of a parent company who allow a wholly owned subsidiary to take action adverse to the parent can be held liable without use of the alter ego doctrine. The court also held that shareholders may file derivative suits against officers and directors of a parent company based on wrongful actions that occurred at a wholly owned subsidiary of a wholly owned subsidiary without asserting alter ego. The court concluded that the district court erred by finding that officers and directors of a parent company cannot be held liable for actions taken by a wholly owned subsidiary without piercing the corporate veil. The court also found that the plaintiffs presented sufficient evidence to defeat a motion for judgment as a matter of law as to some of their causes of action. View "CAPITAL ADVISORS, LLC VS. CAI" on Justia Law