Justia U.S. 5th Circuit Court of Appeals Opinion SummariesArticles Posted in Business Law
Academy of Allergy & Asthma in Primary Care v. Quest Diagnostics, Inc.
AAAPC and UAS filed suit against Quest for conspiring to force them out of the market of providing allergy and asthma testing. The district court dismissed plaintiffs' claims under Federal Rule of Civil Procedure 12(b)(6).The Fifth Circuit concluded that plaintiffs' claims alleging that Quest violated sections 1 and 2 of the Sherman Act and the Texas antitrust law are not time-barred. The court explained that plaintiffs' allegations about Phadia and Quest's continued meetings with providers and payors do not restart the statute of limitations; plaintiffs' allegations regarding the June 2015 policy change does not suffice to restart the statute of limitations; but plaintiffs have sufficiently alleged that Phadia and Quest were involved in the alleged conspiracy and that the allegation regarding Phadia's May 2014 email reset the statute of limitations. Therefore, the court reversed the district court's dismissal as to the state and federal antitrust claims. The court also reversed the dismissal of plaintiffs' misappropriation of trade secrets claim, concluding that plaintiffs have sufficiently pled they could not have discovered their misappropriation injury using reasonable diligence. Moreover, nothing in the complaint forecloses their potential rejoinder to the statute of limitations defense. The court affirmed the district court's dismissal of the civil conspiracy and tortious interference claims. Finally, the court affirmed the district court's denial of plaintiffs' request for leave to amend their complaint. View "Academy of Allergy & Asthma in Primary Care v. Quest Diagnostics, Inc." on Justia Law
WickFire, LLC v. Woodruff
WickFire filed suit against Media, alleging a violation of section 43(a) of the Lanham Act, tortious interference with existing contracts, tortious interference with prospective economic relationships, and civil conspiracy. In this appeal, Media challenged the jury verdict in favor of WickFire.The Fifth Circuit concluded that the district court had jurisdiction over WickFire's Lanham Act claim and thus pendent jurisdiction over each of WickFire's state law tort claims. On the merits, the court concluded that any argument that WickFire offered insufficient evidence regarding the section 43(a) claim is moot where the jury found that there were no damages and thus WickFire cannot be a prevailing party under the Act. The court also concluded that WickFire's tortious interference with contractual relations claim failed as a matter of law. However, because the evidence of damages is insufficient as a matter of law, the court reversed the judgment as to the tortious interference with prospective business relations claim. Because each of WickFire's underlying claims failed, the court reversed the judgment as to the civil conspiracy claim. Finally, the court concluded that TriMax is not entitled to judgment as a matter of law on WickFire's justification defense. Accordingly, the court denied TriMax's motion to dismiss; reversed as to WickFire's tortious interference claims and its civil conspiracy claim; and affirmed in all other respects. The court remanded for further proceedings. View "WickFire, LLC v. Woodruff" on Justia Law
Belliveau v. Barco, Inc.
Plaintiff, a prolific inventor in the field of lighting technology, licensed his intellectual property exclusively to High End Systems in 2007. High End became a wholly owned subsidiary of Barco several years later. After Barco decided to sell High End to a third party in 2017, plaintiff filed suit alleging claims against Barco including breach of contract, breach of fiduciary duty, and fraud by nondisclosure arising out of the events leading up to the sale of High End.The Fifth Circuit held that the district court properly granted summary judgment on plaintiff's claim to pierce the corporate veil. In this case, to hold Barco liable for High End's alleged breach of contract, plaintiff must show that Barco (the then-shareholder) used High End (the corporation) to (1) "perpetrate an actual fraud" (2) primarily for Barco's "direct personal benefit." The court concluded that the evidence, when viewed as a whole, does not raise a fact issue regarding Barco's dishonest purpose or intent to deceive plaintiff in entering into the Barco Sublicense. The court explained that piercing the corporate veil is not a cumulative remedy for creditors of corporate or other legal entities in Texas; that theory does not make owners of such entities codefendants for every breach of contract case. Rather, it is a remedy to be used when the actions of the entity's owner amounting to "actual fraud" have rendered the entity unable to pay its debts. The court held that the district court properly granted summary judgment on plaintiff's claim for breach of fiduciary duty and fraud by nondisclosure. The court agreed with the district court that there was no evidence of a fiduciary relationship between plaintiff and Barco. View "Belliveau v. Barco, Inc." on Justia Law
Shah v. VHS San Antonio Partners, LLC
Shah, a board-certified pediatric anesthesiology specialist, joined STAR, which became the exclusive provider of anesthesia services at several San Antonio-area acute-care hospitals, including NCB. BHS guaranteed STAR $500,000 in collections for pediatric anesthesia services provided at NCB. In 2012, STAR became the exclusive provider of anesthesia services at four BHS hospitals. Shah was not a party to the 2012 agreement, nor was he named in the pediatric income guarantee but he continued to practice as a STAR pediatric anesthesiologist, becoming the primary beneficiary of STAR’s guaranteed collections. In 2016, STAR and BHS amended the 2012 agreement, eliminating the pediatric income guarantee. The exclusivity provision remained. STAR terminated its relationship with Shah. Shah could no longer provide pediatric anesthesia services at NCB or any other BHS facility included in the exclusivity agreement. Shah requested authorization to provide pediatric anesthesia care at NCB; BHS responded that Shah’s reappointment to the Medical Staff of BHS and his privileges were approved but the exclusivity provision precluded Shah from providing pediatric anesthesia services at six BHS facilities (including NCB). After unsuccessfully suing STAR in Texas state court, Shah sued under the Sherman Act.The Fifth Circuit affirmed summary judgment in favor of the BHS parties. Shah’s definition of the relevant market is insufficient as a matter of law; it does not encompass all interchangeable substitute products because it does not include the two non-BHS facilities that the BHS parties contend serve as viable alternatives to BHS facilities. View "Shah v. VHS San Antonio Partners, LLC" on Justia Law
Big Tyme Investments, L.L.C. v. Edwards
Louisiana bar owners challenged the Governor’s restrictions to the operation of bars in response to COVID-19. The Bar Closure Order prohibited on-site consumption of alcohol and food at “bars,” but permitted on-site consumption of alcohol and food at “restaurants.” Two district courts denied the bar owners’ motions for preliminary injunctive relief. The Fifth Circuit affirmed, rejecting an argument under the Equal Protection Clause of the Fourteenth Amendment. The court applied “rational basis” review. The classification at issue is based on a business permit, and does not differentiate on the basis of a suspect class. The Bar Closure Order’s differential treatment of bars operating with AG permits is at least rationally related to reducing the spread of COVID-19 in higher-risk environments. A classification does not fail rational-basis review because it is not made with mathematical nicety or because in practice it results in some inequality. View "Big Tyme Investments, L.L.C. v. Edwards" on Justia Law
Janvey v. GMAG, LLC
The Supreme Court of Texas answered the Fifth Circuit's question and held that a transferee on inquiry notice of fraud cannot shield itself from the Texas Uniform Fraudulent Transfer Act's (TUFTA) clawback provision without diligently investigating its initial suspicions of fraud—irrespective of whether a hypothetical investigation would reveal fraudulent conduct. Having received the answer from the Supreme Court of Texas, the court once again held that defendants' good faith defense must fail.The court reversed the district court's judgment in favor of the Magness Parties, holding that the record does not show that they accepted the fraudulent transfers in good faith; neither of the cited statements at issue demonstrate that the Parties diligently investigated their initial suspicions of the Stanford International Bank's Ponzi scheme on inquiry notice; the Parties have not shown that the Seventh Amendment or due process requires the court to remand for another jury trial; and the Parties have not demonstrated that, as a matter of law, the court cannot render a decision in favor of the Receiver based on the existing record. View "Janvey v. GMAG, LLC" on Justia Law
Basic Capital Management, Inc., v. Dynex Capital, Inc.
After plaintiffs were unable to collect on a $55 million judgment against Dynex Commercial, Inc., plaintiffs filed a lawsuit against Dynex Commercial, Inc. and Dynex Capital, Inc., alleging fraudulent-transfer and alter-ego claims.The Fifth Circuit affirmed the district court's dismissal of plaintiffs' second amended complaint with prejudice based on the grounds that the fraudulent transfer claim is time-barred and the alter ego claim is barred by res judicata. In this case, plaintiffs knew of or reasonably could have discovered the transfers at least by February 2004, if not earlier, and plaintiffs reasonably could have discovered the allegedly fraudulent nature long before April 2016. Furthermore, plaintiffs' failure to raise an alter-ego claim against Dynex Capital during the state-court litigation does not mean that they can raise such a claim now. The court also stated that the district court appropriately used judicial notice of the Form 10-K and state court record. View "Basic Capital Management, Inc., v. Dynex Capital, Inc." on Justia Law
Colonial Oaks Assisted Living Lafayette, LLC v. Hannie Development, Inc.
After Buyers purchased two care facilities from Sellers, Buyers filed suit alleging that Sellers made fraudulent or, at best, negligent misrepresentations in the parties' sale agreements. Buyers also brought claims against Sellers' representatives in their individual capacities.The Fifth Circuit affirmed the district court's dismissal of Buyers' claims with prejudice for failure to state a claim. The court held that the district court properly dismissed Buyers' non-fraud claims for negligent misrepresentation and breach of contractual representations and warranties because these claims were subject to arbitration. In regard to the remaining claims, the court held that Buyers have not adequately pleaded a misrepresentation with respect to both facilities and thus they failed to meet the particularity requirements of Federal Rule of Civil Procedure 9(b). Therefore, because there was no misrepresentation, there was no fraud. View "Colonial Oaks Assisted Living Lafayette, LLC v. Hannie Development, Inc." on Justia Law
Six Dimensions, Inc. v. Perficient, Inc.
Six Dimensions filed suit against a former employee and a competitor, Perficient, alleging claims for breach of contracts, unfair competition, and misappropriation of trade secrets.The Fifth Circuit reversed the part of the judgment holding that the employee breached an employment contract and owed damages to Six Dimensions. The court held that the district court abused its discretion in denying the employee an opportunity to extend the arguments she had already made about the 2014 Agreement and have them apply to the 2015 Agreement. However, the court held that the district court did not reversibly err in interpreting California law and concluding that California's strict antipathy towards restraint of trade of any kind in California Business and Professions Code section 16600 voids the nonsolicitation provision here. The court also found no error in the district court's refusal to apply California's Unfair Competition Law, and held that the district court did not abuse its discretion in refusing to find the jury's verdict contrary to the weight of the great evidence as to the misappropriation claim. Therefore, the court otherwise affirmed the district court's judgment. View "Six Dimensions, Inc. v. Perficient, Inc." on Justia Law
ATOM Instrument Corp. v. Petroleum Analyzer Co., LP
After ATOM filed for bankruptcy, plaintiff and ATOM initiated an adversarial proceeding against Petroleum Analyzer, alleging claims of misappropriation of trade secrets, unfair competition, and civil theft. On the bankruptcy court's recommendation, the district court withdrew the reference to the bankruptcy court and asserted jurisdiction under 28 U.S.C. 1334, and entered partial summary judgment for plaintiff and ATOM. Four years later, the district court held a bench trial and entered judgment in favor of Petroleum Analyzer and later awarded attorneys' fees to Petroleum Analyzer.The Fifth Circuit held that the district court did not clearly err by finding that Petroleum Analyzer did not use plaintiff's trade secrets in Petroleum Analyzer's sulfur-detecting excimer lamp called a MultiTek. Furthermore, the district court did not ignore the "law of the case" doctrine. The court also held that the district court did not err by awarding Petroleum Analyzer attorneys' fees under the Texas Theft Liability Act. The court remanded to allow the district court to make the initial determination and award of appellate attorneys' fees to Petroleum Analyzer. View "ATOM Instrument Corp. v. Petroleum Analyzer Co., LP" on Justia Law