Latest 6 Cases This Week: Primarque Products Co. v. Williams West & Witt's Products Co. (1st Cir.), Woo v. Spackman (1st Cir.), Steves and Sons, ...

The Upside-Down Treatment of Religious Exceptions Cases in the Supreme Court

MICHAEL C. DORF

Cornell law professor Michael C. Dorf comments on the U.S. Supreme Court’s decision last week to reject an emergency application from the State of Alabama to lift a stay on the execution of Willie B. Smith III. Professor Dorf observes the Court’s unusual alignment of votes in the decision and argues that, particularly as reflected by the recent COVID-19 decisions, the liberal and conservative Justices have essentially swapped places from the seminal 1990 case Employment Division v. Smith, which established that the First Amendment does not guarantee a right to exceptions from neutral laws of general applicability.

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Primarque Products Co. v. Williams West & Witt's Products Co.

Court: US Court of Appeals for the First Circuit

Docket: 19-1463

Opinion Date: February 12, 2021

Judge: David J. Barron

Areas of Law: Business Law, Consumer Law

In this appeal and cross-appeal stemming from litigation that followed the termination of an almost forty-year business relationship between a company that manufactured and supplied soup base products (Manufacturer) and a company that distributed them (Distributor), the First Circuit reversed in part and vacated in part Distributor's appeal and affirmed in Manufacturer's cross appeal, holding that the district court erred in part. Following a trial, the jury awarded Distributor $255,000 in damages for its state law breach of contract and tortious interference with business relationships claims against Manufacturer. The district court granted summary judgment to Manufacturer on Distributor's claim against it under Mass. Gen. Laws ch. 93A and to Manufacturer on its counterclaim for breach of contract, for which the court awarded Manufacturer $97,843 in damages. The First Circuit held that the district court (1) erred in granting summary judgment on the Chapter 93A claim; (2) erred in striking as duplicative the jury's damages award on Distributor's breach of contract claim; (3) erred in denying Distributor prejudgment interest on the damages award it received on the tortious interference with business relations claim; and (4) erred in denying Distributor's offset request.

Woo v. Spackman

Court: US Court of Appeals for the First Circuit

Docket: 20-1527

Opinion Date: February 12, 2021

Judge: Selya

Areas of Law: Business Law, Civil Procedure

In this appeal concerning the scope and reach of 28 U.S.C. 1963 - a statute permitting the registration of certain judgment in a federal district court - the First Circuit affirmed the district court's judgment concluding that the New York state court judgment proffered by Plaintiff did not come within the statutory sweep and that no other cognizable basis for federal subject-matter jurisdiction had been shown, holding that the district court did not err. Plaintiff sought recognition of a Korean judgment in New York. A New York court recognized the Korean judgment and entered a judgment in Plaintiff's favor for more than $13 million. When the New York judgment went unpaid, Plaintiff filed the judgment in the United States District Court for the District of Massachusetts. Defendants moved to quash, arguing that the district court lacked subject-matter jurisdiction because 28 U.S.C. 1963 only authorized district courts to register judgments of other federal courts and not state court judgments. The district court agreed and dismissed the matter for want of subject-matter jurisdiction. The First Circuit affirmed, holding (1) section 1963 does not authorize federal courts to register state-court judgments; and (2) there were no independent grounds for federal jurisdiction here.

Steves and Sons, Inc. v. JELD-WEN, Inc.

Court: US Court of Appeals for the Fourth Circuit

Docket: 19-1397

Opinion Date: February 18, 2021

Judge: Albert Diaz

Areas of Law: Business Law, Mergers & Acquisitions

JELD-WEN's customers, Steves and Sons, filed suit challenging JELD-WEN's acquisition of a competitor. After a jury found that the merger violated the Clayton Antitrust Act and that Steves and Sons was entitled to treble damages, the district court granted Steves and Sons' request to unwind the merger and plans to hold an auction for the merged assets after this appeal. The district court then held another trial before a different jury on JELD-WEN's countersuit against Steves and Sons for trade secret misappropriation, allowing three individuals to intervene in the case. The jury ruled in favor of Steves and Sons on most of JELD-WEN's claims and entered judgment for the intervenors. The Fourth Circuit concluded that the district court properly declined to grant JELD-WEN judgment as a matter of law on whether Steves and Sons demonstrated antitrust injury; the district court acted within its discretion by excluding certain evidence from the antitrust trial and by ordering JELD-WEN to unwind the merger, rejecting JELD-WEN's laches defense in the process; the district court properly found that equitable relief under the Clayton Act was appropriate because the merger created a significant threat that Steves and Sons will go out of business in 2021; and JELD-WEN has not shown that the district court's jury instructions in the trade-secrets trial were improper. However, the court vacated the jury's award of future lost profits to Steves and Sons in the antitrust trial because the issue is not ripe. The court explained that the injury on which the future lost profits award was premised cannot occur until September 2021, and the Clayton Act requires a plaintiff seeking damages—as opposed to equitable relief—to "show actual injury." The court also vacated the district court's entry of judgment for the intervenors in the trade-secrets case because JELD-WEN brought no claims against them.

Smith v. General Motors LLC

Court: US Court of Appeals for the Sixth Circuit

Docket: 19-1614

Opinion Date: February 18, 2021

Judge: Nalbandian

Areas of Law: Business Law, Class Action, Consumer Law, Products Liability

In 2005-2006, GM changed the dashboard used for GMT900 model cars from a multi-piece design to a single-piece design, which made the dashboard prone to cracking in two places. Plaintiffs, from 25 states, alleged that GMT900 vehicles produced in 2007-2014 contained a faulty, dangerous dashboard and that GM knew of the defective dashboards before GTM900 vehicles hit the market. The complaint contained no allegation that any of the plaintiffs have been hurt by the allegedly defective dashboards. The complaint, filed on behalf of a nationwide class, alleged fraudulent concealment, unjust enrichment, and violations of state consumer protection statutes and the Magnusson-Moss Warranty Act. The Sixth Circuit affirmed the dismissal of the case. At worst, Plaintiffs suffered only cosmetic damage and a potential reduced resale value from owning cars with cracked dashboards. Although the plaintiffs claimed that routine testing, customer complaints, and increased warranty claims alerted GM to the defective dashboards and accompanying danger, that is not enough to survive a motion to dismiss without specifics about how and when GM learned about the defect and its hazards, and concealed the allegedly dangerous defect from consumers. Even accepting that GM produced defective vehicles, under the common legal principles of the several states, the plaintiffs must show that GM had sufficient knowledge of the harmful defect to render its sales fraudulent.

Xereas v. Heiss

Court: US Court of Appeals for the District of Columbia Circuit

Docket: 19-7108

Opinion Date: February 16, 2021

Judge: Wilkins

Areas of Law: Business Law, Contracts

Plaintiff, who holds the RIOT ACT trademark, entered into a business agreement with defendants to open the Riot Act Comedy Club in downtown D.C. Plaintiff subsequently filed suit to recover damages from defendants' alleged breaches of fiduciary duty and of the operating agreement of the limited liability company the parties formed to start the club. Defendants counterclaimed. The DC Circuit reversed the district court's dismissal of plaintiff's breach of fiduciary duty claim, holding that plaintiff adequately alleged that he and defendants were members of a member-managed LLC and that under D.C. law that suffices to plead the existence of a fiduciary duty. In this case, the district court improperly found it "clear" that a "special confidential relationship transcending an ordinary business transaction did not take place" between the parties. The court explained that the district court failed to consider relevant District of Columbia and Maryland law, the statute's clear imposition of duties of loyalty and care typical of a fiduciary, or the nature of the parties' relationship—as partners and co-managers in a business venture, not merely arms-length parties to a standard commercial transaction. However, plaintiff failed to show that the court should reverse any of the district court's evidentiary rulings. The court affirmed the district court's decision to deny defendants judgment as a matter of law on plaintiff's breach of contract claim and to deny defendants' fee petition. The court remanded for further proceedings.

Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH

Court: Delaware Supreme Court

Docket: 200, 2020

Opinion Date: February 15, 2021

Judge: Per Curiam

Areas of Law: Business Law, Civil Procedure, Contracts, Legal Ethics

In 2010, Appellants Meso Scale Diagnostics, LLC and Meso Scale Technologies, LLC (collectively “Meso”) filed suit in Delaware against Appellee entities Roche Diagnostics GmbH, Roche Diagnostics Corp., Roche Holding Ltd., IGEN LS LLC, Lilli Acquisition Corp., IGEN International, Inc., and Bioveris Corp. (collectively “Roche”), all of which were affiliates or subsidiaries of the F. Hoffmann -- La Roche, Ltd. family of pharmaceutical and diagnostics companies. Meso alleged two counts of breach of contract. Roche prevailed at trial, and the Delaware Supreme Court affirmed the judgment in 2014. Then in 2019, Meso brought a new action asking the court to reopen the case, vacate the judgment entered after trial, and order a new trial. Meso alleged that the Vice Chancellor who decided its case four years earlier had an undisclosed disabling conflict, namely, that Roche’s counsel had been simultaneously representing him in an unrelated federal suit challenging the constitutionality of Delaware’s law providing for confidential business arbitration in the Court of Chancery (“Section 349”). In that federal litigation, which ended in 2014, the Chancellor and Vice Chancellors of the Court of Chancery, as the parties responsible for implementing the challenged statute, were nominal defendants. The Court of Chancery denied relief and dismissed the action. Meso appealed. Finding no reversible error, the Delaware Supreme Court affirmed dismissal.