Justia U.S. 11th Circuit Court of Appeals Opinion Summaries

Articles Posted in Business Law
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Plaintiff, a shareholder, filed a putative class action complaint against magicJack and eight individuals who were magicJack current or former directors. Plaintiff alleged that magicJack issued two proxy statements that contained material misrepresentations. The district court dismissed plaintiff's lawsuit because his claims were derivative in nature and he failed to plead that he made a demand on magicJack or that doing so would have been futile.The Eleventh Circuit held that federal courts should look to state law to decide the issue of whether a claim brought under a federal statute is direct or derivative. In this case, because magicJack is incorporated under the laws of Israel, Israeli law controls the court's analysis. However, even if the court applied Florida law, the result would be the same because the two bodies of law are consistent. The court held that plaintiff's claims are derivative in nature because he failed to allege that he suffered damages independent of the damages that magicJack (and all of its shareholders) suffered. Furthermore, plaintiff failed to plead that he personally suffered a special injury, distinct from that experienced by magicJack or its other shareholders. Finally, any recovery sought in the Second Amended Complaint would necessarily be for the benefit of magicJack and its shareholders. View "Freedman v. MajicJack Vocaltec Ltd." on Justia Law

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Warren, a manufacturer of unitary electric (UE) heaters for HVAC systems, filed suit against its competitor, Tutco and against a Nationally Recognized Testing Laboratory (NRTL), UL. Warren's claims are based on its allegations that, UL certified Tutco's UE heaters as compliant, even though the heaters are not actually compliant. Warren sought damages and injunctive relief under the Lanham Act for false advertising and contributory false advertising, damages under the common law of unfair competition, and declaratory and injunctive relief under the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).The Second Circuit affirmed the district court's grant of Tutco's and UL's joint motion to dismiss. In this case, Warren calls UL's authorization to Tutco to use UL's mark, and Tutco's advertisements to that effect, "misrepresentations," but it really means nothing more than (by its lights) a "misinterpretation" of UL 1995. However, it does not follow, that even a misinterpretation of UL 1995 is a falsity -- or a "deceptive act" within the meaning of the Lanham Act -- rather than a matter of opinion, provided it was made in good faith and in accordance with OSHA's criteria for independence, procedural regularity, etc. The court held that, because all of Warren's claims against UL and Tutco are based upon the same allegation of falsity, they fail for want of a misrepresentation or a deceptive act. View "Warren Technology, Inc. v. UL LLC" on Justia Law

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The court-appointed receiver filed suit against JPMC, seeking to recover funds that were fraudulently diverted from the Receivership Entities' bank accounts in connection with a Ponzi scheme. The complaint sought to avoid the fraudulent transfers and recover the diverted funds on behalf of the Receivership Entities under the Florida Uniform Fraudulent Transfer Act (FUFTA), and to collect damages from JPMC for JPMC's alleged aiding and abetting of three torts: breach of fiduciary duty, conversion, and fraud.The Eleventh Circuit affirmed the district court's dismissal of the complaint, holding that the receiver failed to state a claim under FUFTA because he failed to allege an applicable conveyance or fraudulent transfer. The court also held that the receiver lacked standing to assert, on behalf of the Receivership Entities, claims against JPMC for allegedly aiding and abetting the Ponzi schemers' breach of fiduciary duties, conversion, and fraud. Finally, the court noted that the district court did not abuse its discretion in staying discovery pending resolution of JPMC's motion to dismiss. View "Isaiah v. JPMorgan Chase Bank, N.A." on Justia Law

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BBX filed suit challenging the FDIC's determination that the severance payments BBX sought to make to five former executives of the Bank were golden parachute payments and that it would approve payments of only twelve months of salary to each executive. The FDIC also concluded that BBT was required to seek and receive approval before making the reimbursement payments to BBX. The FRB subsequently approved the same payment amounts but took no action with respect to approving any payments over 12 months of salary because the FDIC had already prohibited any additional payments.The Fifth Circuit affirmed the district court's dismissal of BBX's action against FRB for lack of standing because BBX has not shown any injury it has sustained is fairly traceable to an FRB action or inaction. The court also held that the FDIC's decision to classify the proposed payments as golden parachute payments was not arbitrary or capricious, because the golden parachute statute, 12 U.S.C. 1828(k), covers the stock purchase agreement (SPA) and the proposed payments included therein. Furthermore, earlier agreements, such as severance contracts, are irrelevant because the proposed payments are being made under the SPA. The court held that the FDIC's denial of any payments in excess of 12 months' salary for each executive was not arbitrary and capricious where the explanations the FDIC offered for denying additional payments were reasonable and did not run counter to the evidence. Finally, the court rejected BBX's argument that the FDIC's requirement that BBT seek approval before reimbursing BBX was arbitrary and capricious. View "BBX Capital v. Federal Deposit Insurance Corp." on Justia Law

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The Eleventh Circuit affirmed the tax court's order denying taxpayer's motion to restrain collection to the extent it related to the gross valuation-misstatement penalty. At issue was whether, under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), a tax court presiding over partner-level deficiency proceedings has jurisdiction over a gross valuation-misstatement penalty previously determined to be applicable at the partnership level where the partnership was determined to be a "sham" and "lacking economic substance."The court held that the Internal Revenue Code, as in effect during the relevant time, applicable regulations, and Supreme Court precedent make clear that the valuation-misstatement penalty at issue here relates to an adjustment to a partnership item and, consequently, is explicitly excluded from the tax court's deficiency jurisdiction. Accordingly, the court held that the tax court presiding over partner-level deficiency proceedings does not have jurisdiction over gross valuation misstatement penalties imposed against a partnership previously determined to be a "sham" and "lacking economic substance." View "Highpoint Tower Technology Inc. v. Commissioner" on Justia Law

Posted in: Business Law, Tax Law
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Hi-Tech filed suit alleging that the label of a protein-powder supplement distributed by HBS misled customers about the quantity and quality of protein in each serving, violating both the Georgia Uniform Deceptive Trade Practices Act and the federal Lanham Act. The district court dismissed the complaint.The Eleventh Circuit affirmed the district court's dismissal of the state law claim because it was preempted by the Food, Drug, and Cosmetics Act (FDCA). However, the court reversed the district court's dismissal of the Lanham Act claim, and rejected HBS's arguments that the FDCA barred the claim under the Lanham Act. In this case, Hi-Tech's Lanham Act claim would only require a court to determine whether the protein-content representations on the HexaPro label were misleading to consumers in the context of the label's failure to specify the sources of the nitrogen measured by the federal test. Therefore, this inquiry would not require a court to interpret or apply the FDCA to determine whether or not the marketing of the supplement was deceptive. View "Hi-Tech Pharmaceuticals, Inc. v. HBS International Corp." on Justia Law

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The Eleventh Circuit affirmed the district court's grant of summary judgment for Time Warner in an action brought by Cableview seeking to recover a payment it made to Time Warner based on a disputed indemnity claim. The court held that there were two disputed issues of fact regarding whether Time Warner initially gave its consent to the Installation Agreement assignment through its director of technical operations and whether Time Warner entered into new vendor contracts with FTS, which it later revoked, that made formal assignment of the Installation Agreement unnecessary. The court held, however, that these disputed issues were not material and that a reasonable jury could not find for Cableview on duress. The court also held that the settlement agreement contained sufficiently definite terms and that Cableview could not succeed on its other claims despite the settlement. View "Cableview Communications of Jacksonville, Inc. v. Time Warner Cable Southeast, LLC" on Justia Law

Posted in: Business Law
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Yellowfin filed suit against Barker Boatworks and Kevin Barker, alleging claims for trade dress infringement and false designation of origin under Section 43(a) of the Lanham Act, common law unfair competition, common law trade dress infringement, and violation of Florida's Uniform Trade Secret Act (FUTSA).The Eleventh Circuit affirmed the district court's grant of summary judgment for defendants. The court, weighing the likelihood of confusion factors holistically, held that the district court did not err in holding that Yellowfin could not, as a matter of law, prove a likelihood of confusion between Barker Boatworks' trade dress and its own. Therefore, the court held that the district court properly rejected the rest of Yellowfin's claims related to trade dress and consumer confusion. The court rejected Yellowfin's claims under FUTSA and held that Yellowfin failed to show that Barker allegedly misappropriated Source Information and Customer Information trade secrets. View "Yellowfin Yachts, Inc. v. Barker Boatworks, LLC" on Justia Law

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The Eleventh Circuit certified the following question to the Supreme Court of Georgia: 1) Whether Georgia's apportionment statute, O.C.G.A. 51-12-33, applies to tort claims for purely pecuniary losses against bank directors and officers; 2) whether section 51-12-33 abrogated Georgia's common-law rule imposing joint and several liability on tortfeasors who act in concert; and 3) whether, in a negligence action premised upon the negligence of individual board members in their decisionmaking processes, a decision of a bank's board of directors is a "concerted action" such that the board members should be held jointly and severally liable for negligence. View "Federal Deposit Insurance Corporation v. Loudermilk" on Justia Law

Posted in: Banking, Business Law
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In 2011 and 2012, a number of individuals and closely held corporations known as Treasure Your Success (TYS) operated a fraudulent credit card interest reduction scheme. Universal Processing Services of Wisconsin, LLC (Universal) violated the Telemarketing Sales Rule (TSR), 16 C.F.R. 310.1 et seq., by providing substantial assistance to the TYS schemers. The district court found that a violation of the TSR constitutes an “unfair or deceptive act or practice” in violation of the Federal Trade Commission Act. As such, the district court was authorized to order restitution and disgorgement. Furthermore, the court clarified that substantial assistance under the TSR was itself sufficient to justify joint and several liability. The court reaffirmed its order holding Universal jointly and severally liable; Universal contended that was error and joint and several liability can only lie where the defendant is a participant in a common enterprise with the primary violators. The Eleventh Circuit concluded after review the district court did not abuse its discretion in holding Universal jointly and severally liable with the members of the TYS scheme. View "Federal Trade Comm'r v. Universal Processing Services of Wisconsin, LLC" on Justia Law