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

This case concerned the applicability of a standard "no-action clause" in a trust indenture governing a company's notes. The clause at issue stated that a noteholder could not "pursue any remedy with respect to this Indenture or the Securities" unless the noteholder fell within one of two exceptions. At issue was whether noteholders who did not fall within a stated exception to the clause could nonetheless bring fraudulent transfer claims against the issuer of the securities and its directors and officers. Although the district court found the no-action clause inapplicable to the claims, the court disagreed and held that the language of the no-action clause controlled, barring noteholders from bringing suit. View "Akanthos Capital Mgmt., LLC, et al. v. CompuCredit Holdings Corp., et al." on Justia Law

Holston sued LanLogistics for breach of contract when LanLogistics never gave Holston an opportunity to match Gartlan's offer to purchase LanBox. Holston was a citizen of Florida and LanLogistics was incorporated in Delaware, maintaining its corporate headquarters in Miami, Florida. But by the time Holston filed suit, LanLogistics had dissolved and formally forfeited its authority to conduct business in Florida. At issue on appeal was the citizenship of a dissolved corporation for purposes of diversity jurisdiction and whether summary judgment was appropriately entered where there could have been a genuine issue of material fact. The court held that LanLogistics was only a citizen of Delaware and the court had subject matter jurisdiction where LanLogistics dissolved and formerly withdrew from business before Holston filed suit. The court reversed the district court's supplemental summary judgment order and remanded for a determination regarding the fair market value of each company in the package deal to identify the percentage of the purchase price used to purchase LanBox. View "Holston Investments Inc. B.V.I., et al. v. LanLogistics, Corp." on Justia Law

Plaintiffs are personal investment holding corporations owned by two related Panamanian shareholders. Defendants, of who there are two distinct groups, are (1) a related group of banking corporations operating under the umbrella of Banco Santander, which provide banking, investment, and other financial management services; and (2) certain individual officers/employees of Santander. This dispute arose from plaintiff's investment of an undisclosed sum of money with defendants. At issue was whether a district court, having found a valid contract containing an arbitration clause existed, was also required to consider a further challenge to that contract's place within a broader, unexecuted agreement. Having considered those circumstances in light of Granite Rock Co. v. International Brotherhood of Teamsters and other relevant precedent, the court found that the district court properly construed the law regarding arbitrability in dismissing plaintiff's suit. Accordingly, the court affirmed the judgment. View "Solymar Investments, Ltd., et al. v. Banco Santander S.A., et al." on Justia Law

Relators brought a qui tam action against defendant and its subsidiaries, alleging violations of the reverse false claim provision of the False Claims Act (FCA), 31 U.S.C. 3729(a)(7). Relators subsequently appealed the district court's dismissal, with prejudice, of their third amended complaint for failure to state a claim upon which relief could be granted. The district court held that relators failed to allege with particularity, as required by Rule 9(b), that defendants knowingly made false statements for the purpose of concealing or avoiding an obligation to pay money to the government. Count I alleged that the 2008 Certification of Compliance was false due to the failure to report or remit the million dollars in identified Overpayments, and that defendants made and used the Certification to conceal and avoid the obligation to remit Overpayments. Count II involved the same obligation to remit Overpayments within thirty days but was based on a separate scheme and separate false records. The court held that relators have sufficiently pled each element of a reverse false claim for the Certification of Compliance and the district court's dismissal of Count I was reversed. The court also held that relators have pled all the remaining elements for a reverse false claim for the Discovery Samples and thus, the district court's dismissal of Count II was reversed. View "Matheny, et al. v. Medco Health Solutions, Inc., et al." on Justia Law

Petitioner National Labor Relations Board (the Board or NLRB) sought enforcement of its order against Respondent Contemporary Cars, Inc. (Contemporary). In 2008, the International Association of Machinists and Aerospace Workers (the Union) filed a petition with the Board seeking certification as the representative of Mercedes-Benz service technicians employed at Contemporary. The Board held a hearing, determined the proposed bargaining unit was appropriate under two different theories, and directed that an election occur. Contemporary requested that the Board review the Regional Director’s decision regarding the bargaining unit. Despite only having two members, the Board summarily denied the request. Members of the bargaining unit voted in for representation by the Union, and the Regional Director certified the Union. To preserve its right to challenge the validity of the bargaining-unit determination in a court of appeals, Contemporary refused to bargain. The Union filed an unfair labor practice charge with the Board. Contemporary conceded the violation, and in 2009, the two-member Board issued an order finding Contemporary in violation of the National Labor Relations Act (the Act). Contemporary filed a petition for review of the NLRB’s order with the federal district court. The NLRB cross-petitioned seeking enforcement. The circuit court granted Contemporary's motion to hold the case in abeyance pending the Supreme Court's decision in "New Process Steel, L.P. v. NLRB" (130 S. Ct. 2635 (2010)). In 2010, the NLRB issued an order setting aside its previous two-member decision to "take further action as appropriate." The original two members plus an obligatory third member issued a new order, again affirming the Regional Director's bargaining-unit decision. The NLRB subsequently filed a petition for enforcement of its order with the Eleventh Circuit. Upon review, the Court found that it lacked jurisdiction to consider Contemporary's due process challenge raised on appeal of the 2010 NLRB order. Furthermore, Contemporary did not meet its burden of demonstrating the Board's determination lacked substantial evidentiary support. Therefore, the Court granted the NLRB's petition. View "NLRB v. Contemporary Cars, Inc." on Justia Law

Davidson Directors and PBGC appealed the district court's order to distribute all of News-Journal assets to Cox, a long-time shareholder of the closely-held News-Journal. The court vacated the order, interpreting Florida's election-to-purchase statute to require that any payment made as a result of a corporation's share repurchase decision complied with the distribution requirements of Fla. Stat. 607.06401, which prohibited the distribution of corporate assets to a shareholder if it would render the corporation insolvent. Because the court considered any payment to Cox a distribution to a shareholder within the meaning of the statute, the district court erred when it ordered the distribution of all of News-Journal's assets to Cox without applying the insolvency test contained in the statute. If on remand, the district court finds a distribution to Cox would violate the statute, News-Journal's other creditors should receive payment before any distribution is made to Cox.

BKR appealed the entry of summary judgment against it in its action for breach of contract against Four Winds, tortious interference with a contractual relationship against Phaunos, deceptive and unfair trade practices and civil conspiracy against FourWinds and Phaunos, and unjust enrichment against Phaunos. The district court held that BKR could not prevail on its contract claim and that all the other claims failed as a result. The court held that the district court erred in granting summary judgment to FourWinds on BKR's contract claim because whether FourWinds pursued an investment opportunity that BKR introduced was a question of fact for a jury. The court also held that the district court's grant of summary judgment to FourWinds on BKR's non-contract theories of relief depended on the district court's erroneous view that BKR's contract claim was precluded as a matter of law. Accordingly, the grant of summary judgment to FourWinds was reversed and the case remanded for further proceedings.

In this securities fraud class action, the investor plaintiffs sued the defendant company and three of its principal officers, alleging that they had made a series of eleven false or misleading statements to the public, in violation of section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, 15 U.S.C. 78a et seq. Plaintiffs claimed that the false statements had the effect of artificially inflating the price of defendant's stock until the truth belatedly came out, at which time the stock price dropped and plaintiffs suffered substantial financial losses. The court held that the district court properly dismissed plaintiffs' claims arising from the alleged misstatements made on March 5, 2004 and July 26, 2004, because plaintiffs have inadequately pled scienter and falsity. However, as for plaintiffs' claims arising out of defendant's February 23, 2005 and March 16, 2005 statements, the court vacated the district court's entry of summary judgment. The court held that the securities laws prohibited corporate representatives from knowingly peddling material misrepresentations to the public, regardless of whether the statements introduced a new falsehood to the market or merely confirmed misinformation already in the marketplace. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings.

DynaVision (X) sued Brenda Smith, Robert Thomas, and Bryan Ownbey, (Y) alleging that they breached a fiduciary duty to tell X that Shelby Peeples (Z) had financed the purchase of its interest and moreover, that Y's failure to disclose Z's involvement fraudulently induced X to sell its interest to Y. X also brought suit against Z, the case before the court, alleging that Z violated federal securities law, state securities law, and state common law by denying involvement in the transaction and causing X to sell its interest to Y. X lost both cases on summary judgment because Y's alleged misrepresentation about Z's involvement in the buy-out did not cause X to sell its interest. Rather, X sold because it was in X's economic self-interest to do so. X needed Y's skills; had X purchased Y's interest, it would have had no one to run the carpet factory or to market its product. X therefore had no economically viable option but to sell. After assessing the merits of X's claims, the court affirmed the judgment granting summary judgment.

Plaintiff joined a suit alleging violations of state and federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-68, laws against defendants. EMI Resorts and DMK appealed the district court's entry of an agreed order appointing a receiver-like "monitor" to oversee defendants' financial and business assets. The court held that because defendants failed to demonstrate facts sufficient to nullify their consent to the district court's appointment of the "monitor" and to its waiver of jurisdictional objections, the court declined to vacate the district court's order.