Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

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. View "Steves and Sons, Inc. v. JELD-WEN, Inc." on Justia Law

Bayer filed suit against Belmora, alleging that Belmora engaged in unfair competition in violation of section 43(a) of the Lanham Act. The district court held that Bayer's section 43(a) claims were time-barred. In this case, because the Lanham Act does not include a limitations period for section 43(a) claims, the district court borrowed the statute of limitations from the most analogous state law, declining to apply the equitable doctrine of laches to those claims.The Fourth Circuit vacated the district court's judgment, concluding that the equitable doctrine of laches, rather than a statute of limitations, is the appropriate defense to Bayer's section 43(a) claims. The court also concluded that the district court failed to consider whether Bayer's related state-law claims were subject to tolling. The court remanded to the district court to determine in the first instance whether Bayer's section 43(a) claims are barred by laches and whether Bayer's related state-law claims are subject to tolling. The court affirmed the district court's judgment in all other respects. View "Belmora LLC v. Bayer Consumer Care AG" on Justia Law

Defendant was a successful franchise operator of several tax preparation businesses under the umbrella of JTH Tax, Inc. and SiempreTax+ LLC (together, "Liberty Tax"). In this case, Liberty Tax requested that defendant assign it the leases for the franchise properties, as provided for by the Purchase and Sale Agreement (PSA). However, the parties could not agree to terms for the assignment. Liberty Tax subsequently filed suit and defendant countersued. Defendant largely prevailed and was awarded a significant sum of damages. The Fourth Circuit vacated a substantial portion of the damages award but upheld the judgment in defendant's favor. On remand, the district court recalculated damages based on the Fourth Circuit's instructions and then, on defendant's motion, subsequently amended the judgment, increasing the damages based on purportedly new evidence. Both parties appealed again.The Fourth Circuit found no error in the district court's denial of defendant's arguments for reinstatement of much of the original damages. The court explained that the district court did not err in concluding that the Rule 59(e) standard and the mandate rule precluded defendant's disgorgement theory. However, the court found error in the district court's conclusion that defendant met the standard for relief based on newly discovered evidence and in the award of nominal damages. The court concluded that, in the declaration and now on appeal, defendant does not show he exercised reasonable due diligence during the three years of litigation to discover and present evidence of unpaid rent on the Burnside property. Furthermore, nominal damages were unavailable because defendant was awarded compensatory damages to remedy Liberty Tax's breach of contract, regardless of the finding that Liberty Tax also breached the contract by breaching the implied covenant. Accordingly, the court affirmed in part, reversed and vacated in part, and remanded with instructions to recalculae damages. View "JTH Tax, Inc. v. Aime" on Justia Law

After the tax court determined that petitioners failed to report approximately $41.2 million of compensation income that they realized when certain restricted stockholdings that they owned became substantially vested in January 2004, the tax court upheld the Commissioner's decision to impose accuracy-related penalties for negligence and substantial understatement of tax liability, and denied petitioners' post-trial attempt to offset their underreported income with various net operating loss carrybacks.The Fourth Circuit affirmed the tax court, holding that the tax court did not err in holding that petitioners each realized and were required to report $45.7 million of taxable income when their UMLIC S-Corp. stock substantially vested in taxable year 2004. In this case, even if the Surrender Transactions could somehow be seen as rescinding petitioners' employment and compensation agreements with UMLIC S-Corp., the court agreed with the tax court's conclusion that those transactions were totally devoid of economic substance and must be disregarded for federal income tax purposes. The court also held that the tax court did not err in upholding the accuracy-related penalties imposed by the Commissioner. Finally, the court rejected petitioner's claim that the tax court erred in refusing to consider their net operating losses (NOL) carryback claim during post-trial computation proceedings conducted pursuant to Tax Court Rule 155. View "Estate of Arthur E. Kechijian v. Commissioner" on Justia Law

At issue in this appeal was a tortious interference claim brought by Sprint against Wireless Buybacks, an arbitrager of upgraded phones from customers that then resells them at higher prices. Sprint alleged that its written contract with customers categorically prohibits them from reselling their phones, and Wireless Buybacks has wrongfully induced customers to do so. The district court found that the contract unambiguously barred resale and granted partial summary judgment for Sprint.The Fourth Circuit held that Sprint's terms and conditions did not unambiguously prohibit customers from reselling their phones, and thus Sprint was not entitled to judgment as a matter of law. In this case, the court rejected Sprint's two theories in support of why "Services" unambiguously included all upgraded phones, and Sprint failed to show that Wireless Buybacks bought phones from Sprint customers who agreed to activate their upgraded phones on Sprint's network. Therefore, the court vacated the district court's summary judgment order insofar as it found Wireless Buybacks liable for tortious interference and remanded for further proceedings. View "Sprint Nextel Corp. v. Wireless Buybacks Holdings, LLC" on Justia Law

Life filed a complaint against another corporation of the same name, alleging trademark infringement and unfair competition under the Lanham Act. Life obtained an injunction against the defendant corporation and its officers, including the corporation's president, who was not named a defendant. After entry of a default judgment against the corporation and damages-related discovery, the district court awarded damages and attorneys' fees against both the defendant corporation and its president personally.The Fourth Circuit held that the district court erred in entering judgment against the president personally when he was not named as a party or otherwise brought into the case by service of process. The court also held that the district court did not abuse its discretion in finding the president in contempt of court. Accordingly, the court affirmed in part, vacated in part, and remanded for the district court to determine whether any of the damages and fees award entered against the president is attributable to his contempt of court. View "Life Technologies Corp. v. Govindaraj" on Justia Law

Intervenor alleged that she was terminated by Northrop in violation of the whistleblower protection provision of the Sarbanes-Oxley Act (SOX). The Fourth Circuit held that intervenor did not qualify for whistleblower protection under 18 U.S.C. 1514A, because she did not engage in protected activity. In this case, neither of intervenor's complaints about Northrop's arbitration policy nor her complaints about violations of section 1514A(e) involved any of the basic elements of shareholder fraud. Furthermore, her beliefs were not objectively reasonable. Therefore, the court vacated the administrative orders and remanded the case with instructions for the dismissal of intervenor's complaint and entry of judgment for Northrop. View "Northrop Grumman Systems Corp. v. US Department of Labor" on Justia Law

The Fourth Circuit affirmed the district court's dismissal of plaintiffs' claims stemming from failed investments in an electric vehicle startup, GreenTech. Plaintiffs are a group of 27 Chinese investors who invested $500,000 each in a partnership that loaned their money to GreenTech. Plaintiffs claimed that false statements were made relating to the partnership's fundraising efforts, as well as relating to GreenTech's sell of vehicles and business plans. Plaintiffs now seek to recover losses from their failed investments.The court held that the amended complaint failed to adequately allege justifiable reliance, instead relying on general and conclusory allegations. Even if plaintiffs had properly described who relied on each misstatement and how that person heard of it, they failed to plead justifiable reliance because the written offering documents controlled and contradicted the sorts of stray media statements attributed to GreenTech and the partnership. The court held that there was no plausible allegation in the complaint that defendants diverted plaintiffs from conducting a prudent and objectively reasonable investigation before investing. View "Xia Bi v. McAuliffe" on Justia Law

Plaintiffs appealed the district court's grant of summary judgment to Serco in an action alleging numerous claims arising out of a failed business relationship. Plaintiffs alleged that Serco conspired with Jaxon Engineering to "rig" a bidding process related to work for the Air Force, and thus interfered with plaintiffs' reasonable business expectancy in that work.The Court of Appeal held that the district court properly awarded summary judgment to Serco on the claims of tortious interference with business expectancy, because those claims failed as a matter of law. However, the court held that the district court erred in awarding summary judgment to Serco with respect to plaintiffs' conspiracy claims, because they were not time-barred and, in the alternative, the evidence that plaintiffs were the sole providers of HEMP-related services to Serco for several years was sufficient to create a dispute of material fact regarding whether plaintiffs had a valid business expectancy in the task orders awarded to Jaxon. In regard to the Colorado Organized Crime Control Act (COCCA) claims, the court agreed with the district court that the two year statute of limitations applied to the claims but remanded for the district court to determine as a factual matter the particular limitations period for each of the COCCA claims. Therefore, the court affirmed in part, vacated in part, and remanded for further proceedings. View "L-3 Communications Corp. v. Serco, Inc." on Justia Law

A participant in an Employee Stock Ownership Program (ESOP) filed suit after owners of a closely held corporation sold the company to its ESOP. The participant contended that the trustee chosen for the ESOP by the corporation breached its fiduciary duties to the ESOP and overpaid for the stock — improperly enriching the corporation's owners at the expense of its employees.The Fourth Circuit affirmed the district court's careful findings of fact concluding that the trustee had breached its fiduciary duties. In regard to liability, the district court found four major failures involving SRR's report; that the trustee failed to act as a prudent fiduciary solely on behalf of the ESOP participants; that the value of Stock Appreciation Rights (SARs) issued in connection with the ESOP's purchase of Constellis should have been deducted from Constellis's equity value for purposes of SRR’s valuation; and that the ACADEMI sale did not constitute a meaningful comparator. Furthermore, the court found no error in the district court's damages award and fee award. View "Tim Brundle v. Wilmington Trust, N.A." on Justia Law