Articles Posted in Business Law

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Plaintiffs sued Dentsply, Cavitron's manufacturer and marketer, on behalf of California dentists who purchased the Cavitron ultrasonic scaler for use during oral surgical procedures, under the Unfair Competition Law (UCL) (Bus. & Prof. Code, 17200) and for breach of express warranty. Plaintiffs claim that the Directions for Use indicate Cavitrons can be used in “[p]eriodontal debridement for all types of periodontal diseases,” which by implication included oral surgery; in fact, they cannot because the device accumulates biofilm in its waterlines and is incapable of delivering sterile water during surgical procedures. Following a remand, the trial court certified the class, conducted a bench trial, and rejected all claims. The court of appeal affirmed, agreeing that plaintiffs, as licensed dentists, were well aware that biofilm forms in all dental waterlines and that Cavitrons do not produce sterile water. The evidence failed to establish that the class was likely to be misled. The weight of the evidence established that dental professionals did not understand the warranty that the Cavitron was suitable for use in “[p]eriodontal debridement for all types of periodontal diseases,” as a statement that the Cavitron delivered sterile water or water without biofilm. View "Patricia A. Murray Dental Corp. v. Dentsply International., Inc." on Justia Law

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The oral agreement at issue in this appeal was made in connection with a transaction by which three companies, of which Albert Kanno was the majority shareholder, were sold to two Delaware corporations. The transaction was documented principally by three writings, each of which had an integration clause. A jury found in favor of Kanno and against Marwit Capital Partners II, L.P. (Marwit Capital) and Marwit Partners, LLC (Marwit LLC) on Kanno’s claim for breach of the oral agreement. After the jury rendered its verdict, the trial court concluded the parol evidence rule did not bar Kanno’s breach of contract claim and that the oral agreement was enforceable. Marwit Capital and Marwit LLC (together, Marwit) appealed. The Court of Appeal concluded the three written agreements were at most partial integrations, and, therefore, the oral agreement was enforceable if its terms did not directly contradict and were consistent with those three agreements, and the Court found no direct contradiction or inconsistency. View "Kanno v. Marwit Capital Partners II" on Justia Law

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In these consolidated cases stemming from the sale and purchase of a partnership interest, SP appealed from a judgment of dismissal following the granting of the trial court's own motion for judgment on the pleadings in SP's breach of contract and conversion action against defendant. SP also appealed from the post-judgment order granting defendant his contractual attorney fees. The Court of Appeal held that SP adequately stated causes of action for breach of contract and conversion and reversed the judgment. In this case, even if the Necessary Approvals were legally required to effectuate a transfer of the Partnership Interest, SP's failure to obtain them was not fatal to its breach of contract claim. Furthermore, SP's conversion claim was not a generalized claim for money but rather a claim for a specific identifiable sum of money received by defendant for SP's benefit. Finally, the court reversed the order awarding fees. View "SP Investment Fund I LLC v. Cattell" on Justia Law

Posted in: Business Law, Contracts

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Duke was the founder and CEO of Skinsation. Defendants were Duke’s investors and members of the board of directors. In 2011, Callaway sued Skinsation, Duke, and defendants over a commercial lease, which Duke and defendants personally guaranteed. A judgment of $385,072. was entered, jointly and severally. Duke owned 49 percent of Skinsation stock and defendants combined owned 51 percent. In 2013, Skinsation’s outstanding capital stock had a fair market value of $1.2-$1.5 million. In May 2014, Duke and defendants unsuccessfully attempted to settle their respective contributions. The next day, defendants convened a shareholder meeting without notice to Duke and removed her as a director and terminated Duke’s employment. Defendants entered into a settlement with Callaway. For payment of $397,694, Callaway released defendants from all obligations under the judgment and assigned then all interest in the judgment. The judgment, plus accrued interest, was $444,286.56. Defendants served Duke with notice of levy on all of her Skinsation capital stock, claiming $448,029.90. Defendants purchased all of Duke’s shares at a sheriff’s sale. Duke sued. The court dismissed Duke’s cause of action for conversion. The court of appeal mandamus relief. A judgment debtor may not enforce an assignment of the judgment against a co-judgment debtor for more than the co-judgment debtor’s proportionate share of the judgment and may not enforce an assignment of the judgment against a co-judgment debtor without first seeking judicial determination of the proportionate share of the co-debtor’s liability. View "Duke v. Superior Court" on Justia Law

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Apple shareholders filed a consolidated derivative action concerning Apple’s alleged pursuit and enforcement of anticompetitive agreements with other Silicon Valley companies to prohibit the recruitment of each other’s employees. Plaintiffs alleged that certain current and former members of Apple’s board of directors were aware of or tacitly approved of Apple’s practices and breached their fiduciary duties by permitting the illegal agreements over many years. Plaintiffs alleged that the Apple board never disclosed settlements of an earlier action filed by the Department of Justice based on violations of the federal antitrust laws and several federal class action lawsuits brought by employees of Apple and other technology companies. Given each board member’s alleged role in participating in or allowing the illegal agreements, plaintiffs claimed that any demand on Apple's board to institute the derivative action against the individual defendants should be excused as a futile and useless act. The superior court found that an amended complaint adequately alleged demand futility as to the board in place when the original action was filed. The composition of the board of directors had changed in the interim. The court of appeal disagreed. The court was required to assess demand futility as to the board in place when the amended complaint was filed. View "Apple, Inc. v. Superior Court" on Justia Law

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ITV and the Company appealed the trial court's grant of a preliminary injunction for the Gurneys and Little Win, LLC. The Gurneys are the minority owners of the Company and formerly served as its CEOs. The Court of Appeal reversed the trial court's order to the extent that it reinstated the Gurneys to their positions managing the day-to-day operations of the Company. The court held that, under the terms of the employment agreements, the Company was entitled to terminate the Gurneys' employment at any time for good cause; the board may make decisions by majority vote, with the exception that some decisions require unanimity; the Gurneys' authority over the day-to-day operations of the Company was an exception to the exception; the exceptions to the exception did not grant the Gurneys lifetime jobs as managers of the Company; and the operating agreement, even when interpreted on its own, did not grant the Gurneys authority to manage the Company’s day-to-day operations indefinitely. Therefore, the court affirmed the portion of the preliminary injunction barring the Company from impinging on their rights as board members. View "ITV Gurney Holdings v. Gurney" on Justia Law

Posted in: Business Law, Contracts

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All Masonry & Landscape Supply (All Masonry) appealed a postjudgment order awarding attorney fees to Oldcastle, the prevailing party in a breach of contract action. Oldcastle manufactured masonry and concrete products, including its Belgard-branded concrete pavers and segmented retaining walls. All Masonry distributed landscape supplies and concrete products to customers. All Masonry claimed that in 2001, it entered into an agreement with Oldcastle to be Oldcastle's exclusive dealer of Belgard products in San Diego County. The 2001 dealer agreement was part written and part oral. In 2013, All Masonry sued Oldcastle for breaching the 2001 dealer agreement by distributing Belgard products through other dealers in San Diego County. Oldcastle prevailed on the breach of contract cause of action in 2015 when the court granted its motion for summary adjudication on that claim, rejecting All Masonry's contention that it had the exclusive right to sell Belgard at preferential pricing in San Diego County. Oldcastle filed a postjudgment motion to recover attorney fees in connection with All Masonry's breach of contract claim. The court awarded Oldcastle $180,120 in attorney fees for defending the breach of contract cause of action through summary adjudication and for litigating the postjudgment fees motion. The Court of Appeal reversed the award of attorney fees to Oldcastle, finding no clear and unequivocal evidence that the parties intended to incorporate the terms of a 2010 credit application into their 2001 dealer agreement, which was the basis of the fee award. Civil Code section 1642 does not allow the recovery of attorney fees in this case. View "R.W.L. Enterprises v. Oldcastle, Inc." on Justia Law

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Former restaurant employees sued their former employer, Koji’s Japan, Inc. (Koji’s), Koji’s president, sole shareholder and director Arthur Parent, Jr. (Parent), and A.J. Parent Company, Inc., otherwise known as America’s Printer (America’s Printer), of which Parent was also the president, sole shareholder and director. The plaintiff employees alleged wage and hour claims under the federal Labor Code and the Fair Labor Standards Act of 1938 (FLSA), claims under the California unfair competition law (Bus. & Prof. Code, sec. 17200), and a claim under the California Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, sec. 2699 et seq.). Considering this appeal as a petition for a writ of mandate, the Court of Appeal granted writ relief by holding: (1) the trial court erred by granting the motion to certify a class as to plaintiffs’ claims against only Koji’s because the court applied improper criteria in determining Parent’s potential liability as a joint employer on a class-wide basis; (2) the trial court prejudicially erred by denying plaintiffs’ revised motion to compel further responses to a set of document requests, and also by sanctioning plaintiffs’ counsel; (3) because the Court directed the trial court to vacate its order denying the revised motion to compel further responses to discovery on alter ego issues, the Court directed the trial court to also vacate its findings that Parent and America’s Printer were not Koji’s alter egos; and (4) although the trial court’s statement of decision correctly cited the controlling case law in this matter, the statement of decision misapplied the law as set by that case. View "Turman v. Superior Court" on Justia Law

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Laboratory Specialists International, Inc. (LSI) filed a complaint in Orange County Superior Court alleging causes of action against Shimadzu Scientific Instruments, Inc. (Shimadzu) for breach of contract, conversion, breach of the implied covenant of good faith and fair dealing, intentional interference with contractual relations, and intentional and negligent interference with prospective economic relations. LSI appealed when the trial court dismissed its lawsuit against Shimadzu under the forum selection clause in the parties’ contract. LSI contended Shimadzu erred by requesting a dismissal in its demurrer dismissal based on the forum selection clause, rather than by a separate motion, and that the trial court erred by granting Shimadzu leave to recast its request for dismissal in a separate motion. In the alternative, LSI argued the court erred by: (1) dismissing LSI’s tort claims, which LSI argued did not arise out of or “pertain[]” to the parties’ contract; (2) finding the forum selection clause mandated Maryland as the proper fourm, rather than conducting an analysis under discretionary forum non conveniens factors; and (3) dismissing rather than staying LSI’s lawsuit. As we explain, these contentions are without merit, and we therefore affirm the court’s dismissal order. View "Laboratory Specialists International v. Shimadzu Scientific etc." on Justia Law

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Intel acquired McAfee, in a cash sale at $48 per share. Plaintiff, a pension fund, on behalf of itself and a class, alleged that McAfee, Intel, and former members of McAfee’s board of directors, consisting of nine outside directors and the former president and CEO, DeWalt (defendants), engaged in an unfair merger process contaminated by conflicts; that DeWalt withheld material information about negotiations from McAfee’s directors, who failed to safeguard the process and approved an undervalued price; and that defendants omitted material information from the merger proxy statement on which McAfee’s shareholders relied in voting for the merger. The trial court, applying Delaware law, granted the defendants summary judgment, finding no triable issue of material fact regarding the individual defendants’ alleged breaches of fiduciary duty, and concomitantly no liability on behalf of the corporation for aiding and abetting. The court of appeal affirmed as to the nine directors and reversed as to DeWalt and the corporations. Plaintiff raised triable issues of material fact related to DeWalt’s apparent nondisclosure of arguably material information about a $50-per-share overture. DeWalt bears the burden under the enhanced scrutiny standard to show that he exercised his fiduciary duties in furtherance of the obligation “to secure the transaction offering the best value reasonably available.” View "Central Laborers' Pension Fund v. McAfee, Inc." on Justia Law