Justia U.S. 10th Circuit Court of Appeals Opinion Summaries

Articles Posted in Business Law
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When Seminole Nursing Home, Inc. failed to pay $61,916.19 in federal employment taxes due for 2013, the IRS provided notice to Seminole of its intent to issue a levy to collect these unpaid taxes plus penalties and interest. Seminole challenged the validity of a Tax Code regulation that restricts economic hardship to individual taxpayers who fail to pay delinquent taxes after notice and demand. Seminole contended the economic-hardship exception should be applied to all taxpayers, including corporations. The United States Tax Court rejected the contention on the ground that the regulation was a reasonable interpretation of an ambiguous statute. The Home appealed, but agreeing with the Tax Court, the Tenth Circuit Court of Appeals affirmed. View "Seminole Nursing Home v. Comm'r of Internal Revenue" on Justia Law

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Hetronic International, Inc., a U.S. company, manufactured radio remote controls, the kind used to remotely operate heavy-duty construction equipment. Defendants, none of whom were U.S. citizens, distributed Hetronic’s products, mostly in Europe. After about a ten-year relationship, one of Defendants’ employees stumbled across an old research-and-development agreement between the parties. Embracing a “creative legal interpretation” of the agreement endorsed by Defendants’ lawyers, Defendants concluded that they owned the rights to Hetronic’s trademarks and other intellectual property. Defendants then began manufacturing their own products—identical to Hetronic’s—and selling them under the Hetronic brand, mostly in Europe. Hetronic terminated the parties’ distribution agreements, but that didn’t stop Defendants from making tens of millions of dollars selling their copycat products. Hetronic asserted numerous claims against Defendants, but the issue presented on appeal to the Tenth Circuit centered on its trademark claims under the Lanham Act. A jury awarded Hetronic over $100 million in damages, most of which related to Defendants’ trademark infringement. Then on Hetronic’s motion, the district court entered a worldwide injunction barring Defendants from selling their infringing products. Defendants ignored the injunction. In the district court and before the Tenth Circuit, Defendants focused on one defense in particular: Though they accepted that the Lanham Act could sometimes apply extraterritorially, they insisted the Act’s reach didn’t extend to their conduct, which generally involved foreign defendants making sales to foreign consumers. Reviewing this matter as one of first impression in the Tenth Circuit, and after considering the Supreme Court’s lone decision on the issue and persuasive authority from other circuits, the Tenth Circuit concluded the district court properly applied the Lanham Act to Defendants’ conduct. But the Court narrowed the district court’s expansive injunction. Affirming in part, and reversing in part, the Court remanded the case for further consideration. View "Hetronic International v. Hetronic Germany GmbH, et al." on Justia Law

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On a Monday, Medicredit, a debt collection agency, received a letter from a consumer, plaintiff-appellee Elizabeth Lupia, demanding that it cease calling her about an unpaid medical debt. The next day, before Medicredit processed the letter, it called Ms. Lupia again about the debt. This call served as grounds for Ms. Lupia's suit under the Fair Debt Collection Practices Act (FDCPA). According to Medicredit, its Tuesday call was a bona fide error, thereby shielding the agency from liability. Lupia argued Medicredit’s policy allowed for more time than that: permitting up to three business days of lag time between its receipt and processing of mail (which was how long it took Medicredit to process the letter). For that, Lupia contended, Medicredit could not shield itself under the bona fide-error defense. The district court agreed and granted Lupia’s motion for summary judgment. On appeal, Medicredit challenged Lupia’s standing in federal court and claimed the district court committed several reversible errors in granting Lupia’s motion. After review, the Tenth Circuit found no merit in any of these claims, and affirmed the district court. View "Lupia v. Medicredit" on Justia Law

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In 2005, Appellee Reorganized FLI, Inc.1 (“Farmland”) brought an action against Appellants alleging violations of the Kansas Restraint of Trade Act (“KRTA”). Farmland sought, amongst other things, full consideration damages pursuant to Kan. Stat. Ann. section 50-115. In 2019, Appellants moved for summary judgment on Farmland’s claims, arguing the repeal of section 50-115 operated retroactively to preclude Farmland from obtaining any relief. The Kansas District Court denied the motion for summary judgment but granted Appellants’ motion for leave to file an interlocutory appeal with the Tenth Circuit Court of Appeals. Appellants sought reversal of the district court’s denial of summary judgment and a ruling ordering the district court to enter judgment in their favor. After review, for reasons different from the district court, the Tenth Circuit concluded 50-115 applied retroactively to foreclose Farmland from recovering full consideration damages, Farmland was entitled to other relief if it prevailed on the merits of its claims. Thus, the repeal of 50-115 did not leave Farmland without a remedy and Appellants were not entitled to summary judgment. View "Reorganized FLI v. Williams Companies" on Justia Law

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Respondents-Appellants DynaResource de Mexico, S.A. de C.V. and DynaResource, Inc. (“DynaResources”) appealed the district court’s confirmation of an arbitration award in Applicant-Appellee Goldgroup’s favor. This case involves a protracted dispute over a contract relating to a gold mining operation in Mexico. Goldgroup is a subsidiary of a Canadian company with a portfolio of projects in Mexico. DynaUSA, a Texas-based company, incorporated DynaMexico specifically for the purpose of developing the San Jose de Gracia property in the Sinaloa region of Northern Mexico. In 2006, Goldgroup and DynaResources entered into an Earn In/Option Agreement (the “Option Agreement”) which gave Goldgroup the right to earn up to a 50 percent equity interest in DynaMexico if Goldgroup invested a total of $18 million in four phases over approximately four years. The Option Agreement contained a dispute resolution provision specifying that “[a]ll questions or matters in dispute under this Agreement shall be submitted to binding arbitration . . . in Denver, Colorado under the Rules of the American Arbitration Association (‘AAA’) by a single arbitrator selected by the parties.” The Option Agreement also states that Mexican law applies “in respect to the shares of DynaMexico and the acquisition thereof,” and that venue and jurisdiction for any dispute under the Option Agreement would be in Denver. In 2011, Goldgroup exercised its option, became a 50 percent shareholder in DynaMexico, and appointed two directors. However, before the parties could agree on the fifth director, their relationship broke down due to a dispute over management issues. In 2012, DynaResources filed the first of numerous lawsuits between the parties; Goldgroup defended in part by arguing that DynaResources’s claims were subject to arbitration. Finding no reversible error to the district court's judgment, the Tenth Circuit Court of Appeals affirmed. View "Goldgroup Resources v. Dynaresource De Mexico" on Justia Law

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Southern Furniture Leasing, Inc. filed a putative class action against a group of less-than-truckload (“LTL”) freight carriers, all predecessors to or current subsidiaries of YRC, Inc. Southern Furniture alleged YRC “carried out a widespread and systematic practice of overcharging its customers by intentionally using inflated shipment weights when determining shipment prices.” YRC asked the Tenth Circuit to affirm on the alternate ground that Southern Furniture failed to allege Article III standing. The district court rejected YRC’s standing argument, and the Tenth Circuit agreed with its analysis. The district court granted YRC’s motion to dismiss on the grounds that Southern Furniture had only 180 days to contest the alleged overcharges under 49 U.S.C. 13710(a)(3)(B). To this, the Tenth Circuit concurred and affirmed. View "Southern Furniture Leasing v. YRC" on Justia Law

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Defendants Garrett Reed, Reilly Reed, Element Services, LLC, Jhenna Reed, Reedesign Concepts, and Robert Kubistek appealed a district court order remanding this case from federal district court to Colorado state court due to lack of subject matter jurisdiction. Plaintiff Elite Oil Field Enterprises, Inc. (Elite) moved to dismiss the appeal for lack of appellate jurisdiction. Plaintiff Elite was a Colorado corporation formed in March 2012 to provide roustabout services for the oil field industry. Immediately after its formation, Elite formed two subsidiaries: Elite Oil Field Services, Inc. and Elite Oil Field Equipment, Inc. At some point after the formation, Reilly Reed (Reilly) became upset that he only had a 25% ownership interest in Elite and believed that he was entitled to a 50% share. Reilly and his brother Garrett Reed (Garrett), allegedly devised a scheme for Reilly to form, surreptitiously, a competing company known as Element Services, LLC (Element), and for Element to improperly lure away Elite’s customers and employees with the intent of economically harming Elite and rendering Elite unable to continue its operations. As part of the scheme, Reilly filed a civil lawsuit in Colorado federal district court against Elite, its two subsidiaries, his former business partner Dustin Tixier, and business manager Jason Whisenand, alleging in pertinent part, Elite's corporate documents were altered such that Reilly owned only 25% of the total outstanding corporate stock rather than the originally agreed upon 50%. Plaintiffs moved to transfer and consolidate the multiple civil suits and counterclaims to Colorado state court. The Tenth Circuit determined it lacked subject matter jurisdiction over the appeal, thereby granting Elite's motion to dismiss this appeal. View "Elite Oil Field Enterprises v. Reed" on Justia Law

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After a boiler exploded at a refinery, the Occupational Safety and Health Administration (OSHA) cited the refinery’s owner, Wynnewood Refining Co., LLC, for violating 29 C.F.R. section 1910.119, which set forth requirements for the management of highly hazardous chemicals. The Occupational Safety and Health Review Commission (the Commission) upheld the violations, noting that the refinery had previously violated section 1910.119, but the prior violations occurred before Wynnewood LLC owned the refinery, and therefore occurred under a different employer. Accordingly, the Commission did not classify the violations as “repeat[] violations” under 29 U.S.C. 666(a), which permitted increased penalties for “employer[s] who willfully or repeatedly violate[]” the regulation. Wynnewood appealed the Commission’s order, arguing that section 1910.119 did not apply to the boiler that exploded. The Tenth Circuit found section 1910.119’s plain text unambiguously applied to the boiler, and affirmed that portion of the Commission’s order upholding the violations. The U.S. Secretary of Labor also appealed the Commission's order, arguing the Commission erred by failing to characterize the violations as repeat violations. To this, the Tenth Circuit agreed Wynnewood was not the same employer as the refinery's previous owner, thus affirming that portion of the Commission's order relating to the repeat violations. View "Scalia v. Wynnewood Refining" on Justia Law

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The parties to this appeal were a Bolivian company, Compania de Inversiones Mercantiles S.A. (“CIMSA”), and Mexican companies known as Grupo Cementos de Chihuahua, S.A.B. de C.V. and GCC Latinoamerica, S.A. de C.V. (collectively “GCC”). Plaintiff-appellant CIMSA brought a district court action pursuant to the Federal Arbitration Act to confirm a foreign arbitral award issued in Bolivia against Defendant-appellee GCC. The underlying dispute stemmed from an agreement under which CIMSA and GCC arranged to give each other a right of first refusal if either party decided to sell its shares in a Bolivian cement company known as Sociedad Boliviana de Cemento, S.A. (“SOBOCE”). GCC sold its SOBOCE shares to a third party after taking the position that CIMSA failed to properly exercise its right of first refusal. In 2011, CIMSA initiated an arbitration proceeding in Bolivia. The arbitration tribunal determined that GCC violated the contract and the parties’ expectations. GCC then initiated Bolivian and Mexican court actions to challenge the arbitration tribunal’s decisions. A Bolivian trial judge rejected GCC’s challenge to the arbitration tribunal’s decision on the merits. A Bolivian appellate court reversed and remanded. During the pendency of the remand proceedings, Bolivia’s highest court reversed the appellate court and affirmed the original trial judge. But as a result of the simultaneous remand proceedings, the high court also issued arguably contradictory orders suggesting the second trial judge’s ruling on the merits remained in effect. GCC filed a separate Bolivian court action challenging the arbitration tribunal’s damages award. That case made its way to Bolivia’s highest court too, which reversed an intermediate appellate court’s nullification of the award and remanded for further proceedings. Invoking the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, CIMSA filed a confirmation action in the United States District Court for the District of Colorado. After encountering difficulties with conventional service of process in Mexico under the Hague Convention on Service Abroad of Judicial and Extrajudicial Documents, CIMSA sought and received permission from the district court to serve GCC through its American counsel pursuant to Federal Rule of Civil Procedure 4(f)(3). The district court then rejected GCC’s challenges to personal jurisdiction, holding (among other things) that: (1) it was appropriate to aggregate GCC’s contacts with the United States; (2) CIMSA’s injury arose out of GCC’s contacts; (3) exercising jurisdiction was consistent with fair play and substantial justice; and (4) alternative service was proper. The district court rejected GCC's defenses to CIMSA's claim under the New York Convention. Before the Tenth Circuit Court of Appeals, the Court affirmed the district court: the district court properly determined that CIMSA’s injury arose out of or related to GCC’s nationwide contacts. "The district court correctly decided that exercising personal jurisdiction over GCC comported with fair play and substantial justice because CIMSA established minimum contacts and GCC did not make a compelling case to the contrary." The Court also affirmed the district court's confirmation of the arbitration tribunal's decisions. View "Compania De Inversiones v. Grupo Cementos de Chihuahua" on Justia Law

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In 2015, the Government filed a civil action against Neldon Johnson, Gregory Shepard, and Johnson’s three companies: RaPower-3 LLC (“RaPower”), International Automated Systems, Inc. (“IAS”), and LTB1, LLC (“LTB”) (collectively, Defendants). The Government alleged Defendants promoted an abusive tax scheme. Following a bench trial, the district court found for the Government, enjoined the Defendants from further promoting their scheme, and ordered disgorgement of ill-gotten gains. In 2018, the district court appointed a receiver (Appellee) to take control of Defendants' assets and to investigate whether their affiliated entities possessed proceeds from the illicit tax scheme. On the Receiver’s recommendation, the court added 13 nonparty affiliated entities to the Receivership. Six of the added entities (“Appellant Entities”) appeals, arguing the district court included them in the Receivership without providing sufficient due process. Finding the "Receivership Expansion Order" was not immediately appealable because the Appellant Entities did not show the order was final, the Tenth Circuit dismissed the appeal for lack of jurisdiction. View "United States v. RaPower-3" on Justia Law