Untitled Document

2015 Commercial Law Developments, Prepared by the Business Law Section Commercial Transactions Committee for the 2015 Business Law Section Annual Report
IX. Contracts

A. Formation, Scope and Modification

  • In re Energy Futures Holding Co, 2015 Bankr. LEXIS 3701 (Bankr. D. Del. 2015) – Make-whole premium provision interpreted not to apply as a matter of contract law as a result of filing of bankruptcy.

  • Grand Prospect Partners, L.P. v. Ross Dress For Less, Inc., 232 Cal.App.4th 1332 (2015) – Court finds no procedural unconscionability where party refuses to negotiate with respect to a particular term.

  • Legras v Aetna Life Insurance Company, 786 F.3d 1233 (9th Cir. 2015) – As a matter of Federal common law, when counting days within which an act must occur, if the last day falls on a weekend the act may be performed on the next weekday.

  • Life Plans, Incorporated v. Security Life of Denver Insurance Company, 800 F.3d 343 (7th Cir. 2015) – Provision of agreement regarding three year term and termination was ambiguous.

  • In re Residential Capital, LLC, 2015 WL 2226232 (Bankr. SDNY 2015) – A depositary bank may use a ‘change of terms’ provision to make a depositor into a guarantor of debts of affiliates of fee depositor owed to bank.*

  • Teletracking Technologies, Inc. v. Gori, _ A.3d _ (Pa. 2015) (nonprecedential) - Right of first refusal does not prohibit transfer. A right of first refusal gives the holder of the right the legal privilege to purchase the object, subject to the right for the same price that the offeror is willing to pay for it. There is no legal requirement that the holder of the right be ‘capable’ of purchasing the object for same price.

  • Mohamed v. Uber Technologies, Inc., _ F.Supp.3d _ (ND Calif. 2015) – Electronic signature process is effective. But arbitration provision delegating ‘gateway’ issues not enforceable because not ‘clear and unmistakable’ and provision is unconscionable as is unilateral amendment provision.

  • Transverse, LLC v. Iowa Wireless, LLC, _ F.3d _ ( Cir. 2015) – May interpret contract by words that are typically objects of verbs used.

  • Cobb v. Ironwood Country Club, _ Cal.App.4th _ (2015) - Good faith makes contract with unilateral modification right not illusory.

  • Whitlow v. Rideout Memorial Hospital, _ Cal.App.4th _ (2015) – A hospital emergency room could be liable for acts of an independent contractor emergency room physician under principles of ostensible authority. The court held that such a doctor could be an ‘ostensible agent’ of the hospital, even though the admissions form, signs in the emergency room, and insignia on the doctor’s garments emphasized that the doctor was not an employee of the hospital. The court noted that because the patient was in ‘excruciating’ pain it may not be ‘reasonable’ to expect the patient to understand the import of all of the non-agent statements.

  • Kochins v. Evolution Marketing (NY Sup Ct, Appellate Division, First Department April 2, 2015) – Contract can be formed by email.

  • Bank of Brewton v. Travelers, _ F3d _ (11th Cir 2015) – A fraudulently obtained stock certificate not ‘counterfeit’ for purposes of an insurance policy.

  • Grandadino v. Wells Fargo Bank, _ Cal.App.4th _ (2015) – There is claim for promissory estoppel in absence of proof of oral promise for home loan modification.

  • BOKF, N.A. v. Caesars Entertainment Corporation, _ F.Supp.3d _ (S.D.N.Y. 2015) - Although the plain meaning of ‘and’ is ‘conjunctive’ and the plain meaning of ‘or’ is ‘disjunctive’, the meaning of words in a contract depend on ‘the context and usage in a particular contract’ to implement the ‘intent’ of the parties. The court said that those words could each have the opposite meanings, depending on the ‘context and usage’.

  • Kolchins Evolutions Markets (NY App Div April 2 2015) – E-mails can form binding agreement if they contain ‘essential’ terms of deal.

  • International Union v. General Motors, LLC, _ F.3d _ (6th Cir. 2015) – Integration clause not dispositive because scope of that clause itself has to be interpreted.

  • Siga Technologies Inc. v. Pharmathene Inc., _ A.3d _ (Del. DC. 23, 2015) – A party that breaches a “preliminary agreement” by not negotiating a definitive agreement in good faith may be liable for expectation damages (i.e., damages based on lost profits) if the non-breaching party can show that a definitive agreement would have been reached had the other party negotiated in good faith. The non-breaching party has to show “certainty” of the “fact” of damages, but not their amount. The breaching party bears the risk of the uncertainty of showing the amount of damages.

  • Bank SNB v. Flemming, _ F.Supp.3d _ (W.D. Okla. 2015) – Under Uniform Electronic Transactions Act borrower’s e-mails sufficiently acknowledged debt to create an enforceable signed agreement.

  • Campbell-Ewald Co. v. Gomez, _ U.S. _ (2016) – Under basic principles of contract law, an offer to make a contract, once rejected, has no continuing efficacy.

  • In Touch Concepts, Inc. v. Cellco Partnership, _ F.3d _ ( 2d Cir. 2015) (applying New York law) – Party to an agreement may exercise unilateral termination right. Implied duty of good faith does not restrict exercise of that right.

B. Interpretation and Meaning of Agreement

  • Chebotnikov v. Limolink, Inc., _ F.Supp.3d _ ( D. Mass. 2015) - As a general matter of contract interpretation, disputes “arising under,” “arising out of,” or “arising from” the terms of an agreement must have their inception in the agreement itself. That language does not encompass matters ‘related’ to the agreement or the relationship of the parties. The phrase “arising out of” is construed by courts. The court’s give a broader reading to “with reference to,” “relating to,” or “in connection with.”

C. Adhesion Contracts, Unconscionable Agreements, Good Faith and Other Public Policy Limits, Interference with Contract

  • MeehanCombs Global Credit Opportunities Funds, LP v. Caesars Entertainment Corp., No. 14-CV-7091 SAS, 2015 WL 221055 (S.D.N.Y. Jan. 15, 2015) – Trust Indenture Act § 316(b) requires unanimous consent to as protection of each noteholder’s right to obtain payment.

  • Grand Prospect Partners, L.P. v. Ross Dress For Less, Inc., _ Cal.App.4th _ (2015) – No procedural unconscionability where party refuses to negotiate with respect to a particular term.

  • Pringle v. Garcia, 2015 WL 3606391 (N.D. Ind. 2015) – The jury waiver in the parties’ Guaranty and Collateral Agreement was enforceable. The agreement was among sophisticated parties, the parties had the opportunity to read the agreement, and the waiver was printed in all capital letters and applied to all parties. As to the remaining defendants, there was no right to a jury with respect to the creditor’s request for an appointment of a receiver for the collateral, because that is an equitable remedy, but there was a right to a jury with respect to the count seeking replevin and foreclosure because those are legal remedies.

  • Tibble v. Edison Int’l, _ U.S. _ (2015) – Trustee of ERISA trust has common law trust duty to monitor appropriateness of investments at regular intervals.

  • Montgomery v. GCFS, Inc., _ Cal.App.4th _ (2015) – California finance lender may sell notes to unlicensed persons.

  • In re County of Orange, 784 F. 3d 520 (9th Cir. 2015) - Court held that the federal rule on jury waivers to be a constitutional minimum and incorporated into federal law California’s more protective law on jury waivers. The court declined to enforce the jury trial waiver.

  • Clear-View Technologies, Inc., v. Rasnick et al., F.3 – Court awarded damages.

  • Bozzio v. Emi Group Limited, _ F.3d _ (9th Cir. 2016) – A third-party beneficiary of a contract can bring an action, even if another aligned party is suspended and cannot bring an action.

  • Orcilla v. Big Sur, Inc., _ Cal.App.4th _ (2016) – Loan and loan modification documents were unconscionable where there was slight procedural unconscionability because the documents were in English only and English was the second language of the parties. Under the “sliding scale” test, the substantive unconscionability was “harsh” because the revised monthly loan payments exceeded their income by more than $1,000.

D. Risk Allocation

  • Lewis v. YouTube, LLC, _ Cal.App.4th _ (2016) – Contract clause stating that service provider would bear no liability “whatsoever” for damages resulting from “errors or omissions in any content or for any loss or damage of any kind incurred as a result of your use of and content posted, emailed, transmitted, or otherwise made available via the services, whether based on warranty, contract, tort, or any other legal theory” applied to contract claim. Limitation of liability was particularly appropriate in connection with provision of free service.

  • Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, 2015 N.Y. Slip Op. 07458 (1st Dept. Oct. 13, 2015) – Contract that provided that the “sole remedy” for misrepresentations or breaches of warranty was “to cure [the defect or breach] or repurchase” the loan. The cure or repurchase remedy was impossible (because the loans had been liquidated or foreclosed). The “sole remedy” provision would “leave plaintiffs without a remedy.” The court applied an equitable exception to the contractual limitation on remedies (which is generally enforceable under freedom of contract). This is similar to UCC section 2-719, Comment 1 provision that there should be a “minimum adequate remedy.”

  • Le Metier Beauty Investment Partners LLC v. Metier Tribeca, LLC, NYLJ 1202719289123 (Sup.Ct. App/ Div. 2015) – The enforceability of a defective non-reliance clause was evaluated as a ‘general disclaimer’.

  • MEG Holdings, LLC v. Sapphire, _ NY _ _ (NY Sup Ct 2015) – for an indemnity to cover two-party claims it must ‘unequivocally’ do so.

  • ACA Financial Guarantee v. Goldman Sachs & Co, _ NY _ (2015) – Recipient of misrepresentation that has ‘peculiar’ knowledge must investigate before reasonably relying.

  • Jimenez v. 24 Hour Fitness USA, Inc., _ Cal.App.4th _ (2015) – Prospective release may not release gross negligence or worse and nonverbal gestures may constitute a ‘representation.’

  • Heckart v. A-1 Self Storage, Inc., _ Cal.App.4th _ (2015) - Storage unit rental agreement, which provided for allocation of liability for damage or loss to stored property, was not ‘insurance’. The principal object of the rental agreement was the rental of storage space and thus the storage facility did not engage in the unlicensed sale of insurance.

  • Starbrands Capital v. Original MW, Inc., _ F.Supp.3d _ (D. Mass. 2016) – A contractual Indemnity clause should be interpreted to give effect to intention of parties and thus should not be interpreted to be limited to third party claims. A party to contract is prohibited as a matter of public policy from indemnifying itself or exempting itself from liability for its grossly negligent conduct or intentional misconduct. The reason for the prohibition is that permitting parties to limit their liability contractually for gross negligence or intentional torts “could fail to adequately disincentivize, punish, or compensate for wrongful conduct.” The prohibition applies to limited as well as total releases from liability and it applies to contractual as well as tort claims.

  • Alcoa World Alumina LLC v. Glencore Ltd., C.A. 15C-08-032 EMD CCLD (Del. Superior Court February 8, 2016) – Indemnification agreements are construed “strictly” against the indemnitee. The indemnification provisions of the 1995 Agreement did not expressly indemnify for “contractual liability” generally or the 1989 Agreement specifically. An indemnification agreement must have an “unequivocal undertaking” before there is an obligation to indemnify for a contractual liability that the indemnitee has assumed from the indemnitor. An agreement to hold the indemnitee “harmless” does not satisfy this requirement for any and all claims is insufficient to meet this test.

  • Trueblue, Inc. v. Leeds Equity Partners IV, LP, 2015 WL _ (Del. Ch. 2015) – A stock purchase agreement included a non-reliance provision. The seller made a pre-contractual promise that the agreement did not include. The non-reliance provision and the agreement’s integration provision did not preclude a claim for promissory fraud because the non-reliance provision excluded claims by the buyer for “actual fraud”. A claim for noncontractual fraud could be excluded only by an “explicit and unambiguous” non-reliance provision.

E. Choice of Law and Forum

  • Brown & Brown v. Johnson, _ NY _ _ (NY 2015) – Contractual choice of law provision will be upheld unless application of the chosen law would be ‘truly obnoxious.’

  • Verdugo v. Alliantgroup, L.P., 187 Cal. Rptr. 3d 613 (Cal. App. 2015), _ Cal.App.4th _ (2015) - Court refused to enforce a Texas choice-offorum clause because the court concluded that a Texas court was more likely to enforce the Texas choice-of-law clause than would be a California court, thus resulting in the complaining party’s loss of important California rights. The court noted that the party seeking to enforce the choice-of-forum clause argued that the Texas court was not likely to enforce the Texas choice-of-law clause. The court did not accept that argument.

  • Verdugo v. Alliantgroup, L.P., _ Cal.App.4th _ (2015) – Court does not enforce forum selection clause for another state because that state applicable law would have effect of waiving unwaivable provision of California labor law.

  • DirecTv, _ U.S. _ (2015) - An agreement had a California choice-oflaw clause and a pre-Concepcion arbitration provision. Under California law on the date of the agreement the arbitration clause was unenforceable under California law wiped out by Concepcion. A California appellate court, as a matter of California contract law, held that the California choice-of-law clause meant that the parties intended to apply California law as it (purportedly) existed on the date of the agreement, even though it turned out that California law on arbitration was not effective on that date (as subsequently explained in Concepcion). Thus the California court held the arbitration clause unenforceable under California cases abrogated by Concepcion. The U.S. Supreme Court acknowledged that it had no place expressing its views on California contract law. But the Supreme Court found the ‘reasoning’ so lacking that the Supreme Court held that the California decision was an ‘obstacle’ to the implementation of the federal policy in the Federal Arbitration Act and thus the Supreme Court held that the FAA preempted the result reached by the California court. The Court emphasized that lower courts have to follow the Supreme Court’s decisions and cannot get around national policy by tricky state law doctrines.

  • In re County of Orange, _ F3d _ (9th Cir 2015) – federal courts sitting in diversity to import, as the federal rule, state law governing jury trial waivers when state law is more protective than federal law of the jury trial right.

  • Utilipath, LLC v. Hayes, A., _ (Del Chan 2015) – Non-exclusive forum clause precludes objection to forum.

  • In re Libor-Based Financial Instruments Antitrust Litigation, _ F.Supp.3d _, 2015 WL 4634541 (S.D.N.Y. 2015) – The court addressed concepts of general jurisdiction and specific jurisdiction. In particular, concluded that specific jurisdiction had to be based on acts in the jurisdiction that included the wrongful acts. Court also considers whether forum selection clause operates as consent to jurisdiction and whether ‘related to’ language in clause applies to tort claims ‘related to’ the contract.

  • McDonald v. Whitewater Challengers, _ A _ (Pa. Superior Court 2015) – The place of accident governs contract under choice of law and exculpatory clause enforced.

  • Gucci America, Inc. v. Li, _ F.3d _ (__ Cir. 2015) – Court cannot assert general jurisdiction over foreign financial institution with local branch in absence of formation locally or principal office locally.

  • Ascension Insurance Holdings LLC v. Underwood, _ A. _ _ (Del.Ch. 2015) – Under Restatement of Conflict of Laws (Second) § 187, a choice-of-law clause providing for the application of Delaware law to a covenant not to compete will not be enforced where [complete]

  • BNSF Railway Company v. Superior Court for the County of Los Angeles (Kravoletz), _ Cal.App.4th _, 185 Cal. Rptr. 3rd 391 (2015) - A very large railway company was held not subject to the general jurisdiction of California courts, even though it had very significant operations in California, because its California operations were small compared to its operations in other jurisdictions.

  • Cardoni v. Prosperity Bank, _ F.3d _ (5th Cir. 2015) - Employment contracts contained Texas forum-selection and choice-of-law clauses, as well as noncompetition and nonsolicitation covenants that were valid under Texas law. Applying Section 187 of the Restatement (Second), the court found that, in the absence of the choice-of-law clauses, Oklahoma law would govern the contracts, and then compared the policies of the two states – ‘Texas’s view which prioritizes parties’ freedom to contract and Oklahoma’s which emphasizes the right to earn a living and competition.’ The Court found that that Oklahoma had a greater interest in applying its law than Texas. The court examined the third prong of Section 187(2), which is whether the application of Texas law would violate a ‘fundamental policy’ of Oklahoma. The court answered ‘yes’ with regard to the noncompetition covenants and ‘no’ with regard to the nonsolicitation covenants.

  • Verdugo v. Alliantgroup, L.P., _ Cal.App.4th _ (2015) - The implicated provisions were unwaivable.

  • Swan v. Santander Consumer USA, 2015 WL 1242767 (D. Md. 2015) – The debtors on a car loan were required to arbitrate, on a non-class basis, their claims against the secured party for violation of the Credit Grantor Closed End Credit provisions of the Maryland Commercial Law Code because the arbitration clause in the security agreement gives each party the right to impose arbitration and thus is not substantively unconscionable.

  • Taylor v. Santander Consumer USA, Inc., 2015 WL 5178018 (D. Md. 2015) – The debtors on a car loan were required to arbitrate their claims against the secured party for violating the Maryland Commercial Law Code in repossessing their vehicles because the debtor’s purchase orders, which contained the arbitration clause, had to be read together with simultaneously executed retail installment contracts. Although the arbitration allows the secured party to bring some claims in court, those exceptions did not invalidate the clause.

  • Conway v. Done Rite Recovery Services, Inc., 2015 WL 1989665 (N.D. Ill. 2015) – A debt collector that allegedly violated the Fair Debt Collection Practices Act and several state statutes could invoke the arbitration clause in agreement between the borrower and the secured party because the clause covered ‘any third party providing any good or services in connection with the origination, servicing and collection of amount due under the Contract.’

  • Martinez v. Bloomberg, 740 F.3d 211 (2d Cir. 2014) – Federal law determines the enforceability of a choice-of-court clause choosing foreign courts.

  • Lorely Financing v. Wells Fargo, _ F.3d _ ( Cir. 2015) - Klaxon choiceof- law rule (Federal court applies state choice-of-law rule in diversity cases) should also apply when the Federal court’s jurisdiction is based on a Federal question, but the court is also considering state law claims. New York law of disclaimers requires that the disclaimer ‘contain explicit disclaimers of particular representations that form the basis of the fraud claim’.

  • Hayes v. Delbert Services Corporation, _ F.3d _ (4th Cir. 2016) – A loan agreement provided that it was “subject solely to the exclusive laws and jurisdiction of the Cheyenne River Sioux Tribe.” It went on to provide that it was not “subject to the laws of any state of the United States of America.” The Court held that the provision was unenforceable. It distinguished Italian Colors on the basis that the Supreme Court in Italian Colors said that an arbitration clause could not waive the claim itself (there an antitrust claim), although it could make pursuing it really hard. In this case, the arbitration clause waived the claim itself (arising under Federal law) by purporting to say that Federal law did not apply (in the guise of a choice of law clause). It would have been as if the arbitration clause in Italian Colors said that the antitrust laws did not apply.

  • FdG Logistics LLC v. A&R Logistics Holdings, 2015 WL _ (Del. Ch. 2016) – A choice-of-law clause based on the Delaware statute supplants the rule of Restatement of Conflicts of Law (Second) sc 187 by satisfying the various requirements of that section. It does not bring into play all of Delaware statutory law that would not otherwise apply (such as state securities law). It does include tort claims relating to the enforcement of the agreement. The contract’s non-reliance clause was not sufficiently “specific” and “clear” to rule out pre-contractual statements. The court emphasized that the person asserting a claim based on a misrepresentation should affirmatively state what it has and has not relied upon. It was not sufficient for the seller to disclaim making other representations.

F. Damages and Remedies

  • Mahlum v. Adobe Systems Incorporated, _ F.Supp.2d _ (N.D. Calif. 2015) – An early termination fee is not ‘liquidated damages’ and thus not analyzed to determine if it’s a ‘penalty’.

  • Phillips v. Carlton Energy Group, LLC, SW _ (Texas 2015) – Lost profits damages must be proven with ‘reasonable certainty.’

  • Agam v. Gavra, _ Cal.App.4th _ (2015) – Plaintiff has burden of proof to show expenses arising from breach and defendant has burden to show that losses would have occurred anyway.

  • Diaz v. Kulber Corporation, _ F.3d _ (9th Cir. 2015) – Creditor may recover prejudgment interest under California law if the debt in question was certain or capable of being made certain at that time. [check name]

  • PNC Bank, Nat. Ass’n v. Wolters Kluwer Financial Services, Inc., _ F.Supp.3d _ (SDNY 2014) – Evaluates whether damages are ‘consequential’ or ‘direct’ and enforces exclusion of ‘consequential’ damages.

  • Calandrillo v. GoDaddy, _ NJ _ (NJ Superior Court 2015) – Economic loss doctrine applies where claim essentially seeks economic damages and relationship is contractual.

  • CHMM v. Freeman Marine Equipment, _ F.3d _ ( 9th Cir. 2015) – Discusses the ‘other property’ exception to the economic loss doctrine. The case concerned whether property added to a ship by the buyer before delivery was ‘other property’. The Court, applying California law, held that it was ‘other property’, summarizing the rule as follows: ‘Where the manufacturer of a product had no responsibility for manufacturing or assembling items that the user adds to the product, the user-added items are considered “other property” for purposes of the economic loss doctrine.’ The Court pointed out that the seller’s warranty would not typically apply to the buyer-added property, so that it was fair to allow the buyer to bring an action in tort for damage to the buyer-added property, which would not be an ‘end run’ on contract law.

  • In Re Borsos, (Bankr. E.D.Calif. 2016) – A judgment debtor filed for bankruptcy. The creditor commenced a proceeding in the Bankruptcy Court to declare the debt nondischargeable. Under then existing law, the court ruled that the debt was nondischargeable and for that reason allowed the creditor to garnish the wages of the debtor, which it did ($15,000). The Supreme Court then ruled (in a different case) on an issue that prompted the Bankruptcy Court to reverse its earlier judgment of nondischargability. The debtor then sought restitution of the amounts that had been garnished. Citing to Restatement (Third) of Restitution sc 18, the court awarded restitution, for property taken based on a judgment subsequently reversed.

  • Boston LLC v. Juarez, _ Cal.App.4th _ (2016) – A lease, as a contract, may be terminated only for a “material” breach. A “trivial” or “technical” breach is not sufficient. This is so even if the contract provides that a non-material breach is sufficient to allow the termination of the contract.

G. Arbitration

  • Lexel Imaging Systems, Inc. v. Video Display Corp, 2015 WL 403140 (E.D.Ky. 2015) – Scope of arbitration clause does not require arbitration to determine if ‘default’ exists before secured party exercises self-help.

  • Kaveny v. OneMain Financial, Inc., 2015 WL 3491528 (Ill. Ct. App. 2015) – An arbitrator should have decided whether the debtor’s action against his secured party for violating the Illinois Vehicle Code by failing to release its lien and deliver a clean certificate of title within 21 days of when the secured obligation was paid off fell within the scope of the parties’ arbitration clause, which exempted from its scope exempts actions ‘to the extent necessary to obtain a judicial order for the purpose of . . . establishing, perfecting or clearing title, with respect to an interest in property.’ However, the court had to determine whether the defendant was covered by the arbitration clause, which extended to the initial secured party and ‘its past, present or future respective parents, subsidiaries, affiliates, predecessors, assignees, [and] successors.’

  • Berent v. CMH Homes, Inc., 466 S.W.3d 740 (Tenn. 2015) – While a one-sided arbitration clause can be unconscionable, a clause that required arbitration of all claims except those falling within the jurisdiction of small claims court and the seller’s claims to enforce its security interest or to seek preliminary relief was not unconscionable because the seller provided a business justification for the limited exception for foreclosure proceedings. Consequently, the debtor’s claims against the seller for breach of contract, fraud, and violation of the Tennessee Consumer Protection Act were subject to arbitration.

  • Machado v. System4 LLC, Mass _ (Mass. 2015) – Court permitted a nonsignatory to bind a signatory to an arbitration agreement.

  • Pershing v. Bevis (Texas 2015) – no agreement to arbitrate.

  • In re County of Orange, 784 F. 3d 520 (9th Cir. 2015) - Court held that the federal rule on jury waivers to be a constitutional minimum and incorporated into federal law California’s more protective law on jury waivers. The declined to enforce the jury trial waiver.

  • Atalese v. U.S. Legal Services Group, L.P., A. _ (2014) – Arbitration clause not enforceable unless clearly discloses waiver of right to sue.

  • Sanford v. Bracewell & Guiliani, LLP, _ F.3d _ ( 3rd Cir. 2015) – A person that seeks to enforce a contract is equitably estopped from opposing enforcement of an arbitration clause in that contract by the other party.

  • Sanchez v. Valencia Holding Co., LLC, _ Cal. 3d _ (2015) – After Concepcion, FAA allows unconscionability evaluation if not directly concerning arbitration. Substantive unconscionability does not protect against ‘bad bargain.’

  • Williams v. Superior Court, _ Cal.App.4th _ (2015) – Because Private Attorney General Claim ‘innures’ to state under Iskanian, PAGA claim cannot be split into personal and non-personal aspects and none are arbitrable.

  • Conway v. CLC Bio, LLC, _ NE _ _ (Mass. App. 2015) – Arbitrator has broad discretion to review scope of arbitration and under Italian Colors may decide statutory claims.

  • Royston, Rayzor v. Lopez, _ SW _ _ (Texas 2015) – Texas Supreme Court enforces an arbitration provision. It holds that a largely one-sided provision is not unconscionable (by characterizing the one-sidedness as a scope provision).

  • Natalini v. Import Motors Inc., _ Cal.App.4th _ (2015) (unpublished) - Party seeking arbitration must prove the existence of an agreement to arbitrate.

  • Lexel Imaging Systems, Inc. v. Video Display Corp., _ F.Supp.3d _, 2015 WL 403140 (E. D. Ky. 2015) - Scope of arbitration clause does not require arbitration to determine if ‘default’ exists before secured party exercises self-help.

  • Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, _ F.3d _ (3d Cir. 2016) – The availability of class arbitration constitutes a ‘question of arbitrability’ to be decided by the court – and not the arbitrators – unless the parties’ arbitration agreement ‘clearly and unmistakably’ provides otherwise. Ordinary state law rules of contract interpretation are modified to include that requirement in this circumstance.

  • Credit Suisse Securities (USA) LLC v. Tracey, No. 15-345-Cv, _ F.3d _ (2d Cir. January 28 2016) – FINRA rules do not prevent predispute agreement to arbitrate before a non-FINRA forum.

  • Katz, Nannis & Solomon, P.C. v. Levine, __ NE __ (Mass SJC 2016) – The parties to a contract cannot vary by agreement the grounds for judicial review of an arbitration decision under the Massachusetts arbitration statute.

  • Case Del Caffe Vergnano S.P.A. v. Italflavors LLC, _ F.3d _ (9th Cir. 2016) - Enforceability of a contract that includes an arbitration clause is determined under Federal law, which applies “general principles” of contract law, usually as stated in the Restatement of Contracts (Second). Applying those principles, the court held that the contract was unenforceable because a simultaneous agreement between the parties said that the contract that included the arbitration agreement was of no effect. Thus the court concluded that that contract was a “sham.”

H. Personal Jurisdiction

  • Insurance Corp. of Ireland v. Compagnie Des Bauxites de Guinee, 456 U.S. 694 (1982) – Requirement of personal jurisdiction represents an individual right and can be waived.

  • Daimler Ag 27 v. Bauman, 134 S. Ct. 746, 754 (2014) – Defendant’s affiliations with the forum must be “so ‘continuous and systematic’ as to render them essentially at home” in the forum (quoting Goodyear, 131 S. Ct. at 2851).

  • In re Western States Wholesale Natural Gas Antitrust Litigation, 715 F. 3d 716 (9th Cir. 2013) – A lawsuit arises out of a defendant’s contacts with the forum state if a direct nexus exists between those contacts and the cause of action (“but for” test).

  • Martinez v. Aero Caribbean, 764 F.3D 1062 (9th Cir. 2014) – Service of process on a corporate officer temporarily present in the State may not be sufficient to establish general personal jurisdiction over the corporation.

  • Daimler Ag v. 25 Bauman, 134 S. Ct. 746 (2014), – “[A] corporation can purposefully avail itself of a forum by directing its agents or distributors to take action there.”

  • Walden v. Fiore, 134 S. Ct. 1115 (2014) – In the tort context, specific jurisdiction may be “based on intentional conduct by the defendant that creates the necessary contacts with the forum.”

  • New Earthshell Corp. v. Lycos Internet Ltd., 2015 WL 170564 (D.N.J. 2015) – A secured party that had a pending action in New York against the debtor, a Delaware entity with its principal place of business in California, and several foreign entities was not entitled to a preliminary injunction in a New Jersey action against commingling or transferring any portion of the collateral with other revenues, accounts receivable or the proceeds because it was not clear that the court had personal jurisdiction over the defendants. There was no allegation that the defendants knew that the secured party’s principal place of business was in New Jersey or that they made any contact with the secured party in New Jersey. The allegation that defendants improperly took possession of the collateral arises out of transactions among the defendants, Israeli and Indian entities, that did not involve the secured party, were negotiated and executed in Israel, are governed by Israeli law, and are subject to the jurisdiction of Israeli courts.

  • Brown v. Lockheed Martin Marietta Corporation, _ F.3d _ (2d Cir. 2016) – State does not have general personal jurisdiction over corporation registered to do business in the state where the corporation does significant business in the state. Registration is not consent to jurisdiction and corporation is not “at home” in the state where it is not formed under the law of that state nor does it have its chief executive office in that state.

  • Americold Realty Trust v. Conagra Foods, Inc., _ U.S. _ (2016) – A real estate investment trust is a citizen of the state of its shareholders and members for purposes of diversity jurisdiction.

X. Other Laws Affecting Commercial Transactions | Table of Contents