Krog Business Cases Logo

The KBC Report

A Quarterly Judicial Review

Volume I, Issue 2
July 2021

Introduction

Welcome to Issue 2! We have made formatting changes that we hope will make the Report easier to navigate and read. You can also now follow us on Twitter for additional updates and cases.

This quarter featured no published business-related cases from the Tennessee Court of Appeals. But we have four from the Tennessee Supreme Court (but still no decision in Milan Supply Chain Solutions Inc. v. Navistar Inc., the pending economic-loss-doctrine case): interpreting the noneconomic-damages cap (Yebuah, appeals), the Prompt Pay Act (Snake Steel, contractors), private rights of action under the statute governing casualty-insurance payouts (Affordable Construction Services, insurance; spoiler: there isn’t one), and when a common owner’s right to record restrictive covenants ends (Phillips, real property).

We also have some important federal decisions on the extent of the states’ power to regulate web commerce (Online Merchants Guild, consumer protection), federally mandated ADR under ERISA plans (Baker, ERISA), the extent (or lack) of first-amendment protections in building-permit proceedings (Burns, land-use regulation), and the extent of local governments’ powers to impose fees and exactions on telecom companies (City of Eugene, telecom regulation).

As always, I hope you find the Krog Business Cases Report useful, and perhaps entertaining. You can subscribe to emails via the website, or sign up for updates via RSS.

Get the KBC delivered to your inbox.
Older Issues

Topical Index

Agriculture

Ackerman v. United States Department of Agriculture, 995 F.3d 528 (6th Cir. 2021)
The Department of Agriculture approves crop-insurance policies, and regulations require a particular process for “significant changes” to policy offerings. The Department properly approved a particular crop-insurance policy, but later overlooked a mistake in an application to extend the policy to a new state and approved it via the quick route for “non-significant changes.” Ouch: the mistake in the policy made its coverage illusory. Because the mistake made the new policies significantly different from the old policies, the USDA improperly approved them and should not have obtained summary judgment over the farmers who sued when they received no insurance proceeds.

Appeals

Prewitt v. Saint Thomas Health, No. M2020-0858 (Tenn. Ct. App. April 14, 2021)
Plaintiff sued hospital, and hospital persuaded trial court to dismiss case on two independent grounds. The plaintiff appealed, but only briefed an argument about one of the grounds. That was a mistake: the Court of Appeals held the argument on the second ground waived, and summarily affirmed based on the existence of an unchallenged, independent basis for the trial court’s ruling.

Yebuah v. Center for Urological Treatment, — S.W.3d — (Tenn. 2021)
The Supreme Court first suggested that issue-preservation rules applied at the application-for-permission-to-appeal stage in 2019 in the TWB Architects case. Here the court suggests it is serious about that doctrine, holding a constitutional issue waived because the plaintiff did not raise it in its answer to the defendant’s Rule 11 application. And if you made it to that point in the opinion, you would have seen that the $750,000 statutory cap for noneconomic damages applies jointly, not individually, to personal-injury and derivative consortium claims.

Arbitration

International Energy Ventures Management LLC v. United Energy Group Ltd., 999 F.3d 257 (5th Cir. 2021)
The Defendant agreed to pay the Plaintiff a finder’s fee for brokering a business deal, but never paid it. So the Plaintiff sued, and spent months litigating removal and defending a motion to dismiss for want of jurisdiction. Then it changed its mind and filed for arbitration under the parties’ agreement. (There winds up being another lawsuit and another arbitration, all of which takes years.) Did the Plaintiff waive its right to arbitrate, and who gets to decide that? Yes, filing the lawsuit was inconsistent with invoking arbitration and generating years of expense and delays (even if other causes contributed to the delays) was prejudicial, yielding waiver. And the courts, not the arbitrator, should have decided that question, because the parties’ agreement to arbitrate “all issues” wasn’t an explicit agreement to arbitrate waiver-by-litigation.

Bankruptcy

In re Estate of Ramey, No. E2020-0270 (Tenn. Ct. App. April 23, 2021)
Beneficiary of a decedent’s estate declares Chapter 7 bankruptcy; during his bankruptcy, the estate’s administrator sells the estate’s principal asset (a house). Because the beneficiary’s interest in the estate passed to his Chapter 7 trustee when he filed bankruptcy, he lacked standing to sue the administrator for botching the sale.

Smith v. U.S. Bank N.A. (In re Smith), 999 F.3d 452 (6th Cir. 2021)
The bankruptcy code says the court “shall dismiss a case” at the request of a Chapter 13 debtor. Is there an exception for demonstrable bad faith? No, says the Sixth Circuit: “shall” means “shall.” If the debtor is a bad actor, the court and creditors should invoke the bankruptcy code’s numerous bad-actor tools, of which this statute is not one.

Brokers

Soto v. Presidential Properties LLC, No. E2020-0375 (Tenn. Ct. App. April 27, 2021)
Defendant offers a home for sale and enters a contract to sell it to the plaintiff. Oops! Defendant does not own the home and only has a lease-to-own arrangement, so its conduct (and that of its owner, who signed in his individual capacity) violates the Tennessee Real Estate Broker License Act (because, in addition to not owning the house, the defendants do not have a broker’s license). Misrepresenting the status of the home’s title also violated the Tennessee Consumer Protection Act, so the plaintiff received attorney’s fees at trial and on appeal.

Condominiums

Ernest B Williams IV PLLC v. The Association of Unit Owners of the Five Hundred and One Union Building, No. M2019-2114 (Tenn. Ct. App. April 7, 2021)
The defendant won the contest for who could have the longest entity name, and it also won the dispute in this case over the procedure for distributing sales proceeds among unit owners when a condominium is terminated (you have to obtain an appraisal, and you divvy the proceeds per the appraisal unless 25% of the association’s voting rights vote otherwise).

Consumer Protection

Online Merchants Guild v. Cameron, 999 F.3d 540 (6th Cir. 2021)
When the price for cleaning products sold by third-party merchants on Amazon rose precipitously at the beginning of the covid-19 pandemic, the Kentucky Attorney General threatened to sue third-party sellers located in Kentucky for price gouging in sales to Kentucky residents. And according to the Sixth Circuit, the dormant commerce clause does not prevent him from doing that: even though third-party sellers cannot set geographically restricted prices on Amazon (and so have to sell at one national price), the national effect of Kentucky’s price-gouging statute flows wholly from Amazon’s decision about how to structure its marketplace. The interstate effect is thus neither direct nor inevitable, and so not prohibited by the dormant commerce clause.

Contracts

NuLife Ventures LLC v. Avacen Inc., No. E2020-1157 (Tenn. Ct. App. April 15, 2021)
Plaintiff sold products manufactured by defendant, and defendant agreed not to circumvent plaintiff by selling directly to consumers. When defendant began selling the products directly to consumers and recruiting plaintiff’s resell partners to work with it, plaintiff sued, but the trial court denied it an injunction based on lack of irreparable injury. On direct immediate appeal from the injunction ruling, the Court of Appeals reversed, finding an adequate showing that the defendant’s conduct posed a severe risk to plaintiff’s reputation and the existence of its business, which sufficed as “irreparable.”

LVH LLC v. Freeman Investment LLC, No. M2020-0698 (Tenn. Ct. App. May 14, 2021)
Plaintiff executed an option contract with defendant, but the contract repeatedly referred to the need for the parties to “agree” on a purchase price once the option was exercised. Even though one part of the contract had parts of a price formula, the document as a whole was an unenforceable agreement to agree. Summary judgment for specific performance reversed.

Bowers v. Estate of Mounger, No. E2020-01011 (Tenn. Ct. App. May 27, 2021)
The estate contracted to sell land to the plaintiff, but it turned out the estate could not deliver clear title at the specified time (one of the decedent’s sons squatted on the land claiming under an unrecorded purported deed). By the time the cloud is cleared, the plaintiff no longer wants to buy and there is no sale. Who gets the earnest money? The plaintiff does, because the estate’s failure to deliver marketable title was the first (and only) material breach. The plaintiff’s failure to get a title search was not a material breach, even though specified in the contract, because it was not for the defendant’s benefit. Also of note: the Court of Appeals applies Killingsworth v. Ted Russell Ford Inc. to require an appellant from a non-merits disposition to seek attorney’s fees on appeal or lose them, even if his ultimate entitlement to them (because they turn on the merits) is not itself at issue in the appeal. The plaintiff’s case had previously been dismissed for want of standing, a ruling reversed in a prior appeal. The Court of Appeals held the trial court could not award fees for that appeal, though, because they were not requested at the time.

Jones v. Reda Homebuilders Inc., No. M2020-0597 (Tenn. Ct. App. June 10, 2021)
Defendant built Plaintiffs a house and did it poorly, so the Plaintiff sued. Defendant admitted the existence of defects, but the Plaintiffs only recovered around half their requested damages. Do the Plaintiffs get fees under the contract’s fee-shifting clause? You bet. Also of note: speculative-damages appeals are very hard to win in cases like this, as the Defendant learned.

Contractors

Clarksville Towers LLC v. Straussberger, No. M2020-0756 (Tenn. Ct. App. May 11, 2021) (shareholder liability)
Plaintiff hired defendant’s company for a building project, but the company let its contracting license expire before completion. Plaintiff fired the company and sued the defendant individually for unlicensed contracting and for failing to pay subcontractors. Because the defendant did not personally engage in acts constituting contracting, but only signed company checks on the project, he was not liable under the contractor-licensing statute. Neither the Trust Fund Statute, TCA § 66-11-138, nor the Prompt Pay Act, TCA § 66-34-101, provided a mechanism for the plaintiff to recover against the individual defendant, rather than the corporate entity (bankrupt in the interim) that had been the actual prime contractor on the job. The Plaintiff did not pursue a veil-piercing claim.

Snake Steel Inc. v. Holladay Construction Group LLC, ___ S.W.3d ___ (Tenn. 2021)
The Prompt Pay Act requires owners and general contractors to deposit retainage in an interest-bearing escrow account, and imposes a daily penalty for failure to comply. Does the discovery rule apply to such a claim? No. When does it accrue? Each day of the failure to deposit, such that the plaintiff can recover the daily penalty for the year (the Prompt Pay Act has a one-year limitations period) prior to filing suit regardless of when the retainage was first withheld.

Deeds

In re estate of Johnson, No. M2020-0472 (Tenn. Ct. App. May 26, 2021) (reformation)
Decedent established a trust and conveyed her real property to the trust. After decedent was placed under a conservator, the conservator obtained court approval to sell the real property and purchase a replacement residence for the ward with the proceeds. But, oops, the deed to the new residence was drawn in favor of the conservator as such, rather than as successor trustee. The Court of Appeals concluded that the allegation seeking reformation was of a mere scrivener’s error (not a failure to reflect the true intent of the various parties to the transaction) and was properly corrected because the conservator/trustee testified that deed should have been in favor of the trust and nothing in the transaction-approval record indicated an intent to divest the trust. It affirmed the order reforming the deed.

Eminent Domain

Harrison v. Montgomery County, 997 F.3d 643 (6th Cir. 2021) (government takings)
Ohio has a tax-sale mechanism that allows a county to transfer a tax-delinquent property to a landbank, free of all claims and liens, and without any mechanism for recovery of the taxpayer’s equity. Harrison brought a takings claim when this happened to her, and the District Court dismissed her suit on the basis of the claim-preclusive effect of the tax-foreclosure proceedings. But Sixth Circuit concluded that the suit could proceed following the Supreme Court’s 2019 decision in Knick v. Township of Scott; remanded for the District Court to consider the takings claim in the first instance.

Employees

Nashville Tennessee Ventures Inc. v. McGill, No. M2020-1111 (Tenn. Ct. App. May 24, 2021)
Defendant worked for plaintiff, but she decided to go work for a competitor instead. So before she left, she laid off all of her subordinates at the plaintiff’s business who she thought would be good at the competitor’s business and recommended the competitor hire them. That, unsurprisingly, was a breach of the duty of loyalty. But the plaintiff’s breach-of-contract claim stays dismissed, because the contract says it was between defendant and some non-party entity, and the Plaintiff did not plead a basis for reformation.

ERISA

Baker v. Iron Workers Local 25 Vacation Pay Fund, 999 F.3d 394 (6th Cir. 2021)
An ERISA plan is administered by trustees appointed in equal numbers by the employer and a union. The two sets of trustees disagree over tax compliance. One set of trustees sues the plan, seeking a judgment endorsing its interpretation of the tax code. Can they do that? No: the Labor Management Relations Act, which also applies to this plan, requires deadlocked trustees to arbitrate, and the plan’s terms had a similar requirement, which had to be (but wasn’t) met. Dismissal affirmed.

Federal Jurisdiction

S2 Yachts Inc. v. ERH Marine Corp., ___ F. App’x ___, No. 20-1479 (6th Cir. 2021)
It is generally known that courts may decline to hear declaratory-judgment actions. Here, the Sixth Circuit reminds us of the “Brillhart Doctrine,” which guides the decision to abstain where a state-law suit is already pending between the parties in a state court. Does that apply if the other suit is actually in the Dominican Republic? The Sixth Circuit refrains from deciding, because it concludes the District Court properly heard the case regardless.

Fiduciaries

In re Estate of McMillin, No. E2020-0413 (Tenn. Ct. App. April 1, 2021)
The trial court should have applied an objective prudent-investor standard to assess claims that estate’s executor wasted assets, and it should have considered all of the evidence in the record when ruling on cross-motions for summary judgment; the Court of Appeals reversed the award of summary judgment to the executor (unsurprising, given that executor had previously been found liable for conversion concerning the decedent’s assets).

FLSA

Ramirez v. Statewide Harvesting & Hauling LLC, 997 F.3d 1356 (11th Cir. 2021)
Defendant hired the plaintiffs to drive its agricultural laborers between their lodgings and places such as the laundromat and the grocery store. Defendant then refused to pay overtime, claiming the plaintiffs performed “agricultural work” exempt from the FLSA. The 11th Circuit disagreed, because the transportation services were neither provided on a farm nor physically tied to it, nor intimately connected to core agricultural activities. FLSA judgment in plaintiffs’ favor affirmed.

Insurance

Affordable Construction Services Inc. v. Auto-Owners Insurance Co., 621 S.W.3d 693 (Tenn. 2021)
A Tennessee statute requires that insurance companies paying for damage to buildings make the contractor doing repair work a co-payee on any check. But if the insurance fails to do so and the contractor suffers a loss, the contractor cannot sue under the statute because it does not create a private right of action. So holds the Tennessee Supreme Court, much to this contractor’s chagrin.

Young v. H&H Testing LLC, No. M2020-0145 (Tenn. Ct. App. May 14, 2021) (contracts)
If you get $85,000 in checks from your insurance company over seventeen months, you should probably not keep the money and sue the out-of-network provider it was intended to pay. But that is what Mark Young and his parents did; when the provider counterclaimed for conversion and unjust enrichment, the trial court properly entered summary judgment in its favor.

Clifton v. Tennessee Farmers Mutual Insurance Co., No. M2019-2193 (Tenn. Ct. App. June 23, 2021)
Insurance policy says it becomes void if no insured resides in the house. Does the policy become void when the only insured moves out and leases the house to third parties? Yes. Does the policy come back into effect when the insured moves back in before the fire? No. Summary judgment for the insurer affirmed.

Interpleader

United of Omaha Life Insurance Co. v. Kay, 844 F. App’x 863 (6th Cir. 2021)
Insurance companies who face competing claims to policy funds frequently file interpleader actions to ask a court to resolve the fight between the claimants. But beware: if the dispute between the claimants is about a debt allegedly owed by one to the other, the interpleader action could limit the claimants’ rights to assert all their claims. Here, the claimants were a bank and a borrower; the borrower alleged that the limitations period had run on the bank’s claim against her (such that it should not get proceeds otherwise payable to her), but the Sixth Circuit said “so what”: only the party who would have to pay the interpleaded funds can raise the statute of limitations in that action, and here that party was the insurance company. Because the borrower only stood to lose the insurance money, not pay out of pocket, she could not rely on the statute of limitations.

Landfills

Priority Waste Service Inc. v. Santek Environmental LLC, No. E2020-1073 (Tenn. Ct. App. April 20, 2021)
State law regulates “tipping” fees charged by landfills for the disposal of solid waste by trash collectors. Can a trash collector bring a private right of action under the tipping-fee statute against the landfill for charging a competitor a lower tipping fee, thus damaging the trash collector’s business? Nope.

Land-Use Regulation

Burns v. Town of Palm Beach, No. 18-14515, ___ F.3d ___ (11th Cir. 2021)
Burns wanted to build a mid-century-modern beachfront house, supposedly to express his personal philosophy of simple living (in a 25,000 square-foot home). The town said no. First Amendment violation? Not according to the 11th Circuit: Burns didn’t establish that most passersby would understand the message as the chief purpose of the house’s design, so it flunks the expressive-contact test. Oh, and all Burns’ designs featured huge walls and hedges that would have prevented most of the public from seeing the house anyways.

Law Firms

The Law Offices of T. Robert Hill PC v. Cobb, No. W2020-1380 (Tenn. Ct. App. May 27, 2021)
A named partner leaves a law firm, and lawsuits ensue. A successor firm sues some of the departing employees, alleging they conspired to destroy the firm in violation of their duties of loyalty. But firm’s allegations that employees conspired to compete and to induce the named partner to buy a building for the planned competing law firm were insufficient to state a claim. Keep reading for the discussion of the litigation privilege, which, it turns out, bars claims against attorneys for allegedly making false statements in court filings, engaging in unlawful ex-parte communications with a court, and suborning perjury.

Leases

Hall v. Park Grill LLC, No. E2020-0993 (Tenn. Ct. App. May 26, 2021)
Plaintiff leases a building to defendant; a wildfire destroys the building, but the defendant cleans the debris, uses the empty lot, and keeps paying rent; the lease has a clause concerning repairs, but not one concerning rebuilding or the disposition of insurance proceeds in case of destruction. Consequently, the lessee was neither required to rebuild the structure nor turn over the insurance proceeds. And because the fire was not the lessee’s fault, the destroyed-leasehold statute, TCA 66-7-102, absolved it of the obligation to rebuild, despite a covenant in the lease requiring surrender of the premises in good condition.

Massachusetts Mutual Life Insurance v. RSC-Germantown I LLC, ___ F. App’x ___, No. 20-6193 (6th Cir. 2021)
Plaintiff leases office space from the Defendant, but the business unit using that office goes under and Plaintiff tries to exercise a termination option in the lease available when “Tenant no longer needs to lease office space in the Memphis, Tennessee area.” Is the clause available even though Plaintiff has other business units operating in different Memphis offices? Yes, says the 6th Circuit, because the paragraph as a whole makes clear that “office space” there referred to space for the business operations using the leased office, not any office space for any business operation.

Mortgages

Crenshaw v. Kado, No. E2020-282 (Tenn. Ct. App. June 17, 2021)
Property owner falls behind on loan payments, and mortgage company spends years sending him loan-modification documents, telling him loan has been modified, and sometimes contradicting itself and trying to foreclose on property. Is the mortgagee’s comedy of errors enough to save the owner’s claims about the status of his title from being time barred? Yes, by way of collateral estoppel.

Personal Jurisdiction

Douglass v. Nippon Yusen Kabushiki Kaisha, 996 F.3d 289 (5th Cir. 2021)
In federal court, you can get personal jurisdiction over a defendant if the defendant would be amenable to the jurisdiction of the local state courts, or if you have a federal-law claim and a foreign defendant not suable in a state court, you can get personal jurisdiction if the defendant’s contacts with the country as a whole are sufficient. Here, a Fifth Circuit panel tells us that it thinks the second test does not work the same as the first test, but that it can’t rule that way because it’s bound by circuit precedent. An application for rehearing en banc is pending.

Procedure

Smith v. Gonzalez, No. W2019-2028 (Tenn. Ct. App. April 1, 2021)
Plaintiff’s counsel of record directs another attorney in his firm to sign his name to plaintiff’s complaint and file it with the court. Can he do that? Does it comply with the requirement that pleadings be signed by counsel of record? Yes he can and yes it does.

Circuitronix LLC v. Kinwong Electronic (Hong Kong) Co., 993 F.3d 1299 (11th Cir. 2021)
This Eleventh Circuit case has a lot for those interested in Florida’s law of liquidated damages and contract interpretation, but we include it here for two procedural points: (1) if the Rules of Civil Procedure otherwise require you to file a motion on a day when the court has ordered the clerk’s office be closed, the office is “inaccessible” (and you can file on the next business day) even though the e-filing system was operational that day, and (2) if you don’t disclose a lost-profits calculation during discovery, you won’t be allowed to use it to show damages during trial.

Babcock v. Babcock, No. E2020-0459 (Tenn. Ct. App. April 28, 2021)
A pro se party in a partnership-dissolution action provided an address to the court and opposing counsel, but then moved without updating the address. Predictably, a judgment was entered against her. Her Rule 60 motion was properly denied, because her failure to update her address was mere negligence or inattention, and she failed to present a meritorious defense to the claims in any event.

Barrera v. Bob Parks Realty LLC, No. M2020-1027 (Tenn. Ct. App. May 14, 2021)
If you let your case lie essentially dormant for seven years, and then engage in delaying tactics and refusals to comply with deadlines that take over a page to list, the trial court may very well dismiss your case for failure to prosecute under Rule 41. And the Court of Appeals is not going to reverse.

Akridge v. Alfa Mutual Insurance Co., ___ F.4th ___ (11th Cir 2021)
Suppose your former employee sues you, claiming you fired her to save the substantial benefits expense of treating her chronic medical condition. Now suppose your internal documents say a particular person makes decisions concerning your medical plan. If the plaintiff persistently demands to take his deposition, but the district court enters summary judgment in your favor without allowing the plaintiff to do so, will you be able to hold onto the judgment on appeal? Not likely, and not in this case. Reversed.

Real Property

West v. West, No. E2020-0780 (Tenn. Ct. App. April 15, 2021)
A general sessions court lacks subject-matter jurisdiction over an unlawful-detainer action brought against an occupant who did not enter the property pursuant to a contract, and a de novo circuit appeal on the same basis fails to state a claim.

Phillips v. Hatfield, — S.W.3 —, No. E2019-0628 (Tenn. 2021)
The Chambers owned a number of lots; they sold some, and then recorded a set of restrictive covenants purporting to apply to all the lots they originally owned. None of the subsequent deeds to the previously sold lots incorporate those covenants. Do the covenants apply to the lots sold before they were recorded? No, because a non-owner cannot impose restrictive covenants on land. Nor does it matter that the Chambers reacquired the lots after recording the covenants: because the post-recording deeds did not expressly incorporate the covenants, the covenants could only apply as an implied reciprocal easement. But such easements never operate retroactively (and have other criteria that aren’t met here), so that can’t save the covenants.

Standing

Thomas v. Toms King (Ohio) LLC, 997 F.3d 629 (6th Cir. 2021)
The Federal Fair and Accurate Credit Transactions Act of 2003 requires vendors to truncate credit-card numbers on receipts and provides a statutory cause of action against violators. But just because Congress creates a claim doesn’t make it available for every technical violation. Here, the complaint failed to allege facts showing a “concrete injury” or “increased risk of real harm,” without which the plaintiff lacked Article III standing. And the claim did not survive by analogy to common-law claims based on disclosures of private information because the complaint did not allege an actual disclosure to any third party. A footnote calls out a revisionist theory of Article III standing advanced by Justice Thomas for further development.

Garland v. Orlans PC, 999 F.3d 432 (6th Cir. 2021)
Homeowner plaintiff receives a letter about his mortgage from the defendant law firm, writing on behalf of his mortgage lender. The letter is allegedly misleading, and the plaintiff says it made him “confused” and “anxious”? FDCPA violation? The court won’t say, because being made “anxious” and “confused” aren’t sufficient injuries to confer standing on a plaintiff, even under a statutory cause of action.

State Contracts

Herron v. State, No. W2019-0595 (Tenn. Ct. App. April 7, 2021)
The Claims Commission has jurisdiction over claims against the state predicated on written contracts, but there is no waiver of sovereign immunity for claims predicated on unwritten contracts. Because the plaintiff failed to prove he had a written contract with the state Department of Human Services, the Claims Commission properly dismissed for lack of subject-matter jurisdiction.

Taxation

Clarke v. City of Franklin, No. M2020-0662 (Tenn. Ct. App. May 24, 2021)
Tennessee law allows municipalities to make “annual” assessments to recoup the costs of certain utility-improvement projects. Franklin, though, recorded notices of lien showing that homeowners owed years’ worth of assessments (the full amount of all assessments to be collected concerning the improvement, instead of just one year’s worth). As a result, homeowners had to pay more when selling homes, or lost refinancing opportunities. The Court of Appeals reinstated the homeowners’ claims for damages based on the improper lien notices and opened the possibility for the homeowners to recover attorney’s fees on remand.

Telecom Regulation

City of Eugene v. FCC, 998 F.3d 701 (6th Cir. 2021)
Under federal law, a cable provider can operate in an area only if the appropriate state or local government body gives it a “franchise” to do so. And under the same law, the government body can require certain concessions (like free cable in government buildings), while the law itself requires that the cable provider do other things (like build transmitting apparatus). The optional impositions, the Sixth Circuit tells us, are “franchise fees” under Section 542(g) of the Communications Act, and thus subject to a cap imposed by the Act. The requirements imposed by the Communications Act itself, however, are not. And while a fee imposed on a cable provider’s broadband revenues isn’t a “franchise fee” under the terms of the Act, it is an attempt to circumvent the cap, and thus preempted.

Trademarks

AWGI LLC v. Atlas Trucking Co., 998 F.3d 258 (6th Cir. 2021)
AWGI owns a registered “Atlas” mark for its freight and trucking services. Atlas Trucking, on the other hand, was formed by a steel company, initially to deliver its products; it later started providing logistics services to third parties. When AWGI sued to defend its “Atlas” mark for logistics services, the District Court properly (and understandably) found that Atlas Trucking had infringed by using essentially the same mark in essentially the same field.

Workers’ Comp

Torres v. Precision Industries Inc., 995 F.3d 485 (6th Cir. 2021)
Undocumented alien uses a fake social security number to get a job with the defendant. But he gets hurt on the job and files for worker’s comp. The defendant promptly fires him for that, something Tennessee law prohibits, even with respect to unauthorized workers. Yet the Immigration Reform and Control Act of 1986 preempts his claim for backpay under Tennessee’s worker’s comp statute, but only for the period he was unauthorized to work: because the plaintiff acquired US work authorization after being fired by the defendant, he was entitled to backpay damages from that point forward.

Vicarious Liability

Gardner v. St. Thomas Midtown Hospital, No. M2019-2237 (Tenn. Ct. App. April 1, 2021)
While the common-law rule in Tennessee bars vicarious-liability claims against a principal if the plaintiff’s claim against the actively negligent agent becomes barred by operation of law (such as by the lapse of a statute of limitations or repose), that rule gives way where a statute (here, the Healthcare Liability Act) comprehensively regulates the assertion of claims against principals and agents.

Alliance for Good Government v. Coalition for Better Government, 998 F.3d 661 (5th Cir. May 19, 2021) (officer liability)
Plaintiff sued defendant under the Lanham Act for trademark infringement and won. After the judgment, plaintiff moved to have the court award attorney’s fees against not only the defendant, but its non-party principal officer as well. The district court did just that, and, because she was afforded an opportunity to respond, that was perfectly acceptable, says the Fifth Circuit. N.B.: this ruling seems at odds with Omni Capital Int’l Inc. v. Rudolf Wolff & Co., 484 U.S. 97 (1987).

Compiled and written by Paul Krog
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on email
Email