Articles Posted in Business Law

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Plaintiff Atronix, Inc. filed suit against defendant Kenneth Morris for, among other things, breach of contract, and sued defendant Scott Electronics, Inc. for tortious interference with contractual relations. Atronix appealed a superior court’s order dismissing its action for lack of standing. Morris started working at Atronix Sales, Inc. (Old Atronix) in 1982. He was promoted several times over the course of his employment, eventually becoming program manager in the sales department. That position entailed responsibility for the largest and most important of Old Atronix’s accounts. Accordingly, in 1997, Morris was required to sign a non-compete and non-solicitation agreement (the non-compete agreement), and a non-disclosure agreement. In 2011, Old Atronix merged with Atronix, Inc. (the Company). In 2016, Morris left his job with plaintiff and was hired as a general manager by Scott, one of the Company’s competitors. The New Hampshire Supreme Court concluded the terms of Morris’ non-compete agreement was conveyed to the Company according to the terms of its asset purchase agreement, it was still pertinent to the success of the merger. The Company, therefore, had standing to enforce it against Morris. View "Atronix, Inc. v. Morris" on Justia Law

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Defendants, Nikolaos Pappas and Ascend Medical, Inc. (Ascend), appealed multiple orders of the Superior Court ruling that they misappropriated trade secrets of plaintiff Vention Medical Advanced Components, Inc. d/b/a Advanced Polymers, a Vention Medical Company (Vention), in violation of the New Hampshire Uniform Trade Secrets Act, RSA chapter 350-B (2009) (UTSA). Vention cross-appealed the trial court’s denial of its request for attorney’s fees. Vention is a medical components manufacturer in the medical device industry. Vention makes medical balloons, medical tubing, and heat shrink tubing (HST). Pappas began working at Vention after he graduated from the University of Massachusetts Lowell with a bachelor of science degree in plastics engineering and a master’s degree in innovative and technological entrepreneurship. Prior to working at Vention, Pappas had neither specifically studied HST nor had any experience working with HST. In December 2013, after working for Vention for about ten years, Pappas resigned from the company. During his employment, Pappas was exposed to Vention’s confidential HST technology and information. He also had knowledge of Vention’s business and marketing information and strategies, including the sales volumes for Vention’s various products. At the time he resigned, he was serving as the engineering manager of the HST department. At some point before Pappas resigned, he consulted with an attorney about his obligations under the confidentiality agreement. Almost immediately after leaving Vention, Pappas established Ascend. In late December 2013 and January 2014, the defendants began working with a website developer, communicated with one equipment vendor, and provided an initial machine design to a second equipment vendor. This design included extensive detail and critical specifications of the equipment they wanted built. By August 2014, the defendants began actively marketing HST. After the defendants launched their HST line, Vention requested information about the products. The defendants sent Vention samples of their HST in August and September 2014. After review, the New Hampshire Supreme Court found the trial court determined that the defendants neither willfully and maliciously misappropriated Vention’s trade secrets nor made a bad-faith claim of misappropriation, and there was support in the record for these determinations. Based upon its review of Vention’s arguments and the record, the Supreme Court could not say it was “clearly untenable” or “clearly unreasonable” for the trial court to decline to award fees for bad faith litigation. Accordingly, the Court found no reversible error and affirmed the Superior Court. View "Vention Medical Advanced Components, Inc. v. Pappas" on Justia Law

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The New Hampshire Banking Department (Department) initiated an adjudicative proceeding against CashCall, Inc. (CashCall), WS Funding, LLC (WS Funding), and John Paul Reddam, for violations of RSA chapter 399-A (2006 & Supp. 2012) (repealed and reenacted 2015). Reddam is the president and chief executive officer of CashCall, a lending and loan services corporation headquartered and incorporated in California. Reddam owned all of CashCall’s corporate stock. Reddam was also the president of WS Funding, a wholly owned subsidiary of CashCall. WS Funding was a Delaware limited liability company with a principal place of business in California. CashCall appeared to be engaged in the business of purchasing and servicing small loans or “payday loans” in association with Western Sky Financial. Neither Reddam, CashCall, nor WS Funding was licensed under RSA chapter 399-A to issue small loans in New Hampshire. In June 2013, after analyzing and reviewing CashCall’s responses to an administrative subpoena duces tecum and reviewing the business relationships among CashCall, WS Funding, and Western Sky Financial, the Department issued a cease and desist order to CashCall, WS Funding, and Reddam. In the cease and desist order, the Department found that either CashCall, or WS Funding, was the “actual” or “de facto” lender for the payday and small loans, and that Western Sky Financial was a front for the respondents’ unlicensed activities. Reddam challenged the Department’s denial of his motion to dismiss for lack of personal jurisdiction. The New Hampshire Supreme Court determined the Department made a prima facie showings that: (1) Reddam’s contacts related to the Department’s cause of action; (2) he purposefully availed himself of the protection of New Hampshire law; and (3) it was fair and reasonable to require him to defend suit in New Hampshire. The Court therefore found no due process violation in the Department’s exercise of specific personal jurisdiction over Reddam. View "Petition of John Paul Reddam" on Justia Law

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The plaintiffs were four companies with common owners and operators: Halifax-American Energy Company, LLC; PNE Energy Supply, LLC (PNE); Resident Power Natural Gas & Electric Solutions, LLC (Resident Power); and Freedom Logistics, LLC d/b/a Freedom Energy Logistics, LLC (collectively, the “Freedom Companies”). The defendants were three companies and their owners: Provider Power, LLC; Electricity N.H., LLC d/b/a E.N.H. Power; Electricity Maine, LLC; Emile Clavet; and Kevin Dean (collectively, the “Provider Power Companies”). The Freedom Companies and the Provider Power Companies were engaged in the same business, arranging for the supply of electricity and natural gas to commercial and residential customers in New Hampshire and other New England states. The parties’ current dispute centered on a Freedom Company employee whom the defendants hired, without the plaintiffs’ knowledge, allegedly to misappropriate the plaintiffs’ confidential and proprietary information. According to plaintiffs, defendants used the information obtained from the employee to harm the plaintiffs’ business by improperly interfering with their relationships with their customers and the employee. A jury returned verdicts in plaintiffs’ favor on many of their claims, including those for tortious interference with customer contracts, tortious interference with economic relations with customers, tortious interference with the employee’s contract, and misappropriation of trade secrets. The jury awarded compensatory damages to plaintiffs on each of these claims, except the misappropriation of trade secrets claim, and included in the damages award attorney’s fees incurred by plaintiffs in prior litigation against the employee for his wrongful conduct. Subsequently, the trial court awarded attorney’s fees to the plaintiffs under the New Hampshire Uniform Trade Secrets Act (NHUTSA). On appeal, defendants challenged: (1) the jury’s verdicts on plaintiffs’ claims for tortious interference with customer contracts and the employee’s contract; (2) the jury’s award of damages for tortious interference with customer contracts and tortious interference with economic relations, and its inclusion in that award of the attorney’s fees incurred in the plaintiffs’ prior litigation against the employee; and (3) the trial court’s award of attorney’s fees to plaintiffs under the NHUTSA. Finding no reversible error, the New Hampshire Supreme Court affirmed. View "Halifax-American Energy Company, LLC v. Provider Power, LLC" on Justia Law

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Petitioner Dao Nguyen appealed a New Hampshire Board of Barbering, Cosmetology, and Esthetics (Board) decision, suspending her personal license as a manicurist and revoking the shop license for Nail Care. In 2013, Board inspector Beulah Green conducted a routine inspection of Nail Care, finding numerous violations of the Board Administrative Rules (Rules), including two foot spas that were not disinfected properly, no record of cleaning for two foot spas, five tables that were not sanitized, numerous implements that were either not sanitized and disinfected properly or not discarded or disposed of properly, multiple “credo” blades, and the use of nail drills that are not manufactured for use on the natural nail (improper nail drills). For these violations, Green imposed a fine of $4,158. In the next few years, Green conducted additional inspections, and again found multiple, repeat violations of the Rules. Noting the repeated violations and the “blatant disregard” that the petitioner demonstrated towards the Rules, the Board suspended petitioner’s personal license for five years, revoked her shop license for Nail Care, and ordered her to pay all outstanding fines owed to the Board within 90 days. The Board also ruled that, if the petitioner’s license is reinstated, it will be subject to a three-year probationary period. Finding the Board’s decision was supported by substantial, credible evidence, the New Hampshire Supreme Court affirmed the Board’s decision. View "Appeal of Dao Nguyen" on Justia Law

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Plaintiff DirecTV, Inc. appealed a superior court decision denying a petition for property tax abatement for the tax years 2007, 2008, and 2009. The property at issue was located in New Hampton and used by DirecTV as a satellite uplink facility. On appeal, DirecTV argued that the trial court erred when it: (1) ruled that satellite antennas and batteries used to provide backup power constituted fixtures; and (2) determined the value of the property. The New Hampshire Supreme Court concluded after review that the antennas and batteries were not fixtures, and therefore, taxable as real estate. The Court reversed the superior court on that issue, vacated its decision on the valuation of the property, and remanded for further proceedings. View "DirecTV, Inc. v. Town of New Hampton" on Justia Law

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In 1992, brothers Mark, Matthew, and Patrick McDonough established TASC, a corporation that provided technical engineering services. In September 1995, the brothers converted TASC to a Limited Liability Company (LLC). The brothers had a falling out. As a result, Mark sued the defendants seeking a declaration that TASC must dissolve by September 30, 2015, pursuant to its certificate of formation and operating agreement. Both parties moved for summary judgment. After a hearing, the trial court ruled that: (1) an August 7 dissolution and revocation had no effect on TASC’s governing documents; and (2) TASC was not required to dissolve because its operating agreement permits a majority of its members to continue the company. Consequently, it denied summary judgment to Mark and granted summary judgment to defendants. Finding no reversible error in that judgment, the Supreme Court affirmed. View "McDonough v. McDonough" on Justia Law

Posted in: Business Law

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Plaintiff Alice Finn appealed a Superior Court order denying her motion to affirm, and granting the defendants Ballentine Partners, LLC (BPLLC), Ballentine & Company, Inc., Roy C. Ballentine, Kyle Schaffer, Claudia Shilo, Andrew McMorrow, and Gregory Peterson's motion to vacate a final arbitration award. Ballentine and Finn founded Ballentine Finn & Company, Inc. (BFI). Each owned one half of the company’s stock, and Finn served as the Chief Executive Officer. Later, four other individuals became shareholders of BFI. In 2008, Ballentine and the other shareholders forced Finn out of the corporation and terminated her employment. At the time of her termination, Finn held 37.5% of the shares of BFI. BFI gave Finn a promissory note in the amount of $4,635,684, which represented 1.4 times earnings for her shares for the 12 months before her termination. This amount was below the fair market value of Finn’s shares. Finn challenged her termination before an arbitration panel in 2009. This first arbitration panel found that Finn’s termination was unlawful and awarded her $5,721,756 for the stock that BFI forced her to sell and $720,000 in lost wages. The panel recognized that BFI likely did not have sufficient liquidity to pay the award immediately, so it authorized BFI to make periodic payments. After the first panel award, BFI formed BPLLC, contributed all of its assets and some of its liabilities to BPLLC, and became its sole member. BFI then changed its name to Ballentine & Company. After the reorganization, Ballentine & Co. sold 4,000 preferred units, a 40% membership interest in BPLLC, to Perspecta Investments, LLC. Perspecta paid $7,000,000 to Ballentine & Co. and made a $280,000 capital contribution to BPLLC. The defendants asserted that the membership interest had to be sold in order to raise funds to pay the arbitration award to Finn. In 2013, Finn filed a complaint and a motion to compel arbitration in superior court, alleging that she was entitled to relief under the “Claw Back” provision of the Agreement. The defendants moved to dismiss Finn’s complaint, arguing that it was barred by res judicata. A second arbitration concluded that Finn was entitled to an award based upon an unjust enrichment claim. and awarded Finn $600,000 in equitable relief. Returning to court, Finn moved to affirm, and the defendants moved to vacate in part, the second arbitration award. Applying the "plain mistake" standard of review found in RSA 542:8, the trial court ruled that the second panel’s award of additional damages to Finn on her unjust enrichment claim was barred by res judicata. Finn moved for reconsideration, arguing that the FAA applied to this case. The trial court denied the motion. Because the New Hampshire Supreme Court concluded that the trial court did not err in ruling that RSA 542:8 was not preempted by the Federal Arbitration Act (FAA), and that the second arbitration panel committed a plain mistake of law by concluding that res judicata did not bar Finn’s claim, it affirmed. View "Finn v. Ballentine Partners, LLC" on Justia Law

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In consolidated appeals, petitioners Deere & Company, CNH America LLC (CNH), AGCO Corporation (AGCO), Kubota Tractor Corporation (Kubota), and Husqvarna Professional Products, Inc. (Husqvarna), all appealed superior court orders that granted summary judgment to the State on their constitutional challenges to Senate Bill (SB) 126. SB 126 was enacted in 2013, amending RSA chapter 357-C to define "motor vehicle" as including "equipment," which "means farm and utility tractors, forestry equipment, industrial equipment, construction equipment, farm implements, farm machinery, yard and garden equipment, attachments, accessories, and repair parts." Like its federal counterpart and similar state statutes, RSA chapter 357-C, "the so-called ‘dealer bill of rights,''" was enacted "to protect retail car dealers from perceived abusive and oppressive acts by the manufacturers." RSA chapter 357-C regulated, among other things, a manufacturer's delivery and warranty obligations and termination of dealership agreements. RSA chapter 357-C also defines unfair methods of competition and deceptive practices. Violation of any provision of RSA chapter 357-C constitutes a misdemeanor. Petitioners manufactured agricultural, construction, forestry, industrial, lawn, and garden equipment, including commercial mowers, wheel loaders, backhoes, and agricultural tractors. Their complaint alleged that: (1) retroactive application of SB 126 substantially impaired their existing dealership agreements in violation of the State and Federal Contract Clauses; and (2) SB 126 violated the Supremacy Clause of the Federal Constitution because it voided or otherwise rendered unenforceable mandatory binding arbitration clauses in existing dealership agreements, thereby conflicting with the Federal Arbitration Act (FAA). In sum, the New Hampshire Supreme Court upheld SB 126 against petitioners' claims that it violated the State and Federal Contract Clauses. The Court agreed with the trial court that the preempted provisions were severable from the remaining provisions of RSA chapter 357-C as applied to petitioners. The Court rejected Husqvarna's argument that SB 126 violated the Equal Protection Clause of the Federal Constitution. The Court also rejected Husqvarna's contention that SB 126 had either a discriminatory purpose or effect within the meaning of the dormant Commerce Clause. Nonetheless, the Court vacated the trial court's grant of summary judgment to the State on Husqvarna's dormant Commerce Clause claim and remanded for the trial court to consider, in the first instance, whether SB 126 was unconstitutional under the "Pike" balancing test. View "Deere & Co. v. New Hampshire" on Justia Law

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Steven Cohen met John Raymond when Raymond began dating Cohen’s stepdaughter, Molly, whom Raymond eventually married. Cohen owned a successful scrap metal company and offered Raymond a job. Cohen knew a broker and private wealth manager at Merrill Lynch, and Cohen testified that he wanted to help Raymond learn about investment through that broker. To set up an investment account, Merrill Lynch required a minimum deposit of $250,000. Cohen deposited this amount into an account in Raymond’s name, later testifying at trial that he considered the money to be “seed money” for a business that he planned to open with Raymond. Although Raymond testified that he never intended to go into business with Cohen, the trial court found that “the parties had decided to enter the recycling business together.” Raymond and Molly decided to divorce. Raymond then withdrew $50,000 from the Merrill Lynch account, which he used for “personal purposes.” Upon learning of the divorce and withdrawal, Cohen demanded that Raymond repay him the $250,000, and then sued Raymond in superior court. Cohen claimed that the money was a loan, and that he was entitled to repayment with interest at 5% or 6%. In the alternative, Cohen claimed that Raymond had been unjustly enriched, and that he was entitled to restitution. In his argument on unjust enrichment, Cohen suggested, for the first time, that the $250,000 was a conditional gift. Cohen, appealed the trial court’s ruling that the $250,000 deposited into the investment account was an unconditional gift. Cohen argued, among other things, that the trial court erred by: (1) finding that the $250,000 was an unconditional gift, rather than a loan or a conditional gift; and (2) presuming that the $250,000 was a gift, thereby placing the burden on Cohen to show that it was not a gift. The New Hampshire Supreme Court vacated and remanded: Raymond was Cohen’s son-in-law, thus, the gift presumption did not apply, and the burden should have been on Raymond to prove that Cohen intended to give him the $250,000 as a gift. View "Cohen v. Raymond" on Justia Law

Posted in: Business Law, Contracts