Developments of Interest

New Cases of Interest - February 11, 2014

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02/11/2014

Hong v. CJ CGV America Holdings, Inc. (2013) 222 Cal.App.4th 240.  Plaintiffs were stockholders of a company which operated a broadcast television network in many markets in the United States which catered to Asian-American and South Asian American cultures.  A Korean corporation, CJ Corporation, expressed an interest in investing in the entity, and CJ CGV America was an affiliate of CJ Corporation.  The plaintiffs and CJ CGV America entered into a stock purchase agreement, and thereafter certain differences arose among the parties.  The plaintiff sued the defendant for breach of fiduciary duty, and the defendant sought to compel arbitration pursuant to an arbitration clause contained in a stock purchase agreement.  Both the trial court and the court of appeal denied the petition to compel arbitration.

In reaching this conclusion, the courts observed that California statutory and decisional authority provides that the issue of waiver because of inconsistent litigation activities is a matter ordinarily resolved by a trial court, not by an arbitrator.  While the court agreed with the defendant that the case was subject to the Federal Arbitration Act because interstate commerce was involved, it rejected the defendant's argument that language from decisions of the United States Supreme Court required that the arbitrator decide allegations of waiver, delay or similar defenses to arbitrability.  The court of appeal instead found that the U.S. Supreme Court had not made any determination as to who would decide whether the right to arbitrate was waived by participation in litigation, and concluded that a trial court could properly decide that issue.

Asahi Kasei Pharma Corp. v. Actelion Limited (2013) 222 Cal.App.4th 280.  A licensor entered into a licensing and development agreement for one of its pharmaceutical products.  The company which it had licensed was subsequently acquired by the defendant Actelion Limited, which happened to produce a competing pharmaceutical through a subsidiary.  Plaintiff brought suit against the parent company's owners and executives for interference with contract.  The Court of Appeal upheld the trial court's refusal to provide instructions that the defendants could not be liable for interference occurring after the acquisition concluding that they were not immune from liability for interfering with a subsidiary's contractual obligations because they had an economic interest in that subsidiary.  The court also found that substantial evidence existed that each of the executives involved actively participated in the conduct of interference with contractual relations, which supported personal liability.

Donkin v. Donkin (2013) 58 Cal.4th 412.  This case extensively analyzes the Legislative developments regarding no contest clauses in trust instruments and litigation which may or may not invoke such no contest provisions.  The court also in this case analyzes whether the old law or the new law should apply to any such determinations concerning no contest clauses.

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