The Bullet Point: An Ohio Commercial Law Bulletin
Do I have a First Amendment right to remain anonymous? The Bullet Point: Volume 1, Issue 21
The Bullet Point is a biweekly update of recent, unique, and impactful cases in Ohio state and federal courts in the area of commercial litigation.
Northern Ins. Co. v. Target Corp., 6th Cir. No. 16-2222 (Nov. 29, 2017).
In this appeal, a household-products distributor agreed to distribute goods to Target under a Partners Online Agreement (the “Agreement”). The Agreement contained an indemnification and hold harmless clause. In 2010, the distributor began to wind down its arrangement with Target. It subsequently assigned its indemnification obligation to Target to a third party (the “Assignee”). At the time, the Assignee was insured by Northern Insurance which agreed, in part, to insure against certain bodily injuries. There were exceptions, however, including for “‘[b]odily injury’ or ‘property damage’ for which [the Assignee] is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” The exception did not apply to liability for damages that the Assignee would have in absence of an agreement or that it assumed in an agreement or “insurance contract.”
In 2012, a child was injured when using a product supplied by the distributor and purchased at Target. Target filed a cross-claim for indemnification against the Assignee and after a settlement, sought coverage for the amount paid under the insurance agreement with Northern Insurance. In turn, Northern Insurance filed a declaratory judgment action seeking a declaration on the coverage under the insurance agreement. The district court ultimately entered judgment in favor of Northern Insurance and Target appealed.
On appeal, the Sixth Circuit Court of Appeals affirmed finding that coverage for Target’s loss was excluded by the terms of the insurance policy.
The Bullet Point: “Exclusionary clauses in insurance policies are strictly construed in favor of the insured.” “However, it is impossible to hold an insurance company liable for a risk it did not assume and thus clear and specific exclusions must be enforced.” Moreover, while an insurance policy can cover losses for tort liability, the agreement must “assume the tort liability of another party,” and tort liability is liability “that would be imposed by law in the absence of any contract or agreement.”
Signature Management Team, LLC v. Does, 6th Cir. No. 17a0270 (Nov. 28, 2017).
In this case, plaintiff prevailed in a copyright infringement action and had asked the district court to unmask John Doe, an anonymous blogger. The district court refused but on appeal the Sixth Circuit reversed, ordering the district court to “recognize the presumption in favor of open judicial records.”
Plaintiff is a multilevel marketing company that sells materials designed to help companies profit in multilevel marketing businesses. John Doe is an anonymous blogger who criticizes this type of arrangement. In 2013, Doe posted a hyperlink to an entire book written by the plaintiff. Plaintiff demanded that it be taken down and Doe did so. Plaintiff then commenced this action seeking only injunctive relief, including a request to identify Doe. The district court refused to unmask Doe because of the potential harm in doing so and because his “fair use” defense could have merit. Ultimately, the district court granted plaintiff judgment but refused to unmask Doe, finding it unnecessary.
The Sixth Circuit reversed, however. In so ruling, the court noted that while courts have developed balancing tests between a right to free speech and unmasking a defendant, “all of these cases, however, have dealt with anonymity rights during the discovery process. No case has considered the issue presented here—whether and under what circumstances a court can properly protect a party’s anonymity after judgment. This is an important distinction.” Because this was an issue of first impression, the court reversed for the district court to consider the “presumption of open juridical proceedings” on unmasking an anonymous defendant.
The Bullet Point: Internet speech, like other forms of speech, is protected by the First Amendment. However, courts have begun to develop balancing tests between an anonymous individual’s right to free speech against the interest in unmasking an anonymous defendant. As the Sixth Circuit noted, “A Doe defendant’s post-judgment anonymous speech rights conflict with another important post-judgment interest: the presumption of openness in judicial proceedings.” Because of this presumption, the Sixth Circuit held that “like the general presumption of open judicial records, there is also a presumption in favor of unmasking anonymous defendants when judgment has been entered for a plaintiff. When deciding whether to unmask an anonymous defendant, courts must consider both the public interest in open records and the plaintiff’s need to learn the anonymous defendant’s identity in order to enforce its remedy. The greater a plaintiff’s or the public’s interest in unmasking a losing Doe defendant’s identity, the more difficult it will be for the Doe defendant to overcome the presumption and remain anonymous.”
BMI Fed. Credit Union v. Charlton, 10th Dist. Franklin No. 16AP-390, 2017-Ohio-8744.
This appeal involved challenges by various creditors raising lien priority issues. BMI filed a complaint to take repossession of a vehicle. A repair shop was named as a defendant as well because that is where the vehicle was located. The repair shop argued that its mechanic’s lien had priority over BMI’s lien. The trial court ultimately found that BMI properly perfected its lien prior to the repair work and had priority. The repair shop appealed.
The Tenth Appellate District affirmed the judgment on appeal. In so ruling, the court found that BMI’s lien had possession over the possessory lien of the repair shop that was created later in time.
The Bullet Point: Generally a “possessory lien on goods has priority over a security interest in the goods unless the lien is created by a statute that expressly provides otherwise.” However, when automobiles are involved, the law holds that “any security agreement covering a security interest in a motor vehicle, if a notation of the agreement has been made by a clerk of a court of common pleas on the face of the certificate of title * * *, is valid as against the creditors of the debtor, whether armed with process or not, and against subsequent purchasers, secured parties, and other lienholders or claimants.”
Robinson v. Mayfield Auto Group, LLC, 8th Dist. Cuyahoga No. 105844, 2017-Ohio-8739.
This was an appeal of the trial court’s decision to stay a case pending arbitration. A former car dealership employee filed a breach of contract action against his former employer. The car dealership denied the allegations and sought arbitration. The plaintiff opposed, arguing that the arbitration agreement was not supported by consideration.
On appeal, the Eighth Appellate District agreed with the trial court. The court specifically found that the arbitration agreement was supported by sufficient consideration, as both parties agreed to arbitrate their disputes.
The Bullet Point: Arbitration clauses are treated like other contracts and must be supported by consideration. However, “[n]o consideration is required above and beyond the mutual agreement to arbitrate.” In other words, if the arbitration agreement governs the relationship between the parties, courts will typically find adequate consideration.
Central Mortg. Co. v. Seye, 10th Dist. Franklin No. 16AP-323, 2017-Ohio-8713.
This was an appeal of a trial court’s decision to grant summary judgment to a lender in a foreclosure action. The borrower argued that an issue of fact existed as to whether the lender could foreclose because “different” copies of the promissory note had been entered into the record calling into question its standing.
The trial court and Tenth Appellate District disagreed. The court noted that the lender adequately supported its motion for summary judgment with proper Rule 56 evidence and, furthermore, that “it is well-established that ‘[t]he mere fact that there [are] two different copies of the note in the record—one with indorsement and one without—does not mandate a finding that one of the notes was ‘unauthentic’ or otherwise precludes summary judgment.”
The Bullet Point: The “differing” notes theory in foreclosure actions stands for the proposition that multiple copies of the note in the record with differing endorsements calls into question the lender’s standing to foreclose. However, as the Tenth Appellate District implicitly recognized, standing is determined at the commencement of the action and copies of a promissory note utilized in a prior proceeding have no bearing on the lender’s current standing to foreclose.
Plank v. City of Bellefontaine, 3d Dist. Logan No. 8-17-18, 2017-Ohio-8623.
This was an appeal of a trial court’s decision to deny a city’s request for immunity in a negligence action. In this case, after an argument at a bar, the deceased left and walked on foot toward her hotel. Because the snow was not shoveled on the sidewalks, she walked in the road. The plaintiff, her husband, left the bar shortly after she did, and followed after her. While walking in the street, the deceased was struck and killed by a car.
The plaintiff subsequently filed a wrongful death lawsuit claiming that the city was negligent in failing to plow the streets and sidewalks. The city moved for summary judgment arguing it was immune from suit. The trial court disagreed and the city appealed.
On appeal, the Third Appellate District reversed, finding that the city was immune from suit.
The Bullet Point: Determining immunity is a three-step process. First, the court must determine whether the entity claiming immunity is a political subdivision and whether the alleged harm occurred in connection with either a governmental or a proprietary function. Second, the court must decide whether one of the statutorily defined exceptions apply. Third, the court must decide whether immunity can be “reinstated” because a statutory defense applies.