A sham, at any other time, is still a sham.

Ramos contended that the trial court should not have excluded some of his testimony under the “sham-affidavit rule,” observing that his declaration was given before his deposition. The Fifth Circuit disagreed: “It is the competency, rather than timing, of evidence with which the sham-affidavit rule is concerned.” And it agreed with the district court that the testimony was in fact inconsistent, noting as an example that “Ramos the declarant stated Hacienda ‘never paid him any monies or royalties,’ but Ramos the deponent admitted he couldn’t remember whether he had been paid. Memories, of course, may fade over time; but, that is a far cry from Ramos,at his deposition, being unable to recall many of the events he had stated as fact in his declaration, just four days prior.” Hacienda Records LP v. Hacienda Records & Recording Studio, Inc., No. 16-41190 (Jan. 4, 2018).

Consolidation of two cases = CAFA removal as “mass action”

Plaintiffs, represented by the same counsel, sought to consolidate two actions in state court; the defendant removed under CAFA’s “mass action” provision. A Fifth Circuit panel majority affirmed the denial of Plaintiff’s motion to remand, rejecting arguments about timeliness, retroactivity, and CAFA’s text. The majority reasoned that “it is the mass action, not claims against particular defendants, that is removable,” and that the plaintiff’s motion satisfied the CAFA requirement of “100 or more persons . . . proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact.” A dissent would remand based on CAFA’s “not-retroactivity” language, as one of the state cases was filed before CAFA took effect. Lester v. Exxon Mobil Corp., No. 14-31383 (Jan. 9, 2018).

No attorneys’ fees under form JOA

U.S. Energy Devel. Corp. v. CL III Funding Holding Co. applied the attorneys’ fees provision of the form Joint Operating Agreement in Texas, which says: “Costs and Attorneys’ Fees: In the event any party is required to bring legal proceedings to enforce any financial obligation of a party hereunder, the prevailing party in such action shall be entitled to recover all court costs, costs of collection, and a reasonable attorney’s fee, which the lien provided for herein shall also secure.” The Fifth Circuit concluded that none of the four legal actions involved in the fee request involved a “financial obligation” within the meaning of the provision. No. 17-50217 (Jan. 10, 2018, unpublished).

Deposition transcript is “other paper” for removal clock

While both sides made cogent policy arguments, plain meaning triumphed in Morgan v. Huntington Ingalls, and the Fifth Circuit held that the thirty-day removal deadline begins to run from receipt of a deposition transcript that may create a basis for removal, rather than the oral testimony itself.  “[P]aper” is defined as “[a] written or printed document or instrument.” “[R]eceipt” is defined as the “[a]ct of receiving; also, the fact of receiving or being received; that which is received.” “Copy” is defined as “[t]he transcript or double of an original writing.” “‘Ascertain’ means ‘to make certain, exact, or precise’ or ‘to find out or learn with certainty.’” No. 17-30523 (Jan. 11, 2018).

No standing, no jurisdiction, no dismissal with prejudice

As a further reminder that “standing,” in all of the forms that idea takes, is a complicated set of doctrines, the Fifth Circuit held in Nevarez Law Firm v. Dona Ana Title Co.: “The district court relief on Rule 12(b)(1) when it dismissed Nevarez’s [RICO and state tort] claims with prejudice after concluding that there was no standing. That was error. ‘A dismissal with prejudice is a final judgment on the merits.’ We agree with an earlier opinion of this court that ‘to dismiss with prejudice under Rule 12(b)(1) is to disclaim jurisdiction and then exercise it.'” No. 17-50053 (Jan. 3, 2018, unpublished) (citations omitted).

New test for maritime contract – UPDATED

A unanimous en banc opinion simplified the Fifth Circuit’s test for “whether a contract for performance of specialty services to facilitate the drilling or production of oil or gas on navigable waters is maritime.” The Court now asks: “First, is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters? . . . Second, if the answer to the above question is ‘yes,’ does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract?” Larry Doiron, Inc. v. Jackson , No. 16-30217 (revised Jan. 11, 2018).

What exactly gets exempted?

The question in Peake v. Ayobami was whether a bankruptcy debtor, who asserts a 100% exemption as to a particular estate asset, is asserting that exemption as to the asset itself or its value. The practical consequence is whether “claiming a 100% interest in an asset as exempt allows the debtor to ‘walk away’ with the asset itself and potentially benefit from any post-petition appreciation of it.” The Fifth Circuit gave a limited answer, noting that the statute allows the debtor to claim “a 100% interest in an asset,” and also noting Supreme Court precedent that expressed skepticism about whether a debtor could use this ability to get clear title to a valuable asset, but not providing an ultimate answer to the question. Ni. 16-20589 (Jan. 3, 2018).

Arbitration: “except for actions seeking injunctive relief” means – just that.

Plaintiffs alleged antitrust violations by distributors of dental equipment; seeking damages and injunctive relief. The defendants sought to compel arbitration, based on this arbitration clause in a relevant contract:

Disputes. This Agreement shall be governed by the laws of the State of North Carolina. Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property of Pelton & Crane), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association [(AAA)]. The place of arbitration shall be in Charlotte, North Carolina.

The issue was whether arbitrability was for the courts to decide or the arbitrator. The Fifth Circuit applied “the two-step inquiry adoped in Douglas v. Regions Bank[, 757 F.3d 460 (5th Cir. 2014),] under which the first question is whether the parties “clearly and unmistakably” intended to delegate the question of arbitrability to an arbitrator. Finding that “the interaction between the AAA Rules and the [injunctive relief] carve-out is at best ambiguous,” the Court chose not to resolve that issue, concluding that the second Douglas question was dispositive. That question asks whether the “assertion of arbitrability is wholly groundless,” which the Court found to be the case:

The arbitration clause creates a carve-out for ‘actions seeking injunctive relief.’ It does not limit the exclusion to ‘actions seeking only injunctive relief,’ nor ‘actions for injunction in aid of an arbitrator’s award.’ Nor does it limit itself to only claims for injunctive relief. . . . The mere fact that the arbitration clause allows Archer to avoid arbitration by adding a claim for injunctive relief does not change the clause’s plain meaning.

Archer & White Sales v. Henry Schein, Inc., No. 16-41674  (Dec. 21, 2017) (emphasis added).

Statements about financial condition = no discharge.

A Chapter 7 debtor was denied a discharge for fraud claims arising from statements about a business’s financial condition, based on secion 523(a)(2)(A) of the Bankruptcy Code. The Fifth Circuit affirmed, rejecting his argument that the statements were not sufficiently detailed: “As we noted in In re: Bandi[, 863 F.3d 671, 674 (5th Cir. 2012))], a statement respecting financial condition ‘need not carry the formality of a balance sheet, income statement, statement of changes in financial position, or income and debt statement.’ The information regarding ‘overall net worth or overall income flow’ contained within such a statement – not the formality of the statement – is what is important.”  Haler v. Boyington Capital Group, LLC, No. 17-40229 (Dec. 29, 2017, unpublished).

“Battle of the experts” = fact issue for trial – UPDATED

Cox v. Provident Life involved a dispute about the cause of the plaintiff’s knee problems: “Under the policies, Cox is entitled to receive disability benefits for life if, and only if, his disability resulted from injury rather sickness.” The record showed that:

Shelton, the treating physician, gave deposition testimony that, ‘to a reasonable degree of medical probability,’ ‘the trauma to [Cox’s] left knee when he fell in the hole on December 26, 2010, caused or contributed to the cause of his disability.’ In the same deposition, Shelton reaffirmed that ‘[e]ven though [Cox] may have had some pre-existing arthritis or chondromalacia,’ the injury ‘contributed to and caused part of [Cox’s] disability.’ The district court never grappled with these unequivocal
statements, instead embracing contrary evidence presented by Provident suggesting Cox’s injury did not accelerate his arthritis. That was error. This is a classic ‘battle of the experts,’ the winner of which must be decided by a jury.

No. 16-60831 (revised Jan. 2, 2018).

Does registration to do business in LA = personal jurisdiction in LA?

Sidestepping the question whether International Shoe overruled the century-old case of Penn. Fire Ins. Co. v. Gold Issue Mining, 243 U.S. 93 (1917), the Fifth Circuit held that registering to do business in Louisiana did not automatically consent to personal jurisdiction there:

Nowhere in Pennsylvania Fire did the Court hold that registering to do business in a state or appointing an agent for service of process acts as consent to any suit of any kind in that state. Instead, it merely concluded that defendants had consented to service of process in Missouri, resting largely on the fact that the state court had construed the Missouri statute to require such consent to suit for the service at issue. This case lacks what Pennsylvania Fire had: a clear statement from the state court construing the statute to require consent. Gulf Coast does not identify any statute or agreement that requires foreign entities to expressly consent to any suit in Louisiana.

Gulf Coast Bank & Trust Co v. Designed Conveyor Systems LLC, No. 17-30062 (Dec. 22, 2017, unpublished) (citations omitted).

FCA and public disclosure

Solomon brought a False Claims Act case allleging improper billing on the F-35 Joint Strike Fighter Project. The Fifth Circuit affirmed the dismissal of his claim under the “public disclosure bar,” examining three disclosures under this test: “We are not concerned . . . with the overall probability of someone inferring fraudulent activity from the public disclosures. The focus is on whether they could have made the inference.” Solomon v. Lockheed Martin Corp., No. 17-10046 (Dec. 19, 2017).

Viewing the hole record reveals fact issue.

A longshoreman died after stepping through a hole on an oil platform. The district court granted summary judgment, finding no fact issue about the “open and obvious” nature of the hole – a necessary element for recovery under the LHWCA. The Fifth Circuit reversed, finding conflicting testimony on the issue, and commenting on pictures of the scene (right): “True, the pictures taken directly over the hole, as one might expect, depict a visible opening. But the pictures taken from an angle–similar to the point of view of a person approaching the hole–depict the way in which the platform’s grating, in [a witness’s] words, can ‘play tricks on your eyes’ and make the opening difficult to see.”  The Court reminded that even though the case would be tried to the bench: “Judicial efficiency is a noble goal, to be sure. But when an evidentiary record contains a material factual dispute (as this one does), we simply cannot bypass the role of the fact-finder, whoever that may be.” Manson Gulf LLC v. Modern American Recycling Service, Inc., No. 17-30007 (Dec. 18, 2017).

Too much, too late.

In Howard v. Maxum Indemnity Co., “Howard’s appeal raises as a central, threshold question whether he waived application of Oklahoma law” in an insurance dispute. Unfortunately, “[a]lthough Howard did raise the choice of law issue in his Rule 59(e) motion, ‘this court will typically not consider an issue or a new arugment raised for the first time in a motion for reconsideration in the district court.’ . . . ‘Parties generally are bound by the theory of law they argue in the district court, absent some manifest injustice.'” No. 16-11746 (Dec. 13, 2017).

What triggers the right to remove?

In this not-unusual situation, the Fifth Circuit found that a removal based on diversity was timely: In response to special exceptions, [the Strongs] filed an amended petition stating the maximum amount of damages in controversy by specifying that the Strongs sought “monetary relief of $100,000 or less.” Cf. Tex.  R. Civ. P. 169 (requiring the “$100,000 or less” language to allow for expedited actions). The Strongs also sought injunctive relief ordering both a loan modification to prevent further TDCA violation and “the arrearage . . . to be deleted and/or capitalized . . . so that the loan is brought current.” Green Tree did not remove to federal district court until after it received a response to its request for disclosure in which the Strongs explicitly indicated that they were seeking damages in excess of $75,000.” The Court rejected the Strong’s argument that the petition implictly placed the entire property value at issue. Strong v. Green Tree Servicing LLC, No. 16-11346 (Dec. 11, 2017) (unpublished).

When the network administrator goes rogue . . .

“Upset that a coworker had been fired, Thomas[, a network adminstrator,] embarked on a weekend campaign of electronic sabotage.” He was successfully prosecuted under the Computer Fraud and Abuse Act, which criminalizes conduct that “knowingly causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer.” Thomas, citing his network administration responsibilities, argued that “because he was authorized to damage the computer when engaging in [certain] routine tasks, any damage he caused while an employee was not ‘without authorization.’” The Fifth Circuit rejected this argument, noting – in addition to obvious practical issues – that the case law Thomas relied on about “authorization” involved liability under other CFAA provisions about computer access, rather than this provision about causing damage. This case is of general interest to civil litigation, both because CFAA violations can create civil liability, and because unfortunate admissions can have significant consequences:

Just a couple weeks after the damage spree, and before the FBI had contacted Thomas, he told the friend whose firing had set this in motion that “he thought he might have broken the law.” Which law, the friend inquired? Thomas’s response: “the Computer Fraud and Abuse Act.”

United States v. Thomas, No. 16-41264 (Dec. 11, 2017).

No, that’s not a federal question

Griffith sued his former employer under state law, referring in the pleading to a charge he filed with the EEOC and its issuance of a right-to-sue notice. Alcon removed based on federal question jurisdiction; the district court accepted the removal and granted summary judgment to the employer. The Fifth Circuit reversed: “Although Griffith indeed referenced his dealings with the EEOC in his complaint, he did not mention Title VII or any similar federal statute. As such, the district court lacked subject-matter jurisdiciton and was not entitled to render judgment in Alcon’s favor.” Griffith v. Alcon Research, No. 17-20290 (Dec. 6, 2017, unpublished).

Good appellate advocacy seminar in 2018 –

DRI’s 2018 Appellate Advocacy Seminar will be held at the Planet Hollywood Resort in Las Vegas from March 14-15, 2018.  This year’s seminar will include valuable insights into effective advocacy (including tips from Bryan Garner), and joint sessions with trial court practitioners.  The seminar promises great networking opportunities with judges, appellate practitioners and trial advocates from across the country. This year’s seminar will be held in conjunction with the Trial Tactics Seminar, and anyone attending the appellate seminar can attend the final day of the Trial Tactics Seminar for no cost. The seminar also coincides with the beginning of the NCAA men’s basketball tournament, a great time to enjoy the excitement of Las Vegas. You can register for the Appellate Seminar here.  Save $100 and get the best hotel rates when you register and book by February 13, 2018.

Scope of CAFA remand review

Johnson v. Real Estate Mortgage Network, Inc. reminds of a technical but important point about the review of remand orders under CAFA in the Fifth Circuit: “Facing our CAFA deadline, we continue to apply [prior preceden’s] suggestion that our jurisdiction to review a CAFA remand order stops at the edge of the CAFA portion of the order,” and does not extend to “every issue decided in the remand order, including federal question jurisdiction.” No. 17-30768 (Nov. 30, 2017).

Notice of appeal reminder –

A premature notice of appeal is certainly better than nothing, but may not be enough, as the Fifth Circuit noted in Johnson v. Real Estate Mortgage Network, Inc.: “Before we address Johnson’s contentions on appeal, we note that Johnson’s notice of appeal from the summary judgment dismissing the claims against some, but not all, of the defendants, was premature. Nevertheless, because the district court could have certified that the summary judgment was appealable, and it subsequently entered a final judgment, the notice of appeal gives us appellate jurisdiction over the summary judgment.  However, because Johnson did not file a notice of appeal from the final judgment, which dismissed his remaining claims against REMNI/Homebridge, we do not have jurisdiction to consider the dismissal of his claims against REMNI/Homebridge.” No. 17-20347 (Dec. 1, 2017, unpublished).

$80 million ticket on the Erie Railway

In City of San Antonio v. Hotels.com, the Fifth Circuit reversed an $84 million judgment for several cities, against online hotel reservation services, relating to the collection of local occupancy taxes. The holding turned entirely on the force of an intermediate Texas appellate opinon under the Erie doctrine. In its reasoning, the Fifth Circuit rejected a number of arguments against following that opinion, including: (1) the scope of the record before the courts; (2) the analytical framework used by the Texas court; and (3) the precise language of the relevant ordinance. The Court was satisfied with the general principles relied upon by the Texas opinion, as well as its resolution of “absurd result” arguments made in both cases. No. 16-50479 (Nov. 29, 2017). The Dallas Morning News has a good summary of the issues and history of this long-running litigation.

Of the common law and “chymistry”

Melton v. Phillips, No. 15-10604 (Nov. 13, 2017), a difficult qualified immunity case that required en banc review to resolve, features a concurrence with the unusual verb “cross-pollinated” to describe a confluence of two lines of authority. That perspective on the development of common law recalls the concept of “vegetation” in early scientific thought, used to describe vigorous and lively growth not just in plant life, but throughout nature. Indeed, no less than Isaac Newton wrote a paper about “Chymystry” titled “On Nature’s Obvious Laws and Processes in Vegetation”: