The unsuccessful plaintiffs in Blythe v. Bumbo International appealed the dismissal of their products liability claim about a Bumbo baby seat (right). No. 14-40387 (July 27, 2015, unpublished). The Fifth Circuit, affirmed, holding on two key evidentiary issues:
1. “The district court did not abuse its discretion in excluding the instructions on Bumbo’s website [under Fed. R. Evid. 407.] . . . [Plaintiffs’ attempt to introduce the website instructions for the purpose of proving a design defect ‘under the guise’ of claiming they are admissible under the impeachment exception.”
2. Evidence about prior product recalls and related investigations was inadmissible, as subsequent remedial measures. Examining the “subject matter, underlying purpose, and relevance” of the communications about safety harnesses, the Court noted that none involved the use of a Bumbo on an elevated surface as the plaintiffs had done, contrary to product warnings.
After the EEOC sent two inconsistent letters about a claimant’s case – one in June, and one in July – a confusing limitations problem arose. The Fifth Circuit found that equitable tolling applied and prevented a bar to filing suit. It agreed with the district court that testimony about what the EEOC told counsel on the phone was inadmissible for the truth of the matter asserted, but disagreed that it was completely inadmissible — when offered to prove why counsel acted as he did, the conversation was not offered for a hearsay purpose. The Court also noted that counsel, and his client, had proceeded diligently throughout the matter, noting: “Th[e] desire to have an EEOC letter with all the t’s crossed and i’s dotted is a sign of diligence rather than dawdling.” Alvarado v. Mine Service, Ltd., No. 14-50668 (July 30, 2015, unpublished).
H&E Equipment sued Advanced Services after a fire at a plywood plant. Advanced brought a third-party claim against Georgia-Pacific for indemnity, who in turn sought coverage from Kinsale Insurance. Kinsale denied coverage on the ground that Advanced was also insured under the relevant policy, triggering this “insured v. insured” exclusion: “This insurance does not apply to claims or ‘suits’ for ‘bodily injury,’ ‘property damage’ or ‘personal and advertising injury’ brought by one insured against any other insured.” The Fifth Circuit reversed summary judgment for the insurer, reasoning: “Advanced did not, in turn, seek damages from Georgia-Pacific due to a property loss; it sought indemnity based on general tort principles for the property damage that occurred to another party. Advanced had no property damage, but it seeks protection from a potential duty to pay for someone else’s property damages.” Kinsale Ins. Co. v. Georgia-Pacific, LLC, No. 14-60770 (July 27, 2015) (distinguishing Fidelity & Deposit Co. of Maryland v. Conner, 973 F.2d 1236 (5th Cir. 1992).
Plaintiff challenged a proposed development plan as violating the Fair Housing Act. Defendants argued “that because the planned redevelopment is both inchoate and designed to be mixed income and to attract a variety of tenants, [Plaintiff] can only speculate as to whether, if redevelopment proceeds, it will deprive her of the social and economic benefits of diversity,” and thus lacked standing. The Fifth Circuit disagreed, finding that her “asserted injury would be concretely felt in the logical course of probably events flowing from an unfavorable decision by this court: (1) HUD approves the already-pending plan for redevelopment; (2) redevelopment occurs according to the approved plan; [and] (3) segregation and minority- and poverty-concentration occur in [Plaintiff’s] neighborhood as specifically anticipated in several expert reports contained in the record.” The Court distinguished Clapper v. Amnesty International, 133 S. Ct. 1138 (2013), a recent case about the Foreign Intelligence Surveillance Act, as “depend[ing] on a long and tenuous chain of contingent events[.]” McCardell v. U.S. Dep’t of Housing & Urban Devel., No. 14-40955 (July 23, 2015).
Dixon complained that he was defrauded into leasing a Toyota Corolla, having been told that the lease would be tax-exempt because his co-lessee was a non-profit entity. The Fifth Circuit affirmed dismissal, finding that the Consumer Leasing Act does not confer standing unless all lessees are natural persons, which the non-profit was not. Dixon v. Toyota Motor Credit Corp., No. 14-30426 (July 23, 2015).
HUD suspended a mortgage lender from doing business with the government; after some litigation, HUD withdrew the suspensions. In the meantime, the lender had appealed the district court’s ruling that upheld the suspensions, and argued that it was not moot after the withdrawal. The Fifth Circuit disagreed, finding that the requested declaration that the suspension was unlawful is “no longer embedded in an actual controversy about the appellants’ legal rights.” The Court rejected arguments based on the “voluntary-cessation” and “collateral consequences,” emphasizing the specific posture of the lender’s situation with the government and the specifics of the regulatory environment. The Court also rejected an argument based on the past economic losses, noting that the lender was not seeking damages and could not under the applicable statute. Allied Home Mortgage Corp. v. U.S. Dep’t of Housing & Urban Devel., No. 14-20523 (July 22, 2015, unpublished).
Red Barn Motors sued its lender in a Louisiana district court. That court transferred the case to Indiana based on a forum selection clause. Three months later, the dealer sought mandamus relief from the Fifth Circuit, which denied its request. The Court noted that the case was no longer in the Circuit – meaning that the only possible remedy would be to ask the Indiana court to return the case, which would require a “very extreme case.” “Despite the potential availability” of this limited opportunity for mandamus relief, the Court found that the unexplained three-month delay in seeking review showed a lack of diligence that defeated the petition. In re: Red Barn Motors, Inc., No. 15-30067 (July 20, 2015).
Plaintiff’s FCA claims about billing for aircraft parts were dismissed for failure to comply with the heightened pleading requirements of Fed. R. Civ. P. 9(b), in that:
- it is not sufficient to argue that certain federal regulations must have been contained in the relevant contract, because by their terms, they do not automatically apply;
- neither nondisclosure of a part’s history, nor the subsequent failure of a plane containing that part, establishes that a false claim was made about it; and
- speculation about a company’s billing practices does not adequately establish when the company actually submitted the allegedly false claims.
United States ex rel Gage v. Davis S.R. Aviation, LLC, No. 14-50704 (July 14, 2015).
The district court overseeing the settlement process for Deepwater Horizon claims ordered that the program could not have access to a certain set of “claim-specific information” before making an initial determination about a claim’s eligibility. BP sought to appeal this ruling as a collateral order. The Fifth Circuit dismissed for lack of jurisdiction, acknowledging that it had taken three earlier appeals about the settlement. The Court concluded that those appeals involved uniquely important issues about interpretation of the underlying agreement, and expressed concern about inviting significantly more interlocutory appeals given “the increasing frequency of court-supervised settlement agreements and consent decrees.” Lake Eugenie Land & Development v. BP Exploration & Production. No. 14-30823 (July 16, 2015).
The plaintiffs/relators in United States ex rel Rigsby v. State Farm contended that, in the wake of Hurricane Katrina, State Farm improperly skewed its claims handling process in favor of finding flood damage, as “wind policy claims were paid out of the company’s own pocket while flood policy claims were paid with government funds.” They won at trial and the Fifth Circuit affirmed, finding that – notwithstanding earlier investigations – they were “paradigmatic . . . whistleblowing insiders” as to this specific claim who qualified as “original sources.” The Court went on to find sufficient evidence of falsity and scienter, and reversed a discovery ruling that would not have allowed the plaintiffs to investigate the facts of other potentially false claims. No. 14-60160 (July 13, 2015).
1. As the Supreme Court term wound down, it affirmed the panel opinion in Baker Botts LLP v. ASARCO, holding that under the Bankruptcy Code: “Section §330(a)(1) does not permit bankruptcy courts to award fees to §327(a) professionals for defending fee applications.” No. 14–103 (U.S. June 15, 2015).
2. The Supreme Court also granted review of Dolgencorp Inc. v. Mississippi Band of Choctaw Indians, 746 F.3d 167 (5th Cir. 2014), which addresses Indian tribal court jurisdiction over a tort claim.
Moving to dismiss? Drafting a complaint? Educating a colleague? Check out the newly-revised Twombly/Iqbal page on 600Camp, which includes the recent insights from Wooten v. McDonald Transit Associates, No. 13-11035 (June 7, 2015) (statutory employment claim), Owens v. Jastrow, No. 13-10928 (June 12, 2015) (scienter), and mortgage servicing cases.
A contract dispute about the management of several vessels (among them, the M/V Maurader, right) led to a holding that a termination fee was void as a penalty. The contract required the boat owner to pay the management company “fifty percent of what [it] would have earned as a Management Fee had [the] Agreement not been so terminated,” and provided a formula for making that calculation, which in this case was $537,246.86. “The termination fee formula, however, makes no deductions to account for the fact that [management company] would have fewer expenses in the event of termination, and [it] has not quantified the expenses that would remain.” Comar Marine Co. v. Raider Marine Logistics LLC, No. 13-30156 (July 6, 2015).
Building on momentum after winning a challenge to the MERS business model, MERS succeeded in arguing that an earlier suit against Bank of America created a res judicata bar to a later suit against MERS because MERS and the bank were in privity. Warren v. MERS, No. 14-11102 (July 2, 2015, unpublished).
At mid-year 2015, you can see here my recommendations for five cases from the last 3 months that are well worth a read.