Defendant hosted a website with a public forum called “HairTalk.” Plaintiffs sued for copyright infringement when celebrity photos, to which they owned the rights, were posted by third-party users on HairTalk without their consent. The Fifth Circuit affirmed summary judgment for Defendant, adopting the “volitional conduct” requirement for direct infringement cases, and observing: “[I]t does not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet.” BWP Media USA v. T&S Software, No. 16-10510 (March 27, 2017).
An architecture firm held a large judgment against a bankruptcy debtor, and contended that the failure of the debtor’s insurer to object to that claim barred further dispute about the insurer’s liability. The Fifth Circuit disagreed, concluding that “in this no asset bankruptcy case, nothing in the court proceedings required claims allowance, no notice was provided to parties in interest to object to claims, and no bankruptcy purpose would have been served by the bankruptcy court’s adjudicating [the firm’s claim.” Kipp Flores Architects v. Mid-Continent Casualty Co., No. 16-20255 (March 24, 2017).
Reviewing the requirements for the application of judicial estoppel, the Fifth Circuit reversed the resolution of a case about insurance coverage of attorneys fees in Aldous v. Darwin Nat’l Assurance Co., No. 16-10537 (March 16, 2017). The Court found that the district court misapplied judicial estoppel when it “unjustifiably read the [key] supplemental declaration in isolation,” and made several “small antecedent errors” leading up to that ruling, including its reading of the relevant earlier decision.
Air Evac contended that the Airline Deregulation Act preempted Texas workers compensation laws about reimbursement for air-ambulance services. This claim led to a dispute about the scope of Eleventh Amendment liability and the landmark Constitutional case of Ex parte Young, 209 U.S. 123 (1908). In a methodical analysis of Young’s history and purpose, the Fifth Circuit concluded that Air Evac could sue: “[T]he balance-billing prohibition works in concert with state defendants’ implementation of the reimbursement system, serving as a backstop against alternative methods of fee collection. State defendants’ pervasive authority to oversee and enforce Texas’ workers’-compensation system satisfies the Ex parte Young exception.” Air Evac EMS, Inc. v. State of Texas, No. 16-51023 (March 20, 2017).
Adams LLC, formed in July 2010, bought a number of assets from Adams Produce Company, Inc., and sought to prosecute a Deepwater Horizon claim for damages suffered by Adams Inc. Unfortunately, “[a]lthough substantially alll of Adams Inc.’s assets and liabilities were transferred as part of the transaction, it is undisputed that Adams Inc. retained certain assets and liabilities. Adams Inc. and Adams LLC are two distinct entities, and the asset transfer that occurred here was not just a change in form.” BP Exploration v. Claimant ID 100169608, No. 16-30482 (March 8, 2017, unpublished).
The Fifth Circuit affirmed a summary judgment for the defendants in the FCA case of Abbott v. BP Exploration & Production; after describing the alleged fact issues about “whether engineers approved the various stages of construction of the Atlantis [offshore oil platform],” it noted: “Rarely does the pursuit of an individual’s FCA claims lead to an investigation requested by Congress. But that is the case with these Plaintiffs, whose insistence on the alleged issues with the Atlantis led to Congressional hearings, an investigation by a federal agency, and the [De[artment of the Interior] Report,” which “found no grounds to suspend the operation of the Atlantis or revoke BP’s designation as an operator.” No. 16-20028 (March 14, 2017).
The Clarion-Ledger reports that Judge E. Grady Jolly of Mississippi will retire on his 80th birthday in October 2017, creating another vacancy on the Fifth Circuit for President Trump to fill. The same paper has a good description of the process for filling the vacancy. Judge Jolly has served the Fifth Circuit with distinction for 35 years; his skill and grace will be greatly missed.
In an interesting parallel to the ongoing litigation about travel bans (which most recently produced a District of Hawaii opinion granting a TRO), the Fifth Circuit denied en banc review in Defense Distributed v. U.S. Dep’t of State, which affirmed a preliminary injunction about the use of 3-D printing technology to make certain firearms. A dissent observes: “Certainly there is a strong public interest in national security. But there is a paramount public interest in the exercise of constitutional rights, particularly those guaranteed by the First Amendment . . . ” No. 15-50759 (March 15, 2017).
Tower Credit garnished the debtor’s wages. In defense of a later preference action, Tower argued that its garnishment was effective when served (taking it outside the preference period), not when the debtor in fact received money. The Fifth Circuit disagreed: “The combination of Supreme Court precedent and the overwhelming weight of persuasive authority applying § 547(e)(3) make clear that a debtor’s wages cannot be transferred until they are earned. Thus, we hold that a creditor’s collection of garnished wages earned during the preference period is an avoidable transfer made during the preference period even if the garnishment was served prior to that period.” Tower Credit v. Schott, No. 16-30274 (March 13, 2017).
In affirming sanctions for vexatious litigation in connection with bankruptcy proceedings, the Fifth Circuit noted, in particular: “Appellants’ . . . repeated attempts to litigate issues that have been conclusively resolved against them or that they had no standing to assert and by their unsupported and multiple attempts to remove . . . the trustee.” Carroll v. Abide, No. 16-30996 (March 13, 2017).
Attorney Martinez sued another law firm (“HLG”) for various torts related to the firm contacting his clients about alleged overbilling. The firm asserted absolute immiunity as a defense and the Fifth Circuit agreed, in a fact-specific holding, that the evidence “demonstrate[s] that the allegedly tortious statements at issue in this case were made in relation to a proposed arbitration and are therefore absolutely privileged under Texas law.” The firm already represented two Martinez clients in connection with the potential arbitration; the new clients did not originate contact with the firm; and all of them ultimately retained the firm. Martinez v. Hellmich Law Group, PC, No. 16-50305 (March 8, 2017, unpublished). This case joins a line of similar holdings in recent years in favor of attorney immunity.